I

104TH CONGRESS

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.

IN THE HOUSE OF REPRESENTATIVES

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

A BILL

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Insurance Disclosure

5 Act of 1995’’.
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1 SEC. 2. DISCLOSURES BY INSURERS TO APPLICANTS.

2 (a) REQUIREMENT TO PROVIDE WRITTEN EXPLA3 NATION OR NOTICE OF DECLINATION.—The Secretary of

4 Housing and Urban Development shall, by regulation, re5 quire that each insurer who, through the insurer, or an

6 agent or broker, declines a written application or written

7 request to issue an insurance policy under a designated

8 line shall provide to the applicant at the time of such dec9 lination, through such insurer, agent, or broker, one of

10 the following:

11 (1) A written explanation of the specific reasons

12 for the declination.

13 (2) Written notice that (A) the applicant may

14 submit to the insurer, agent, or broker, within 90

15 days of such notice, a written request for a written

16 explanation of the reasons for the declination, and

17 (B) pursuant to such a request, an explanation shall

18 be provided to the applicant within 21 days after re19 ceipt of such request.

20 (b) RESPONSE TO REQUEST FOR EXPLANATION.—If

21 an insurer, agent, or broker making a declination receives

22 a written request referred to in subsection (a)(2) within

23 such 90-day period, the insurer, agent, or broker shall pro24 vide a written explanation referred to in such subsection

25 within such 21-day period.
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1 SEC. 3. DISCLOSURES BY INSURERS TO POLICYHOLDERS.

2 The Secretary of Housing and Urban Development

3 shall, by regulation, require that each insurer who cancels

4 or refuses to renew an insurance policy under a designated

5 line shall provide to the policyholder, in writing and within

6 an appropriate period of time as determined by the Sec7 retary, the reasons for canceling or refusing to renew the

8 policy.

9 SEC. 4. CONSIDERATION OF MODEL ACTS.

10 In issuing regulations under sections 2 and 3, the

11 Secretary shall consider relevant portions of model acts

12 developed by the National Association of Insurance Com13 missioners.

14 SEC. 5. EFFECT ON STATE LAWS.

15 Sections 2 and 3 shall not be construed to annul,

16 alter, or effect, or exempt any insurer, agent, or broker

17 subject to the provisions of such sections from complying

18 with any laws or requirements of any State with respect

19 to notifying insurance applicants or policyholders of the

20 reasons for declination or cancellation of, or refusal to

21 renew insurance, except to the extent that such laws or

22 requirements are inconsistent with such sections (or the

23 regulations issued thereunder) and then only to the extent

24 of such inconsistency. The Secretary is authorized to de25 termine whether such inconsistencies exist and to resolve

26 issues regarding such inconsistencies. The Secretary may
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1 not provide that any State law or requirement is inconsist2 ent with section 2 or 3 if it imposes requirements equiva3 lent to the requirements under such sections or require4 ments that are more stringent or comprehensive, in the

5 determination of the Secretary.

6 SEC. 6. IMMUNITY.

7 In issuing regulations under sections 2 and 3, the

8 Secretary shall specifically consider the necessity of pro9 viding insurers, agents, and brokers immunity solely for

10 the act of conveying or communicating the reasons for a

11 declination or cancellation of, or refusal to renew insur12 ance on behalf of a principal making such decision. The

13 Secretary may provide for immunity under the regulations

14 issued under sections 2 and 3 if the Secretary determines

15 that such a provision is necessary and in the public inter16 est, except that the Secretary may not provide immunity

17 for any conduct that is negligent, reckless, or willful.

18 SEC. 7. DESIGNATION OF LINES OF INSURANCE.

19 (a) IN GENERAL.—The Secretary shall, by regula20 tion, designate lines of insurance as designated lines for

21 purposes of this Act, as follows:

22 (1) AUTOMOBILE.—The Secretary shall des23 ignate private passenger automobile insurance and

24 shall also designate any sublines and coverage types

25 of private passenger automobile insurance that the
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1 Secretary considers appropriate for purposes of this

2 Act.

3 (2) NONCOMMERCIAL INSURANCE FOR RESI4 DENTIAL PROPERTY.—The Secretary shall designate

5 homeowners insurance and dwelling fire and allied

6 lines, and shall distinguish the coverage types in

7 such lines by the perils covered and by market or re8 placement value, as the Secretary considers appro9 priate for purposes of this Act. For purposes of this

10 Act, homeowners insurance shall not include any

11 renters coverage or coverage for the personal prop12 erty of a condominium owner.

13 (b) REPORT.—At any time the Secretary determines

14 that any line of insurance not described in subsection (a)

15 should be a designated line because disparities in coverage

16 provided under such line exist among geographic areas

17 having different income levels or racial composition, the

18 Secretary shall submit a report to the Congress rec19 ommending designating such line of insurance as a des20 ignated line for purposes of this Act.

21 (c) DURATION.—

22 (1) IN GENERAL.—Except as provided in para23 graph (2), the Secretary shall make the designations

24 under this section once every 5 years, by regulation,

25 and each line and subline or coverage type des-
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1 ignated under such regulations shall be designated

2 for the 5-year period beginning upon the issuance

3 of such regulations.

4 (2) ALTERATION.—During any 5-year period

5 referred to in paragraph (1) in which designations

6 are in effect, the Secretary may amend or revise the

7 designated lines, sublines, and coverage types only

8 by regulation and only in accordance with the re9 quirements of this section. Such regulations amend10 ing or revising designations shall apply only to that

11 portion of the 5-year period during which such

12 amendment or revision is made that remains after

13 the expiration of the 6-month period beginning on

14 the date of issuance of the regulations.

15 (d) TIMING OF DESIGNATIONS.—The Secretary shall

16 make the designations required by subsection (c)(1) and

17 notify interested parties during the 6-month period ending

18 6 months before the commencement of the 5-year period

19 to which such designations apply.

20 (e) OBTAINING INFORMATION.—The Secretary may

21 require insurers to submit to the Secretary such informa22 tion as the Secretary considers necessary to make designa23 tions specifically required under this section. The Sec24 retary may not require insurers to submit any information

25 under this subsection that relates to any line of insurance
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1 not specifically authorized to be designated pursuant to

2 this section or that is to be used solely for the purpose

3 of a report under subsection (b).

4 SEC. 8. STATE ENFORCEMENT.

5 The Secretary may authorize the States to enforce

6 the requirements under regulations issued under sections

7 2 and 3.

8 SEC. 9. ENFORCEMENT.

9 (a) CIVIL PENALTIES.—Any insurer who is deter10 mined by the Secretary, after providing opportunity for

11 a hearing on the record, to have violated any requirement

12 pursuant to this Act shall be subject to a civil penalty of

13 not to exceed $5,000 for each day during which such viola14 tion continues.

15 (b) INJUNCTION.—The Secretary may bring an ac16 tion in an appropriate United States district court for ap17 propriate declaratory and injunctive relief against any in18 surer who violates the requirements referred to in sub19 section (a).

20 SEC. 10. DEFINITIONS.

21 For purposes of this Act:

22 (1) AGENT.—The term ‘‘agent’’ means, with re23 spect to an insurer, an agent licensed by a State

24 who sells property and casualty insurance. The term

25 includes agents who are employees of the insurer,
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1 agents who are independent contractors working ex2 clusively for the insurer, and agents who are inde3 pendent contractors appointed to represent the in4 surer on a nonexclusive basis.

5 (2) DESIGNATED LINE.—The term ‘‘designated

6 line’’ means a line of insurance designated by the

7 Secretary under section 7.

8 (3) INSURANCE.—The term ‘‘insurance’’ means

9 property and casualty insurance. Such term includes

10 primary insurance, surplus lines insurance, and any

11 other arrangement for the shifting and distributing

12 of risks that is determined to be insurance under the

13 law of any State in which the insurer or insurer

14 group engages in an insurance business.

15 (4) INSURER.—The term ‘‘insurer’’ means any

16 corporation, association, society, order, firm, com17 pany, mutual, partnership, individual, aggregation of

18 individuals, or any other legal entity that is author19 ized to transact the business of property or casualty

20 insurance in any State or that is engaged in a prop21 erty or casualty insurance business. The term does

22 not include an individual or entity which represents

23 an insurer as agent solely for the purpose of selling

24 or which represents a consumer as a broker solely

25 for the purpose of buying insurance.
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1 (5) PROPERTY AND CASUALTY INSURANCE.—

2 The term ‘‘property and casualty insurance’’ means

3 insurance against loss of or damage to property, in4 surance against loss of income or extra expense in5 curred because of loss of, or damage to, property,

6 and insurance against third party liability claims

7 caused by negligence or imposed by statute or con8 tract. Such term does not include workers’ com9 pensation, professional liability, or title insurance.

10 (6) SECRETARY.—The term ‘‘Secretary’’ means

11 the Secretary of Housing and Urban Development.

12 (7) STATE.—The term ‘‘State’’ means any

13 State, the District of Columbia, the Commonwealth

14 of Puerto Rico, the Northern Mariana Islands, the

15 Virgin Islands, American Samoa, and the Trust Ter16 ritory of the Pacific Islands.

17 SEC. 11. REGULATIONS.

18 (a) IN GENERAL.—The Secretary shall issue any reg19 ulations required under this Act and any other regulations

20 that may be necessary to carry out this Act. The regula21 tions shall be issued through rulemaking in accordance

22 with the procedures under section 553 of title 5, United

23 States Code, for substantive rules. Except as otherwise

24 provided in this Act, the final regulations to carry out this

25 Act shall be issued not later than the expiration of the
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1 18-month period beginning on the date of the enactment

2 of this Act and shall take effect upon issuance.

3 (b) BURDENS.—In prescribing such regulations, the

4 Secretary shall take into consideration the administrative,

5 paperwork, and other burdens on insurance agents, includ6 ing independent insurance agents, involved in complying

7 with the requirements of this Act and shall minimize the

8 burdens imposed by such requirements with respect to

9 such agents.

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