HBA-TYH H.B. 3490 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3490 By: Dunnam Insurance 3/30/1999 Introduced BACKGROUND AND PURPOSE Currently, an insured party's attorneys can be compelled to submit billings with detailed statements to a third-party auditor. This may constitute a violation of attorney-client privilege that could lead to revelation of client confidences and make those materials discoverable by an adversary. H.B. 3490 requires the insured party to give full consent in order for information to be given to a thirdparty auditor. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1 (Article 21.56C, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter E, Chapter 21, Insurance Code, by adding Article 21.56C, as follows: Art. 21.56C. AUDIT OF BILLING BY DEFENSE COUNSEL. Prohibits an insurer that is obligated to provide a defense for an insured under a casualty insurance policy from performing certain enumerated actions. Authorizes an insurer to take the above enumerated actions with the prior written consent of the insured, obtained after full disclosure to the insured. Requires the commissioner of insurance, in consultation with the State Bar of Texas, to adopt rules to implement this article. Provides that the rules must specify the disclosure required to be made. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause. Effective date: upon passage.