HBA-JEK C.S.H.B. 2527 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2527
By: Junell
Business & Industry
4/8/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Certificates of insurance for workers' compensation policies are documents
issued by insurance companies to be used as evidence of the existence of a
policy.  However, these documents can be easily duplicated and used
fraudulently as evidence of insurance.  C.S.H.B. 2527 standardizes
information that must be contained in a workers' compensation and
commercial liability insurance certificate, and requires the commissioner
of insurance to adopt rules to ensure that a fraudulent document can be
distinguished from an authentic certificate. 

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) and SECTION 3 of this bill. 

ANALYSIS

C.S.H.B. 2527 amends the Insurance Code to require the commissioner of
insurance (commissioner) by rule to establish requirements for a
certificate of insurance issued by an insurance company to be used as
evidence of the existence of a workers' compensation policy or commercial
liability policy, including commercial automobile and general liability.
The bill provides that these rules must include requirements to assist an
individual relying on a certificate of insurance as proof of insurance to
verify the accuracy of the information contained in the certificate.  The
bill specifies the information that the certificate of insurance must
include.  These provisions apply only to a certificate of insurance issued
by an insurance company on or after January 1, 2002.  The commissioner is
required to adopt rules no later than December 1, 2001. 

C.S.H.B. 2527 amends the Insurance and Labor codes to require an insurance
company that cancels or does not renew a workers' compensation policy to
deliver notice of the cancellation or nonrenewal to the insured and each
certificate holder who provides a written request for the notice. 

EFFECTIVE DATE

September 1, 2001.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2527 modifies the original bill by requiring the commissioner of
insurance (commissioner) to establish requirements for a certificate of
insurance issued by an insurance company to be used as evidence of a
commercial liability policy, including commercial automobile and general
liability.  The substitute changes the information that must be included in
a certificate of insurance and specifies that a certificate must include
any information required by the commissioner.