Proposed Action on Rules
EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE CHAPTER 5, SUBCHAPTER
L, ARTICLE 5.96
Notice is given that the Commissioner of Insurance will consider a proposal
made in a staff petition which seeks amendments of the Texas Automobile Rules
and Rating Manual (the Manual), Rule 141, Rental Car Companies. Staff's petition
(Ref. No. A-0603-13-I), was filed on June 13, 2003.
Staff proposes amending Manual Rule 141 to remove the requirement that
an employee of a rental car company or its franchisee verbally inform a prospective
renter that he or she may already have an insurance policy that duplicates
the coverage that would be provided by the policy (automobile rental liability
insurance) offered by the rental car company. Staff also proposes to eliminate
the requirement that such an employee verbally inform the prospective renter
that the purchase of automobile rental liability insurance is not required
as a condition of renting an automobile. The rule's requirements for written
disclosures would not be changed, and Staff's proposal would eliminate only
the verbal disclosure requirements.
Former Insurance Code Article 21.07, Section 21(i) required a rental car
company or franchisee licensed pursuant to that section to conduct a training
program to be submitted to the Commissioner of Insurance for approval, and
the program was required to meet certain minimum standards. One standard was
that the trainee would be "instructed to acknowledge to a prospective renter"
that the renter may have insurance policies that already provide the coverage
being offered by the rental car company. The statute also provided that the
trainee would be instructed "to acknowledge" that the purchase of automobile
rental liability insurance is not required for renting a vehicle.
Former Insurance Code Article 21.07, Section 21(g)(2) set forth requirements
for written disclosures at every rental car location. Those requirements included
similar wording to that previously mentioned in Section 21(i), as well as
numerous other provisions. Manual Rule 141, adopted effective May 30, 1998
by Commissioner's Order No. 98-0513, currently requires verbal disclosure
and written disclosure to a prospective customer that automobile rental liability
insurance may duplicate existing coverage, and that it is not required for
the rental transaction.
Former Insurance Code Article 21.07, Section 21 was repealed effective
September 1, 1999, and it was in essence replaced by Insurance Code Article
21.09, effective on that same date. Article 21.09, Section 1(d), contains
some provisions similar to former Article 21.07, Section 21(i), such as the
standard that "each trainee must be instructed to inform a prospective customer
that ...the purchase of insurance specified in this article is not required
in order to complete the associated consumer transaction...." However, there
is no longer a statutory requirement for disclosure regarding duplicate coverage,
other than in Article 21.09(g), which specifically pertains to written disclosures
only.
Staff believes that Insurance Code Article 21.09, Section 1(d) may be interpreted
as not mandating verbal disclosure that the purchase of automobile rental
liability insurance is optional in the rental transaction, provided that disclosure
is made in writing, as required by Article 21.09, Section 1(g). That interpretation
is possible because the requirement "to inform" in Article 21.09, Section
1(d)(2) may be construed to be satisfied by disclosure in writing.
Certain rental car companies on January 13, 2003 filed a petition with
the Department (Ref. No. A-0103-02), asserting that the verbal disclosure
requirements of Manual 141 "do not have any consumer benefit," that they "unnecessarily
delay the rental transaction," and that they create problems with consistency.
The petition also asserts that no other state requires both verbal and written
disclosures of this nature, and that the other states require only written
disclosures. Considering the foregoing factors, staff recommends deleting
the verbal disclosure requirements from Manual Rule 141.
A copy of the petition, with the full text of the proposed amendments to
the Manual is available for review in the office of the Chief Clerk of the
Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further
information or to request copies of the petition, please contact Sylvia Gutierrez
at (512) 463-6327; refer to (Ref. No. A-0603-13-I).
Comments on the proposed changes must be submitted in writing no later
than 5:00 p.m. on July 28, 2003 to the Office of the Chief Clerk, Texas Department
of Insurance, P.O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional
copy of comments is to be simultaneously submitted to Marilyn Hamilton, Associate
Commissioner, Property & Casualty Program, Texas Department of Insurance,
P.O. Box 149104, MC 104-PC, Austin, Texas 78714-9104.
A public hearing on this matter will not be held unless a separate request
for a hearing is submitted to the Office of the Chief Clerk during the comment
period defined above.
This notification is made pursuant to Insurance Code Article 5.96, which
exempts it from the requirements of the Government Code, Chapter 2001 (Administrative
Procedure Act).
TRD-200303709
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: June 16, 2003