B-0038-04

To: ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS WRITING AUTOMOBILE INSURANCE IN THE STATE OF TEXAS AND TO THEIR AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY

Re: Personal Auto Liability Insurance/Lack of Prior Insurance 28 TAC §5.401 and Military Personnel

Letter from the Commissioner
Insurance Coverage for Deployed and Returning
U.S. Armed Forces Personnel

The Commissioner of Insurance urges insurers and insurance producers to avoid placing additional burdens and hardships upon members of the Armed Forces of the United States (U.S.) who are about to be deployed and those returning from active military service. The Commissioner urges insurers and insurance producers to favorably consider the tremendous service and the sacrifices that these policyholders and their families are providing and to give every courtesy and reasonable consideration to maintaining the insurer/policyholder relationship. These members of the Armed Forces and their families should not be penalized for the services they have and are providing.

The Commissioner further advises that in addition to the laws of this state, policyholders who are members of the U.S. Armed Forces have rights and privileges pursuant to the Servicemembers Civil Relief Act, (HR 100) as amended by the 108 U.S. Congress and signed by the President of the U. S. on December 19, 2003 (the Act). Insurers and insurance producers should review the Act to ensure that their actions are not incompatible with the provisions of the Act. The Act may be found at: http://usmilitary.about.com/library/milinfo/scra/blscramenu.htm.

I also encourage insurers and insurance producers to review the following relevant regulation regarding underwriting treatment of applicants for private passenger automobile liability insurance.

28 Texas Administrative Code §5.401 - Temporary and Permanent Requirements Regarding Underwriting Treatment of and Disclosure to Applicants for Private Passenger Automobile Liability Insurance
http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=28&pt=1&ch=5&rl=401

For your use and convenience a copy of the bulletin relating to 28 TAC §5.401 is on the reverse side of this letter.

Sincerely,

José Montemayor
Commissioner of Insurance

Attachment

August 26, 2004

COMMISSIONER'S BULLETIN NO. B-0038-04

TO ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS WRITING AUTOMOBILE INSURANCE IN THE STATE OF TEXAS AND TO THEIR AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY

RE: Personal Auto Liability Insurance/Lack of Prior Insurance 28 TAC §5.401 and Military Personnel

This bulletin is sent to remind insurers, agents, and others of a provision in Title 28, Texas Administrative Code, Section 5.401(b) (28 TAC §5.401(b)) that has been in effect since September 24, 1992. This provision provides that insurers may not use an applicant's lack of prior insurance in determining the appropriate rate for "private passenger automobile" (personal auto) insurance if the applicant has not been operating an uninsured auto in this state for more than 30 days during the 12 months immediately preceding the date of the application.

An example of a violation of this provision would be an insurance group's placement of an applicant in a company with higher rates than the applicant would be charged if not for a gap in coverage resulting from active duty in the military.

Any insurer violating this rule is subject to sanctions, including those set forth in Insurance Code Chapters 82, 83, and 84.

Questions regarding this bulletin may be directed to Grover Corum, Manager, Personal Automobile/Homeowners Division at 512-322-3430 or Grover.Corum@tdi.state.tx.us.

JOSÉ MONTEMAYOR
COMMISSIONER OF INSURANCE