HBA-TBM H.B. 956 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 956 By: Burnam Insurance 4/26/2001 Committee Report (Amended) BACKGROUND AND PURPOSE Under current law, consumers are protected from insurers limiting coverage for the repair of an automobile by requiring the policyholder to have repair work performed by a repair shop chosen by the insurer. Despite this protection, substantial steering of business by insurance companies to preferred repair shops still occurs. Clarification of the limitations on insurers and the rights of policyholders may reduce this illegal practice. House Bill 956 expands the prohibitions on an insurer from directly or indirectly limiting the beneficiary of a policy or a third-party claimant from selecting a repair facility for repair of a claimant's vehicle. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 956 amends the Insurance Code to prohibit a person in the business of insurance (insurer) from directly or indirectly limiting the beneficiary of a policy or a third-party claimant (claimant) from selecting a repair person or facility (repair facility) for the repair of the claimant's vehicle. The bill prohibits an insurer from: _accepting any form of compensation or discount from a repair facility in exchange for referrals; _restricting a claimant's or beneficiary's right to choose a repair facility by communicating or providing incentive to a claimant that a repair facility is required to be used or more or less preferable or acceptable or inducing a claimant to waive the right to select a repair facility; _communicating to a claimant that repairs, parts, materials, or labor are guaranteed by a person other than the repair facility that performs the repairs; _communicating to a claimant that alternative transportation is allowed only if the damaged vehicle is repaired by a repair facility selected or recommended by the insurer or the insurer's agent; or _threatening for any reason to remove a claimant's vehicle from the claimant's selected repair facility. The bill authorizes a consumer group, representative of a consumer, or insurer to submit a written, documented complaint relating to an alleged violation of these provisions to the Texas Department of Insurance. The bill also prohibits an insurer in the settlement of a third party claim from communicating to a claimant that the person recommends or prefers the claimant use a repair facility on a list maintained or compiled by an insurer. The bill provides that a person commits an unfair and deceptive act or practice in the business of insurance if the person violates the above provisions and is subject to penalties and sanctions. EFFECTIVE DATE September 1, 2001. EXPLANATION OF AMENDMENTS Committee Amendment No. 1 removes the prohibition against an insurer recommending an automotive repair person or facility to a policyholder or third party making a claim for damages to an automobile.