82R7664 TJS-F
	By: Davis	S.B. No. 1064

	A BILL TO BE ENTITLED
	AN ACT
	relating to the collection and use of certain information by
	certain insurers; providing administrative penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle A, Title 10, Insurance Code, is amended
	by adding Chapter 1811 to read as follows:
	CHAPTER 1811. DATA MINING AND PATTERN RECOGNITION
	Sec. 1811.001.  DEFINITIONS.  In this chapter, "insurer,"
	"personal automobile insurance," and "residential property
	insurance" have the meanings assigned by Section 2301.051.
	Sec. 1811.002.  COLLECTION OF INFORMATION CONCERNING DATA
	MINING AND PATTERN RECOGNITION. (a)  The commissioner by rule
	shall require an insurer that writes personal automobile insurance
	or residential property insurance in this state to report to the
	department concerning:
	(1)  technologies to be used by the insurer to identify
	relationships among variables that are used to predict differences
	in expected losses of covered persons and perils or applicants for
	coverage or are otherwise used in the activities of regulated
	entities; and
	(2)  the manner in which the insurer intends to use the
	relationships derived from the technologies described by
	Subdivision (1) in:
	(A)  underwriting and creating and defining risk
	classifications;
	(B)  setting rates and premiums, as applicable;
	(C)  detecting fraudulent claims;
	(D)  identifying subrogation opportunities;
	(E)  improving marketing; or
	(F)  performing other activities identified by
	the commissioner.
	(b)  In exercising the commissioner's authority under this
	section, the commissioner shall require that insurers report
	specific uses of relationships derived from the technologies.
	(c)  Underwriting guidelines and related information
	obtained by the commissioner under this section are subject to
	Section 38.003. Other information obtained under this section is
	commercial information not subject to the disclosure requirements
	of Chapter 552, Government Code.
	Sec. 1811.003.  ADMINISTRATIVE PENALTIES. If the department
	determines that an insurer has violated this chapter or a rule
	adopted under this chapter, the department shall assess
	administrative penalties against the insurer in the manner provided
	by Chapter 84. The amount of an administrative penalty imposed
	under this section shall be based on:
	(1)  the seriousness of the violation, including the
	nature, circumstances, extent, or gravity of the violation; and
	(2)  the economic harm caused by the violation.
	Sec. 1811.004.  REPORT TO LEGISLATURE. The department shall
	include in its biennial report to the legislature under Section
	32.022 information concerning the use of relationships derived from
	the technologies described by Section 1811.002 by insurers. The
	information must include the impact of the use of those
	relationships on insurance and other coverage to covered persons
	and perils and applicants for coverage in this state.  The report
	must include, as applicable, recommendations for proposed
	legislation appropriate to regulate the use of relationships
	derived from the technologies and means to facilitate availability
	of insurance in underserved markets.
	SECTION 2.  (a)  In this section, "department" means the
	Texas Department of Insurance.
	(b)  The department shall conduct a study of:
	(1)  technologies such as statistical techniques,
	devices, or models that may be used by or on behalf of an insurer
	that writes personal automobile insurance or residential property
	insurance in this state to establish new classifications or to
	change methods of classification for rating, tiering, or
	underwriting; and
	(2)  the manner in which insurers use the relationships
	derived from the technologies described by Subdivision (1) in:
	(A)  predicting differences in expected losses of
	covered persons and perils or applicants for coverage;
	(B)  underwriting and creating and defining risk
	classifications or changing a method of classification;
	(C)  setting or determining rates and premiums; or
	(D)  using classifications or a change in a method
	of classification to deny coverage, limit coverage, or refuse to
	renew or cancel coverage under personal automobile or residential
	property insurance policies.
	(c)  The department shall include the results of the study
	conducted under this section in the biennial report to the 83rd
	Legislature made under Section 32.022, Insurance Code. The report
	must describe the impact that the use of the relationships derived
	from technologies described by Subsection (b) of this section has
	on insurance, policyholders, and applicants for insurance in this
	state, and may include recommendations for proposed legislation
	appropriate to regulate or mitigate the use of those technologies.
	SECTION 3.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2011.