December 8, 2021

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Texas Amended Consumer/Homeowners Bill of Rights and Other Recent Legislation

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Introduction: The Texas Department of Insurance (“TDI”) has adopted rules amending the Consumer Bill of Rights for personal automobile and homeowners’ insurance.1 See 28 TAC §5.9971(b). Insurers must begin providing the new Bill of Rights to insureds by November 15, 2021. The Bill of Rights is a summary of a policyholder’s rights and is not a part of a policyholder’s policy. Additionally, Texas Senate Bill 1376 has been enacted to exempt 18 kinds of commercial insurance policies from rate and form filing requirements. This new legislation applies on or after September 1, 2021, to policies delivered, issued for delivery, or renewed. In addition, Texas Senate Bill 965 amends rate filing requirements for residential property and personal automobile insurers with low market shares and applies on or after to January 1, 2022, to delivered, issued or renewed policies.

I. Texas Consumer Bill of Rights: (effective May 16, 2021) (Discussing below only homeowner rights rather than including personal automobile rules).

A. Rule 28 TAC Section 5.9971(b)
This bill contains a lot of excellent information for insureds. Insurers must provide copies of this amended Bill of Rights to new insureds and to renewals beginning Nov. 15, 2021.

B. Topics in the Bill:

Where to get information: Your insurance company, TDI, your declaration page, and there is a section in the bill regarding resources for shopping for insurance. To obtain information from TDI, you have the right to call TDI free at 800-252-3439 or 512-463-6515 in Austin, Texas.
What you should know before you buy insurance: Your insurance company is prohibited from making false, misleading, statements relating to your policy and what you should know about the use of credit information by the insurer.
What you should know when you file a claim: deadlines for processing, a reasonable investigation, release of claim payments from lenders, etc.
Who to contact for claim disagreements: your insurance company, TDI, a public adjuster, contact an attorney.
What you should know about renewal, cancellation and nonrenewal: notice of cancellation, your right to cancel, refund of premium, notice of a material change in your policy, notice of a premium increase.

II. S.B. 1367: (effective September 1, 2021)

A. Purpose: Deregulation:
“Seeks to enact market-oriented reforms that will facilitate robust product offerings by exempting any line of certain kinds of commercial insurance from applicable rate and policy from filing requirements.” See Insurance Committee Report (Unamended), Bill Analysis of S.B. 1367 by Senator Brandon Creighton (R-Conroe) author of the bill.

B. Analysis: Eliminates rate and form filing requirements for certain lines of commercial insurance.
This bill amends the Insurance Code to exempt any line of the following kinds of insurance written under a commercial insurance policy or contract issued by an insurer authorized to engage in the business of insurance in Texas from applicable rate and form filing requirements. The following kinds of insurance are now exempt or deregulated:

•surety bonds;
•fidelity bonds;
•commercial inland marine’
•boiler and machinery;
•environmental impairment or pollution liability;
•Kidnap and ransom;
•political risk or expropriation;
•commercial excess liability or umbrella liability;
•directors’ and officers’ liability;
•fiduciary liability;
•employment practices liability;
•errors and omission and professional liability other than medical professional liability;
•media liability;
•product liability, product recall, or completed operations;
•commercial cybersecurity, including first-and third-party commercial lines coverage for losses arising out of or relating to data privacy breaches, network security, computer viruses, and similar exposures;
•highly protected commercial property that is subject to a much lower than normal probability of loss due to low-hazard occupancy or property type, superior construction, special fire protection equipment and procedures, and management commitment to loss prevention;
•commercial flood insurance not provided through the National Flood Insurance Program; or
•any combination of only the kinds of insurance included in the list or otherwise exempted from the requirements under the bill’s provisions.

C. Pertinent Provisions:
SB 1367 authorizes the Commissioner of Insurance by rule to exempt an additional commercial line of insurance or commercial risk not listed above from rate and form filing requirements. The Commissioner is also authorized to reinstate the requirements for one of the listed kinds of insurance above for a period of no longer than one year if, after notice and hearing, the Commissioner issues an order that does the following:

•Includes a finding that a reasonable degree of competition does not exist for that specific kind of insurance; and
•Specifies of the relevant tests and test results used to determine the degree of competition for that kind of insurance.

The bill establishes that, in the absence of such a finding with respect to a specific kind of insurance, a competitive market is presumed to exist for that kind of insurance.

The bill also authorizes the Commissioner to adopt reasonable and necessary rules to implement the bill’s provisions exempting lines of certain kinds of insurance from applicable rate and form filing requirements.

The bill establishes the requirement for an insurer to file with the Commissioner all rates, applicable rating manuals, supplementary rating information, and additional information as required by the Commissioner inapplicable to rates for use with an insured that has the following:

•total insured property values of $5 million or more;
•total annual gross revenues of $10 million or more; or
•a total premium of $25,000 or more for property insurance, $25,000 or more for general liability insurance, or $50,000 or more for multi-peril insurance.

D. Supporters of the Bill:

•American Property Casualty Insurance Association
•National Association of Mutual Insurance Companies,
•Independent Insurance Agents of Texas
•Texas Coalition for Affordable Insurance Solutions
•Texas Association of Business
•Association of Fire and Casualty Companies of Texas
•Texas Surplus Lines Association

III. S.B. 965 Relating to Rate Filing Requirements for Certain Personnel Lines Insurers with Low Market Shares (effective September 1, 2021).

This bill, in one page, amends the Texas Insurance Code Section 251.252 (a) and (d) in rate filing requirements for residential property and personal automobile insurers with low market shares. SB 965 applies to rates for policies that are delivered, issued for delivery, or renewed on or after January 1, 2022.

If you have questions about the Bill of Rights or the above laws/statutes, you may always contact the Office of Public Insurance Counsel at 333 Guadalupe, Suite 3-120, Austin, Texas 78701 (512) 322-4143 or www.opic.state.tx.us.
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1 https://www.sos.state.tx.us/texreg/archive/May142021/tables-and-graphics/202101657-3.pdf

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