ICT Details New Laws Taking Effect in 2004

The Insurance Council of Texas recently issued a reminder that new insurance legislation affecting the use of credit scores, water damage claims and the regulation of public adjusters is being put into place in Texas in 2004.

The ICT noted that beginning Jan. 1, legislation found in Senate Bill 14 allows consumers to avoid negative credit scores by informing their insurance company of catastrophic events in their lives. Consumers must write to their insurer notifying them of a serious illness or injury, a death of a spouse, child, or parent, or temporary loss of employment, by divorce or by identity theft. In each case,
insurers may consider only credit information not affected by the event or must assign the policyholder a neutral credit score.

SB 14 also prohibits insurance companies from denying, canceling or nonrenewing a residential or auto insurance policy solely on the basis of credit scoring. The Texas Department of Insurance has proposed a plus-or-minus 10 percent limit on the allowable differences in rates charged by insurers due solely to differences in credit scores. TDI held a hearing the proposed amendment on Jan. 7. (A decision was not available by press time for this issue of Insurance Journal.)

Public adjusters will need a state-issued license to conduct business beginning next year. Public adjusters act on behalf of an insured in negotiating the settlement of a claim. Their payment is a percentage of that claim.

SB 127 requires public adjusters to successfully pass an examination, comply with financial responsibility requirements and provide fingerprints to TDI to become fully licensed.

The department will be responsible for investigating any complaints or violations involving public adjusters. The legislation also capped the commission fee of public adjusters at ten percent for any insurance claim settlement.

SB 127 places restrictions on the use of claims history for water damage. The law says homeowners cannot be charged higher rates or be nonrenewed if they have had less than three appliance-related water claims within a three-year period and have had the damage properly repaired and inspected.

Beginning April 1, mold remediators, who perform mold-related activities affecting indoor air quality, will be required to take a statewide examination, register and obtain a license from the Texas Department of Health. HB 329 calls for TDH to investigate any complaints regarding mold remediators and mold-related activities.

Many other provisions of SB 14, which carried most of the major insurance reform legislation, will become effective Dec. 1, 2004. Those provisions include moving both residential homeowners and auto insurance from the benchmark rating system to a file and use system.

Topics Texas Legislation