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.