HBA-DMH H.B. 1404 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1404 By: Martinez Fischer Insurance 3/11/2001 Introduced BACKGROUND AND PURPOSE Credit card companies market life, disability, and unemployment insurance to consumers by enclosing information in monthly billing statements. This insurance covers all or a portion of a cardholder's debt in the event of the cardholder's death, disability, or involuntary unemployment. A cardholder authorizes coverage by checking a box on a monthly billing statement, the monthly premium is then charged to the consumer's credit card and paid to the insurance company. This informal application process may make consumers vulnerable to abuses such as unauthorized coverage or overcharging. Current law does not require these insurance companies to keep consumer applications or policy information on file, which may make proving an unauthorized charge difficult. House Bill 1404 requires providers of credit insurance to retain applications and policy forms for one year after coverage ends, and authorizes an insured to inspect records on request. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated the commissioner of insurance SECTION 1 (Section 4, Article 21.79A, Insurance Code) of this bill. ANALYSIS House Bill 1404 amends the Insurance Code to require an insurer to maintain complete records relating to each policy or group certificate of specified credit insurance issued by the insurer that is marketed in connection with credit cards. The bill specifies the information the records must include, how the records are to be maintained, and the inspection of the records. The bill provides that these provisions do not affect the insured's obligation to issue an original policy or certificate to an insured. The bill authorizes the commissioner of insurance to adopt rules as necessary to implement these provisions. EFFECTIVE DATE September 1, 2001.