Bill Text: TX SB111 | 2011-2012 | 82nd Legislature | Introduced
Bill Title: Relating to regulation of property and casualty insurance rates.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2011-01-31 - Referred to Business & Commerce [SB111 Detail]
Download: Texas-2011-SB111-Introduced.html
By: Davis | S.B. No. 111 | |
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relating to regulation of property and casualty insurance rates. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 706.004, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 706.004. RATES AND FORMS. Notwithstanding any other | ||
law, rates and forms for insurance coverage issued under this | ||
chapter are governed by: | ||
(1) Subchapters A-D [ |
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(2) Subchapter A, Chapter 2301; and | ||
(3) Article 5.13-2. | ||
SECTION 2. Section 912.002(c), Insurance Code, is amended | ||
to read as follows: | ||
(c) [ |
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residential [ |
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written by a county mutual insurance company is subject to Article | ||
5.13-2, [ |
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insurance company is subject to Chapter 2253. The commissioner may | ||
adopt rules as necessary to implement this subsection. | ||
SECTION 3. Section 1806.052, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 1806.052. CONSTRUCTION OF SUBCHAPTER. This subchapter | ||
may not be construed to prohibit the modification of rates by a | ||
rating plan that complies [ |
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requirements of Chapter 2251 or Article 5.13-2, as applicable, | ||
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designed to encourage the prevention of accidents, and to account | ||
for all relevant factors inside and outside this state, including | ||
the peculiar hazards and experience of past and prospective | ||
individual risks. | ||
SECTION 4. Section 2251.002(7), Insurance Code, is amended | ||
to read as follows: | ||
(7) "Supplementary rating information" means any | ||
manual, rating schedule, plan of rules, rating rules, | ||
classification systems, territory codes and descriptions, rating | ||
plans, and other similar information used by the insurer to | ||
determine the applicable premium for an insured. The term includes | ||
the number of policyholders that would be affected by the rating | ||
information change and factors and relativities, including | ||
increased limits factors, classification relativities, deductible | ||
relativities, premium discount, and other similar factors and | ||
rating plans such as experience, schedule, and retrospective | ||
rating. | ||
SECTION 5. Section 2251.003, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2251.003. APPLICABILITY OF CERTAIN SUBCHAPTERS. | ||
(a) This subchapter and Subchapters B, C, and D [ |
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(1) an insurer to which Article 5.13 applies, other | ||
than the Texas Windstorm Insurance Association, the FAIR Plan | ||
Association, and the Texas Automobile Insurance Plan Association; | ||
and | ||
(2) except as provided by Subsection (c), a Lloyd's | ||
plan, reciprocal or interinsurance exchange, and county mutual | ||
insurance company with respect to the lines of insurance described | ||
by Subsection (b). | ||
(b) This subchapter and Subchapters B, C, and D [ |
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apply to all lines of the following kinds of insurance written under | ||
an insurance policy or contract issued by an insurer authorized to | ||
engage in the business of insurance in this state: | ||
(1) general liability insurance; | ||
(2) residential and commercial property insurance, | ||
including farm and ranch insurance and farm and ranch owners | ||
insurance; | ||
(3) personal and commercial casualty insurance, | ||
except as provided by Section 2251.004; | ||
(4) medical professional liability insurance; | ||
(5) fidelity, guaranty, and surety bonds other than | ||
criminal court appearance bonds; | ||
(6) personal umbrella insurance; | ||
(7) personal liability insurance; | ||
(8) guaranteed auto protection (GAP) insurance; | ||
(9) involuntary unemployment insurance; | ||
(10) financial guaranty insurance; | ||
(11) inland marine insurance; | ||
(12) rain insurance; | ||
(13) hail insurance on farm crops; | ||
(14) personal and commercial automobile insurance; | ||
(15) multi-peril insurance; and | ||
(16) identity theft insurance issued under Chapter | ||
706. | ||
(c) Sections 2251.008, 2251.052, 2251.101, 2251.102, | ||
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Lloyd's plan or a reciprocal or interinsurance exchange with | ||
respect to commercial property insurance, inland marine insurance, | ||
rain insurance, or hail insurance on farm crops. | ||
SECTION 6. Section 2251.101(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) For [ |
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written in this state, each insurer shall file with the | ||
commissioner all rates, applicable rating manuals, supplementary | ||
rating information, and additional information as required by the | ||
commissioner. | ||
SECTION 7. The heading of Subchapter D, Chapter 2251, | ||
Insurance Code, is amended to read as follows: | ||
SUBCHAPTER D. PRIOR APPROVAL OF RATES [ |
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SECTION 8. Section 2251.151, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2251.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL | ||
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for a personal automobile insurance policy or a residential | ||
property insurance policy until the rate has been filed with the | ||
department in accordance with Subchapter C and approved by the | ||
commissioner in accordance with this subchapter. | ||
(b) For all rates that are not included in Subsection (a), | ||
the [ |
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the department for the commissioner's approval all rates, | ||
supplementary rating information, and any supporting information | ||
in accordance with this subchapter if the commissioner determines | ||
that: | ||
(1) the insurer's rates require supervision because of | ||
the insurer's financial condition or rating practices; or | ||
(2) a statewide insurance emergency exists. | ||
(c) [ |
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subsection (a) or (b) files a petition under Subchapter D, Chapter | ||
36, for judicial review of an order disapproving a rate under this | ||
chapter, the insurer must use the rates in effect for the insurer at | ||
the time the petition is filed and may not file and use any higher | ||
rate for the same line of insurance subject to this chapter before | ||
the matter subject to judicial review is finally resolved unless | ||
the insurer, in accordance with this subchapter, files the new rate | ||
with the department, along with any applicable supplementary rating | ||
information and supporting information, and obtains the | ||
commissioner's approval of the rate. | ||
(d) [ |
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filed with the department under this section to the effective date | ||
of the new rate, the insurer's previously filed rate that is in | ||
effect on the date of the filing remains in effect. | ||
(e) [ |
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the insurer's rates under Subsection (b) [ |
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commissioner determines that the conditions described by that | ||
subsection [ |
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(f) [ |
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filed with the department on the date [ |
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necessary to evaluate the rate has been received by the department. | ||
(g) [ |
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the insurer's rates under Subsection (b) [ |
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commissioner shall issue an order specifying the commissioner's | ||
reasons for requiring the rate filing. An affected insurer is | ||
entitled to a hearing on written request made to the commissioner | ||
not later than the 30th day after the date the order is issued. | ||
SECTION 9. Section 2251.152, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2251.152. [ |
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CERTAIN RATE APPROVAL REQUIREMENTS. (a) After [ |
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[ |
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required of an insurer under Section 2251.151(b) is approved under | ||
this subchapter, the [ |
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commissioner, may use any rate subsequently filed by the insurer if | ||
the subsequently filed rate does not exceed the lesser of: | ||
(1) 107.5 percent of the rate approved by the | ||
commissioner; or | ||
(2) 110 percent of any rate used by the insurer in the | ||
previous 12-month period. | ||
(b) [ |
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effect on the date specified by the insurer. | ||
SECTION 10. Section 2251.153, Insurance Code, is amended to | ||
read as follows: | ||
(a) Not later than the 60th [ |
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is filed with the department under this subchapter, the | ||
commissioner shall: | ||
(1) approve the rate if the commissioner determines | ||
that the rate complies with the requirements of this chapter and any | ||
other provision of this code governing the setting of the rate by | ||
the insurer; or | ||
(2) disapprove the rate if the commissioner determines | ||
that the rate does not comply with the requirements of this chapter | ||
or any other provision of this code governing the setting of the | ||
rate by the insurer. | ||
(b) Except as provided by Subsection (c), if a rate has not | ||
been approved or disapproved by the commissioner before the | ||
expiration of the 60 [ |
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the rate is considered approved and the insurer may use the rate | ||
unless the rate proposed in the filing represents an increase of | ||
12.5 percent or more from the insurer's previously filed rate. | ||
(c) For good cause, the commissioner may, on the expiration | ||
of the 60 [ |
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period for approval or disapproval of a rate for a [ |
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30-day period. [ |
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SECTION 11. Section 2251.156, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER; | ||
HEARING. (a) The commissioner shall disapprove a rate filing if | ||
the commissioner determines that the rate filing made under this | ||
chapter does not meet the standards under Subchapter B. | ||
(b) [ |
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under this chapter [ |
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shall issue an order specifying in what respects the filing fails to | ||
meet the requirements of this chapter or another provision of this | ||
code applicable to the setting of the rate by the insurer | ||
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(c) [ |
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entitled to a hearing on written request made to the commissioner | ||
not later than the 30th day after the date the order disapproving | ||
the rate filing takes effect [ |
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SECTION 12. Section 2251.104, Insurance Code, is | ||
transferred to Subchapter D, Chapter 2251, Insurance Code, and | ||
redesignated as Section 2251.157 to read as follows: | ||
Sec. 2251.157 [ |
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HEARING. (a) The commissioner may disapprove a rate that is in | ||
effect only after a hearing. The commissioner shall provide the | ||
filer at least 20 days' written notice. | ||
(b) The commissioner must issue an order disapproving a rate | ||
under Subsection (a) not later than the 15th day after the close of | ||
the hearing. The order must: | ||
(1) specify in what respects the rate fails to meet the | ||
requirements of this chapter; and | ||
(2) state the date on which further use of the rate is | ||
prohibited, which may not be earlier than the 45th day after the | ||
close of the hearing under this section. | ||
SECTION 13. The following provisions of the Insurance Code | ||
are repealed: | ||
(1) Section 2251.103; | ||
(2) Section 2251.155; | ||
(3) Subchapter E, Chapter 2251. | ||
SECTION 14. The commissioner of insurance shall adopt all | ||
rules necessary to implement this Act on or before December 1, 2011. | ||
SECTION 15. The change in law made by this Act applies to | ||
insurance policies delivered, issued for delivery, or renewed on or | ||
after January 1, 2012, and to rates for those policies. An | ||
insurance policy delivered, issued for delivery, or renewed before | ||
January 1, 2012, and rates for the policy are governed by the law as | ||
it existed immediately before the effective date of this Act, and | ||
that law is continued in effect for that purpose. | ||
SECTION 16. This Act takes effect September 1, 2011. |