Part 1.
FINANCE COMMISSION OF TEXAS
Chapter 1.
CONSUMER CREDIT COMMISSIONER
Subchapter I. INSURANCE
7 TAC §1.802
The Finance Commission of Texas adopts an amendment to 7
TAC § 1.802, concerning single interest insurance for a motor vehicle.
The purpose of the amendment is to exempt motor vehicle property insurance
from the provisions of the property insurance rule. Prior to 1997 most loans
on motor vehicles were governed by Chapter 4 of the Credit Code. When Chapter
342 was adopted, it merged the old Chapter 3 and Chapter 4 provisions. The
rule §1.802 was adopted in May 1999 based upon the property insurance
provisions as they had been applied under the old Chapter 3. Although no comments
were received at the time the rule was adopted it has become apparent that
writing property insurance on motor vehicles at non-standard rates was formerly
permissible, but has been restricted by the adoption of 7 TAC §1.802.
This amendment would remove the restriction and allow motor vehicle property
insurance to be written at non-standard rates. Removing the restriction would
furthermore restore parity between financing of motor vehicles under the loan
chapter and the retail sales chapter. The amendment is adopted with non-substantive
changes to the proposal as published in the April 6, 2001, issue of the
The agency received 3 comments in support of the amendment. One comment
also suggested clarification of the proposal, by changing the word automobile
to motor vehicle. That non-substantive change is reflected in this adoption.
The amendment is adopted under the Texas Finance Code §
11.304, which authorizes the Finance Commission to adopt rules to enforce
Title 4 of the Texas Finance Code. Additionally, Texas Finance Code §342.551
grants the Consumer Credit Commissioner and the Finance Commission the authority
to interpret the provisions of Title 4, Subtitle B, in which Chapter 342 is
located.
These rules affect Chapter 342, Texas Finance Code.
§1.802.Authorized Property Insurance.
(a)
Property insurance, other than insurance covering a motor
vehicle, written in connection with a loan made under Chapter 342 must be
written at rates not in excess of the rates fixed or approved by the Texas
Department of Insurance if a rate structure has been fixed or approved for
that particular type of coverage.
(b)
If property insurance, other than insurance covering a
motor vehicle, requested or required on a loan is sold or obtained by a licensee
at a rate that is not fixed or approved by the Texas Department of Insurance,
the licensee must first obtain prior acknowledgment from the commissioner
that the coverage and the rate bear a reasonable relationship to:
(1)
the amount, term, and conditions of the loan;
(2)
the value of the collateral; and
(3)
the existing hazards or risk of loss, damage, or destruction.
(c)
Insurance, other than insurance covering a motor vehicle,
written at rates not fixed or approved by the Texas Department of Insurance
is subject to cancellation or adjustment if the insurance is not otherwise
approved by the commissioner.
(d)
If a licensee is seeking authority from the commissioner
under subsection (b) of this section for a rate not fixed or approved by the
Texas Department of Insurance, a copy of the relevant policy that is to be
issued shall be filed with the Office of Consumer Credit Commissioner, together
with any evidence that is probative on the factors listed in subsection (b)
of this section.
(e)
Property insurance written in connection with a Chapter
342 loan must be provided by a company authorized to do business in this state.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 22, 2001.
TRD-200103581
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: July 12, 2001
Proposal publication date: April 6, 2001
For further information, please call: (512) 936-7640
7 TAC §1.805
The Finance Commission of Texas adopts an amendment to 7
TAC § 1.805, concerning authorized credit insurance.
The purpose of the amendment is to add the appropriate references under
the Insurance Code that govern group debtor life and accident and health insurance.
These are equivalent products to credit life and credit disability insurance,
and thus are eligible to be written under Chapter 342. The amendment simply
acknowledges that authority. The amendment is adopted without changes to the
proposal as published in the April 6, 2001, issue of the
Texas Register
(26 TexReg 2589).
The agency received no written comments on this proposal.
The amendment is adopted under the Texas Finance Code §
11.304 and § 342.551, which authorizes the Finance Commission to adopt
rules to enforce Title 4 of the Texas Finance Code.
These rules affect Chapter 342, Texas Finance Code.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 22, 2001.
TRD-200103582
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Effective date: July 12, 2001
Proposal publication date: April 6, 2001
For further information, please call: (512) 936-7640
Chapter 91.
CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS
Subchapter H. INVESTMENTS
Part 6.
CREDIT UNION DEPARTMENT