HBA-JEK H.B. 2871 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2871
By: Ramsay
Insurance
3/23/2001
Introduced



BACKGROUND AND PURPOSE 

The 73rd and 74th Legislatures passed civil justice reforms to reduce the
cost of insurance litigation and limit the maximum amounts that may be
awarded in a judgment.  The 74th Legislature enacted legislation to ensure
that the benefits resulting from these civil justice reforms, particularly
reductions in the cost of litigation and in the maximum amount that may be
awarded in a judgement, were passed on to the insured public.  The rate
reductions that allowed for these benefits to be passed on to consumers
expired January 1, 2001, but some feel that an effort to return more of
this money to the policyholders is warranted.  House Bill 2871 extends the
temporary rate rollback for certain lines of insurance and requires the
commissioner of insurance to ensure that savings are being passed through
to policyholders. 

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 5.131, Insurance Code) of this bill. 

ANALYSIS

House Bill 281 amends the Insurance Code to extend the across-the-board
rate reductions for certain lines of insurance until January 1, 2003 rather
than January 1, 2001.  The bill requires only county mutual insurers,
mutual insurers, joint underwriting associations, and other insurers whose
rates are not regulated to pass through the savings that accrue from the
temporary rate rollback to their policyholders on a prospective basis.  

The bill requires the commissioner of insurance (commissioner) to obtain
and examine data from county mutual insurers, mutual insurers, joint
underwriting associations, and other insurers whose rates are not regulated
to ensure that these insurers are passing through savings to their
policyholders as required by law. The bill requires an insurer who fails to
meet the pass through requirement as determined by the commissioner on or
before January 1, 2003 to provide rate refunds or reductions to the
insurer's policyholders on a prospective basis in an amount and manner
determined by the commissioner by rule. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.