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.