Bill Text: TX SB814 | 2013-2014 | 83rd Legislature | Introduced
Bill Title: Relating to the collection and use of certain information by certain insurers; providing administrative penalties.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-03-05 - Referred to Business & Commerce [SB814 Detail]
Download: Texas-2013-SB814-Introduced.html
| 83R1183 TJS-F | ||
| By: Davis | S.B. No. 814 | |
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| 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 1812 to read as follows: | ||
| CHAPTER 1812. DATA MINING AND PATTERN RECOGNITION | ||
| Sec. 1812.001. DEFINITIONS. In this chapter, "insurer," | ||
| "personal automobile insurance," and "residential property | ||
| insurance" have the meanings assigned by Section 2301.051. | ||
| Sec. 1812.002. 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. 1812.003. 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. 1812.004. 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 1812.002 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 84th | ||
| 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, 2013. | ||
