HBA-DMH H.B. 955 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 955 By: Burnam Insurance 4/30/2001 Introduced BACKGROUND AND PURPOSE Legislation enacted in 1991 was intended to provide freedom of choice to consumers having vehicle repairs performed under an auto insurance policy. In 1997, additional legislation specified unacceptable practices by insurance companies and required disclosure to consumers of their rights under state law regarding choice in automotive repair. The commissioner of insurance was authorized to promulgate rules to make consumers aware of such rights. Despite these protections, insurers are still able to require the use of substandard or nonmanufactuer parts for vehicle repairs performed by repair shops under an auto insurance policy. House Bill 955 prohibits specified persons under an auto insurance policy or in the settlement of a liability claim, from requiring the use of any part or product in the repair of a motor vehicle, or from requiring a repair person or facility to specify any part or product that may be used to repair a motor vehicle. 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 5.07-1, Insurance Code) of this bill. ANALYSIS House Bill 955 amends the Insurance Code to specify the persons to whom these provisions apply (person) and to prohibit such a person, under an auto insurance policy or in the settlement of a liability claim, from requiring the use of any part or product in the repair of a motor vehicle, or from requiring a repair person or facility to specify any part or product that may be used to repair a motor vehicle (Arts. 5.07-1(a), 5.071(g), and 5.07-1(l)). The bill prohibits a person, in connection with the repair of damage to a motor vehicle covered under an auto insurance policy, from reducing the amount paid for repairs by applying predesignated limits on material-related costs. The bill also prohibits a person, in connection with the repair of damage to a motor vehicle, from entering into an agreement with a repair person or facility that includes restrictions on the use of certain materials, procedures, or actions that may effect the motor vehicle's condition, value, or auto insurance coverage (Art. 5.07-1(b)). The bill authorizes the commissioner of insurance (commissioner) to exercise rulemaking authority under the Unfair Claim Settlement Practices Act with respect to any fraudulent activity (Art. 5.07-1(h)). The bill prohibits the commissioner from adopting a rule that allows a person to specify a nonoriginal equipment manufacturer part as the basis for a damage report, estimate, or appraisal as a limit to the cost of a damage repair in a case which affects the warranty, value, safety, or suitability of certain motor vehicles (Art. 5.071(j)). The bill requires a person who uses or references survey data to determine reasonable costs for damage repairs or costs to ensure that the survey data was obtained by statistically sound survey and research methods, to publish a report containing information with regard to the survey, to provide copies of the report to the commissioner, and to provide, upon request, copies to specified entities and individuals (Art. 5.07-1(k)). The bill includes consumer groups, representative of a consumer, and insurers among the parties that are authorized to submit a written documented complaint to the Texas Department of Insurance with respect to an alleged violation of these provisions. (Art. 5.07-1(e)). The bill provides that a person commits an unfair and deceptive act or practice in the business of insurance if the person violates the aforementioned provisions and is subject to each penalty or other sanction provided by statutes regarding unfair competition and unfair practices (Art. 5.07-1 (m)). EFFECTIVE DATE September 1, 2001.