HBA-TBM H.B. 1408 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1408 By: Junell Insurance 2/21/2001 Introduced BACKGROUND AND PURPOSE When a person who purchases insurance pays the premium on a quarterly basis, the person runs the risk of paying for coverage that will not be used if the person cancels the policy prior to the end of the prepaid, four-month period. The premium payments made for the months that are not covered are usually not automatically reimbursed by an insurer, as an insurance company has the discretion to either keep those premium payments or reimburse the insured. Presently, the state of Texas does not have any laws that require the insurer to reimburse the insured for unearned premium payments. House Bill 1408 requires all insurance companies to promptly reimburse to the insured all unearned premium payments. 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 21.29, Insurance Code) in this bill. ANALYSIS House Bill 1408 amends the Insurance Code to require an insurer to promptly refund to an insurance policyholder or contract holder any unearned premium for a policy or contract. The commissioner of insurance is required to adopt rules necessary to implement this provision. The provisions in this bill apply only to an insurance premium paid to an insurer on or after January 1, 2002. EFFECTIVE DATE September 1, 2001.