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.