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 Bank-
ing 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Insurance Disclosure
Act of 1995’’.
SEC. 2. DISCLOSURES BY INSURERS TO APPLICANTS.
(a) REQUIREMENT TO PROVIDE WRITTEN EXPLA-
NATION OR NOTICE OF DECLINATION.—The Secretary of
Housing and Urban Development shall, by regulation, re-
quire 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 dec-
lination, 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 re-
ceipt 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 pro-
vide a written explanation referred to in such subsection
within such 21-day period.
SEC. 3. DISCLOSURES BY INSURERS TO POLICYHOLDERS.
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 Sec-
retary, the reasons for canceling or refusing to renew the
policy.
SEC. 4. CONSIDERATION OF MODEL ACTS.
In issuing regulations under sections 2 and 3, the
Secretary shall consider relevant portions of model acts
developed by the National Association of Insurance Com-
missioners.
SEC. 5. EFFECT ON STATE LAWS.
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 de-
termine whether such inconsistencies exist and to resolve
issues regarding such inconsistencies. The Secretary may
not provide that any State law or requirement is inconsist-
ent with section 2 or 3 if it imposes requirements equiva-
lent to the requirements under such sections or require-
ments that are more stringent or comprehensive, in the
determination of the Secretary.
SEC. 6. IMMUNITY.
In issuing regulations under sections 2 and 3, the
Secretary shall specifically consider the necessity of pro-
viding 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 insur-
ance 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 inter-
est, except that the Secretary may not provide immunity
for any conduct that is negligent, reckless, or willful.
SEC. 7. DESIGNATION OF LINES OF INSURANCE.
(a) IN GENERAL.—The Secretary shall, by regula-
tion, designate lines of insurance as designated lines for
purposes of this Act, as follows:
(1) AUTOMOBILE.—The Secretary shall des-
ignate 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
RESI-
DENTIAL 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 re-
placement value, as the Secretary considers appro-
priate for purposes of this Act. For purposes of this
Act, homeowners insurance shall not include any
renters coverage or coverage for the personal prop-
erty 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 rec-
ommending designating such line of insurance as a des-
ignated line for purposes of this Act.
(c) DURATION.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall make the designations
under this section once every 5 years, by regulation,
and each line and subline or coverage type des-
ignated 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 re-
quirements of this section. Such regulations amend-
ing 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 informa-
tion as the Secretary considers necessary to make designa-
tions specifically required under this section. The Sec-
retary 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).
SEC. 8. STATE ENFORCEMENT.
The Secretary may authorize the States to enforce
the requirements under regulations issued under sections
2 and 3.
SEC. 9. ENFORCEMENT.
(a) CIVIL PENALTIES.—Any insurer who is deter-
mined 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 viola-
tion continues.
(b) INJUNCTION.—The Secretary may bring an ac-
tion in an appropriate United States district court for ap-
propriate declaratory and injunctive relief against any in-
surer who violates the requirements referred to in sub-
section (a).
SEC. 10. DEFINITIONS.
For purposes of this Act:
(1) AGENT.—The term ‘‘agent’’ means, with re-
spect 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 ex-
clusively for the insurer, and agents who are inde-
pendent contractors appointed to represent the in-
surer 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, com-
pany, mutual, partnership, individual, aggregation of
individuals, or any other legal entity that is author-
ized to transact the business of property or casualty
insurance in any State or that is engaged in a prop-
erty 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, in-
surance against loss of income or extra expense in-
curred because of loss of, or damage to, property,
and insurance against third party liability claims
caused by negligence or imposed by statute or con-
tract. Such term does not include workers’ com-
pensation, 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 Ter-
ritory of the Pacific Islands.
SEC. 11. REGULATIONS.
(a) IN GENERAL.—The Secretary shall issue any reg-
ulations required under this Act and any other regulations
that may be necessary to carry out this Act. The regula-
tions 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, includ-
ing 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.
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