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H.R. 1247 (104th): Insurance Disclosure Act of 1995

The text of the bill below is as of Mar 15, 1995 (Introduced).

HR 1247 IH


1st Session

H. R. 1247

To require property and casualty insurers to provide written notification to insurance applicants and policyholders of decisions to refuse to issue or to cancel or refuse to renew an insurance policy.


March 15, 1995

Mr. FIELDS of Louisiana introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committee on Banking and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


To require property and casualty insurers to provide written notification to insurance applicants and policyholders of decisions to refuse to issue or to cancel or refuse to renew an insurance policy.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


    This Act may be cited as the ‘Insurance Disclosure Act of 1995’.


    (a) REQUIREMENT TO PROVIDE WRITTEN EXPLANATION OR NOTICE OF DECLINATION- The Secretary of Housing and Urban Development shall, by regulation, require that each insurer who, through the insurer, or an agent or broker, declines a written application or written request to issue an insurance policy under a designated line shall provide to the applicant at the time of such declination, through such insurer, agent, or broker, one of the following:

      (1) A written explanation of the specific reasons for the declination.

      (2) Written notice that (A) the applicant may submit to the insurer, agent, or broker, within 90 days of such notice, a written request for a written explanation of the reasons for the declination, and (B) pursuant to such a request, an explanation shall be provided to the applicant within 21 days after receipt of such request.

    (b) RESPONSE TO REQUEST FOR EXPLANATION- If an insurer, agent, or broker making a declination receives a written request referred to in subsection (a)(2) within such 90-day period, the insurer, agent, or broker shall provide a written explanation referred to in such subsection within such 21-day period.


    The Secretary of Housing and Urban Development shall, by regulation, require that each insurer who cancels or refuses to renew an insurance policy under a designated line shall provide to the policyholder, in writing and within an appropriate period of time as determined by the Secretary, the reasons for canceling or refusing to renew the policy.


    In issuing regulations under sections 2 and 3, the Secretary shall consider relevant portions of model acts developed by the National Association of Insurance Commissioners.


    Sections 2 and 3 shall not be construed to annul, alter, or effect, or exempt any insurer, agent, or broker subject to the provisions of such sections from complying with any laws or requirements of any State with respect to notifying insurance applicants or policyholders of the reasons for declination or cancellation of, or refusal to renew insurance, except to the extent that such laws or requirements are inconsistent with such sections (or the regulations issued thereunder) and then only to the extent of such inconsistency. The Secretary is authorized to determine whether such inconsistencies exist and to resolve issues regarding such inconsistencies. The Secretary may not provide that any State law or requirement is inconsistent with section 2 or 3 if it imposes requirements equivalent to the requirements under such sections or requirements that are more stringent or comprehensive, in the determination of the Secretary.


    In issuing regulations under sections 2 and 3, the Secretary shall specifically consider the necessity of providing insurers, agents, and brokers immunity solely for the act of conveying or communicating the reasons for a declination or cancellation of, or refusal to renew insurance on behalf of a principal making such decision. The Secretary may provide for immunity under the regulations issued under sections 2 and 3 if the Secretary determines that such a provision is necessary and in the public interest, except that the Secretary may not provide immunity for any conduct that is negligent, reckless, or willful.


    (a) IN GENERAL- The Secretary shall, by regulation, designate lines of insurance as designated lines for purposes of this Act, as follows:

      (1) AUTOMOBILE- The Secretary shall designate private passenger automobile insurance and shall also designate any sublines and coverage types of private passenger automobile insurance that the Secretary considers appropriate for purposes of this Act.

      (2) NONCOMMERCIAL INSURANCE FOR RESIDENTIAL PROPERTY- The Secretary shall designate homeowners insurance and dwelling fire and allied lines, and shall distinguish the coverage types in such lines by the perils covered and by market or replacement value, as the Secretary considers appropriate for purposes of this Act. For purposes of this Act, homeowners insurance shall not include any renters coverage or coverage for the personal property of a condominium owner.

    (b) REPORT- At any time the Secretary determines that any line of insurance not described in subsection (a) should be a designated line because disparities in coverage provided under such line exist among geographic areas having different income levels or racial composition, the Secretary shall submit a report to the Congress recommending designating such line of insurance as a designated line for purposes of this Act.

    (c) DURATION-

      (1) IN GENERAL- Except as provided in paragraph (2), the Secretary shall make the designations under this section once every 5 years, by regulation, and each line and subline or coverage type designated under such regulations shall be designated

for the 5-year period beginning upon the issuance of such regulations.

      (2) ALTERATION- During any 5-year period referred to in paragraph (1) in which designations are in effect, the Secretary may amend or revise the designated lines, sublines, and coverage types only by regulation and only in accordance with the requirements of this section. Such regulations amending or revising designations shall apply only to that portion of the 5-year period during which such amendment or revision is made that remains after the expiration of the 6-month period beginning on the date of issuance of the regulations.

    (d) TIMING OF DESIGNATIONS- The Secretary shall make the designations required by subsection (c)(1) and notify interested parties during the 6-month period ending 6 months before the commencement of the 5-year period to which such designations apply.

    (e) OBTAINING INFORMATION- The Secretary may require insurers to submit to the Secretary such information as the Secretary considers necessary to make designations specifically required under this section. The Secretary may not require insurers to submit any information under this subsection that relates to any line of insurance not specifically authorized to be designated pursuant to this section or that is to be used solely for the purpose of a report under subsection (b).


    The Secretary may authorize the States to enforce the requirements under regulations issued under sections 2 and 3.


    (a) CIVIL PENALTIES- Any insurer who is determined by the Secretary, after providing opportunity for a hearing on the record, to have violated any requirement pursuant to this Act shall be subject to a civil penalty of not to exceed $5,000 for each day during which such violation continues.

    (b) INJUNCTION- The Secretary may bring an action in an appropriate United States district court for appropriate declaratory and injunctive relief against any insurer who violates the requirements referred to in subsection (a).


    For purposes of this Act:

      (1) AGENT- The term ‘agent’ means, with respect to an insurer, an agent licensed by a State who sells property and casualty insurance. The term includes agents who are employees of the insurer, agents who are independent contractors working exclusively for the insurer, and agents who are independent contractors appointed to represent the insurer on a nonexclusive basis.

      (2) DESIGNATED LINE- The term ‘designated line’ means a line of insurance designated by the Secretary under section 7.

      (3) INSURANCE- The term ‘insurance’ means property and casualty insurance. Such term includes primary insurance, surplus lines insurance, and any other arrangement for the shifting and distributing of risks that is determined to be insurance under the law of any State in which the insurer or insurer group engages in an insurance business.

      (4) INSURER- The term ‘insurer’ means any corporation, association, society, order, firm, company, mutual, partnership, individual, aggregation of individuals, or any other legal entity that is authorized to transact the business of property or casualty insurance in any State or that is engaged in a property or casualty insurance business. The term does not include an individual or entity which represents an insurer as agent solely for the purpose of selling or which represents a consumer as a broker solely for the purpose of buying insurance.

      (5) PROPERTY AND CASUALTY INSURANCE- The term ‘property and casualty insurance’ means insurance against loss of or damage to property, insurance against loss of income or extra expense incurred because of loss of, or damage to, property, and insurance against third party liability claims caused by negligence or imposed by statute or contract. Such term does not include workers’ compensation, professional liability, or title insurance.

      (6) SECRETARY- The term ‘Secretary’ means the Secretary of Housing and Urban Development.

      (7) STATE- The term ‘State’ means any State, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, the Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands.


    (a) IN GENERAL- The Secretary shall issue any regulations required under this Act and any other regulations that may be necessary to carry out this Act. The regulations shall be issued through rulemaking in accordance with the procedures under section 553 of title 5, United States Code, for substantive rules. Except as otherwise provided in this Act, the final regulations to carry out this Act shall be issued not later than the expiration of the 18-month period beginning on the date of the enactment of this Act and shall take effect upon issuance.

    (b) BURDENS- In prescribing such regulations, the Secretary shall take into consideration the administrative, paperwork, and other burdens on insurance agents, including independent insurance agents, involved in complying with the requirements of this Act and shall minimize the burdens imposed by such requirements with respect to such agents.