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No significant fiscal implication to the State is anticipated.
HB 1060 would make several changes to Chapter 4102 (Public Insurance Adjusters) of the Insurance Code. This legislation would repeal Section 4102.069 (Registration Program for Trainees). Inconjunction with repealing that section, this legislation would also remove the adjuster trainee certificate program and associated fee.
HB 1060 would prohibit an insurance adjuster from entering into a contract with an insured without the intent of actually performing the services normally provided by an adjuster. In other words, an adjuster could not enter into a contract with an insured just to refer the insured to a third party (such as an attorney) for money. However, this would not prohibit an adjuster from recommending a particular attorney or third-party to an insured.
The author's statement of intent is well worth reading to get the background on why SB 1060 is under consideration by the legislature:
"Dozens of lawsuits are filed against property insurance companies everyday day across Texas alleging underpayment of hail damage claims. Thousands of these lawsuits are presently pending in courts across the state—predominately in Hidalgo, Dallas, Tarrant, and Potter counties— all locations where significant hail storms have occurred over the past few years.
Typically these lawsuits originate with a public adjuster knocking on a property owner's door with promises of a "free roof" because of hail damage. As long as the roof is old, it likely exhibits characteristics that can be alleged to have resulted from hail impact. These public adjusters work to demonstrate to the insurance company that there exists damage resulting from hail impact in an attempt to reasonably resolve the claim.
Other public adjusters, however, simply act as conduits for lawyers. These public adjusters have no intention of adjusting the claim, but instead simply immediately refer their property owner clients to a lawyer. In fact, some public adjusters ask the homeowner to sign a lawyer contract simultaneously with execution of the public adjuster contract. That contract provides the lawyer with a 30 to 40 percent contingency fee payable out of any insurance proceeds obtained.
There is an emerging industry in Texas of public adjusters taking advantage of insurance claims for significant personal financial gain, specifically in hail storm situations."
This is clearly a situation involving a deceptive and predatory business practice. While it is unclear that the provisions of this legislation are the best solution to the problem this is a legitimate issue for the legislature to consider because of the impact it has on insurance rates for homeowners statewide. Balancing the increased regulation created by this legislation against the property rights protections of homeowners we are neutral on HB 1060.