Texas 2009 - 81st Regular

Texas House Bill HB1594 Compare Versions

Only one version of the bill is available at this time.

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1	1	By: Anchia H.B. No. 1594
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to regulation of property and casualty insurance rates.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 912.002(c), Insurance Code, as effective
9	9	April 1, 2009, is amended to read as follows:
10	10	(c) [Rate regulation for a residential fire and allied lines
11	11	insurance policy written by a county mutual insurance company is
12	12	subject to Chapter 2253.] Rate [On and after December 1, 2004,
13	13	rate] regulation for a personal automobile insurance policy and a
14	14	residential [fire and allied lines] property insurance policy
15	15	written by a county mutual insurance company is subject to Article
16	16	5.13-2, and Chapter 2251, and Chapter 2253. A county mutual
17	17	insurance company is subject to Chapter 2253. The commissioner may
18	18	adopt rules as necessary to implement this subsection.
19	19	SECTION 2. Section 1806.052, Insurance Code, is amended to
20	20	read as follows:
21	21	Sec. 1806.052. CONSTRUCTION OF SUBCHAPTER. This subchapter
22	22	may not be construed to prohibit the modification of rates by a
23	23	rating plan that complies [is filed in accordance] with the
24	24	requirements of Chapter 2251 or Article 5.13-2, as applicable,
25	25	[that has not been disapproved by the commissioner,] and that is
26	26	designed to encourage the prevention of accidents, and to account
27	27	for all relevant factors inside and outside this state, including
28	28	the peculiar hazards and experience of past and prospective
29	29	individual risks.
30	30	SECTION 3. Section 2251.002(7), Insurance Code, is amended
31	31	to read as follows:
32	32	(7) "Supplementary rating information" means any
33	33	manual, rating schedule, plan of rules, rating rules,
34	34	classification systems, territory codes and descriptions, rating
35	35	plans, and other similar information used by the insurer to
36	36	determine the applicable premium for an insured. The term includes
37	37	the number of policyholders that would be affected by the rating
38	38	information change and factors and relativities, including
39	39	increased limits factors, classification relativities, deductible
40	40	relativities, premium discount, and other similar factors and
41	41	rating plans such as experience, schedule, and retrospective
42	42	rating.
43	43	SECTION 4. Section 2251.003(c), Insurance Code, is amended
44	44	to read as follows:
45	45	(c) Sections 2251.008, 2251.052, 2251.101, 2251.102,
46	46	[2251.103,] 2251.104, 2251.105, and 2251.107 do not apply to a
47	47	Lloyd's plan or a reciprocal or interinsurance exchange with
48	48	respect to commercial property insurance, inland marine insurance,
49	49	rain insurance, or hail insurance on farm crops.
50	50	SECTION 5. Section 2251.101(a), Insurance Code, is amended
51	51	to read as follows:
52	52	(a) For [Except as provided by Subchapter D, for] risks
53	53	written in this state, each insurer shall file with the
54	54	commissioner all rates, applicable rating manuals, supplementary
55	55	rating information, and additional information as required by the
56	56	commissioner.
57	57	SECTION 6. The heading of Subchapter D, Chapter 2251,
58	58	Insurance Code, is amended to read as follows:
59	59	SUBCHAPTER D. PRIOR APPROVAL OF RATES [UNDER CERTAIN
60	60	CIRCUMSTANCES]
61	61	SECTION 7. Section 2251.151, Insurance Code, is amended to
62	62	read as follows:
63	63	Sec. 2251.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL
64	64	[UNDER CERTAIN CIRCUMSTANCES]. (a) An insurer may not use a rate
65	65	for a personal automobile insurance policy or a residential
66	66	property insurance policy until the rate has been filed with the
67	67	department in accordance with Subchapter C and approved by the
68	68	commissioner in accordance with this subchapter. This subsection
69	69	does not apply to a county mutual insurance company with respect to
70	70	personal automobile insurance rates.
71	71	(b) For rates applicable to personal automobile insurance
72	72	policies offered by county mutual insurance companies and for all
73	73	other rates that are not included in Subsection (a), the [The]
74	74	commissioner by order may require an insurer to file with the
75	75	department for the commissioner's approval all rates,
76	76	supplementary rating information, and any supporting information
77	77	in accordance with this subchapter if the commissioner determines
78	78	that:
79	79	(1) the insurer's rates require supervision because of
80	80	the insurer's financial condition or rating practices; or
81	81	(2) a statewide insurance emergency exists.
82	82	(c) [(a-1)] If an insurer subject to an order under
83	83	Subsection (b) files a petition under Subchapter D, Chapter 36, for
84	84	judicial review of an order disapproving a rate under this chapter,
85	85	the insurer must use the rates in effect for the insurer at the time
86	86	the petition is filed and may not file and use any higher rate for
87	87	the same line of insurance subject to this chapter before the matter
88	88	subject to judicial review is finally resolved unless the insurer,
89	89	in accordance with this subchapter, files the new rate with the
90	90	department, along with any applicable supplementary rating
91	91	information and supporting information, and obtains the
92	92	commissioner's approval of the rate.
93	93	(d) [(b)] From the date a [of the filing of the] rate is
94	94	filed with the department under this section to the effective date
95	95	of the new rate, the insurer's previously filed rate that is in
96	96	effect on the date of the filing remains in effect.
97	97	(e) [(c)] The commissioner may require an insurer to file
98	98	the insurer's rates under Subsection (b) [this section] until the
99	99	commissioner determines that the conditions described by that
100	100	subsection [Subsection (a)] no longer exist.
101	101	(f) [(d)] For purposes of this chapter [section], a rate is
102	102	filed with the department on the date [the department receives the
103	103	rate filing] the commissioner determines that all information
104	104	necessary to evaluate the rate has been received by the department.
105	105	(g) [(e)] If the commissioner requires an insurer to file
106	106	the insurer's rates under Subsection (b) [this section], the
107	107	commissioner shall issue an order specifying the commissioner's
108	108	reasons for requiring the rate filing. An affected insurer is
109	109	entitled to a hearing on written request made to the commissioner
110	110	not later than the 30th day after the date the order is issued.
111	111	SECTION 8. Section 2251.152, Insurance Code, is amended to
112	112	read as follows:
113	113	Sec. 2251.152. [RATE APPROVAL REQUIRED;] EXCEPTION TO
114	114	CERTAIN RATE APPROVAL REQUIREMENTS. (a) After [An insurer subject
115	115	to this subchapter may not use a rate until the rate has been filed
116	116	with the department and approved by the commissioner in accordance
117	117	with this subchapter.
118	118	[(b) Notwithstanding Subsection (a), after] a rate filing
119	119	required of an insurer under Section 2251.151(b) is approved under
120	120	this subchapter, the [an] insurer, without prior approval of the
121	121	commissioner, may use any rate subsequently filed by the insurer if
122	122	the subsequently filed rate does not exceed the lesser of:
123	123	(1) 107.5 percent of the rate approved by the
124	124	commissioner; or
125	125	(2) 110 percent of any rate used by the insurer in the
126	126	previous 12-month period.
127	127	(b) [(c)] Filed rates under Subsection (a) [(b)] take
128	128	effect on the date specified by the insurer.
129	129	SECTION 9. Section 2251.153, Insurance Code, is amended to
130	130	read as follows:
131	131	(a) Not later than the 120th [30th] day after the date a rate
132	132	is filed with the department under this subchapter, the
133	133	commissioner shall:
134	134	(1) approve the rate if the commissioner determines
135	135	that the rate complies with the requirements of this chapter and any
136	136	other provision of this code governing the setting of the rate by
137	137	the insurer; or
138	138	(2) disapprove the rate if the commissioner determines
139	139	that the rate does not comply with the requirements of this chapter
140	140	or any other provision of this code governing the setting of the
141	141	rate by the insurer.
142	142	(b) Except as provided by Subsection (c), if a rate has not
143	143	been approved or disapproved by the commissioner before the
144	144	expiration of the 120 [30]-day period described in Subsection (a),
145	145	the rate is considered approved and the insurer may use the rate
146	146	unless the rate proposed in the filing represents an increase of
147	147	12.5 percent or more from the insurer's previously filed rate.
148	148	(c) For good cause, the commissioner may, on the expiration
149	149	of the 120 [30]-day period described by Subsection (a), extend the
150	150	period for approval or disapproval of a rate for a [one additional]
151	151	30-day period [The commissioner and the insurer may not by
152	152	agreement extend the 30-day period described in Subsection (a)].
153	153	SECTION 10. Section 2251.156, Insurance Code, is amended to
154	154	read as follows:
155	155	Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
156	156	HEARING. (a) The commissioner shall disapprove a rate filing if
157	157	the commissioner determines that the rate filing made under this
158	158	chapter does not meet the standards under Subchapter B.
159	159	(b) [(a)] If the commissioner disapproves a rate filing
160	160	under this chapter [Section 2251.153(a)(2)], the commissioner
161	161	shall issue an order specifying in what respects the filing fails to
162	162	meet the requirements of this chapter or another provision of this
163	163	code applicable to the setting of the rate by the insurer
164	164	[disapproving the filing in accordance with Section 2251.103(b)].
165	165	(c) [(b)] An insurer whose rate filing is disapproved is
166	166	entitled to a hearing on written request made to the commissioner
167	167	not later than the 30th day after the date the order disapproving
168	168	the rate filing takes effect [in accordance with Section
169	169	2251.103(c)].
170	170	SECTION 11. Section 2251.104, Insurance Code, is tranferred
171	171	to Subchapter D, Chapter 2251, Insurance Code, and redesignated as
172	172	Section 2251.157 to read as follows:
173	173	Sec. 2251.157 [2251.104]. DISAPPROVAL OF RATE IN EFFECT;
174	174	HEARING. (a) The commissioner may disapprove a rate that is in
175	175	effect only after a hearing. The commissioner shall provide the
176	176	filer at least 20 days' written notice.
177	177	(b) The commissioner must issue an order disapproving a rate
178	178	under Subsection (a) not later than the 15th day after the close of
179	179	the hearing. The order must:
180	180	(1) specify in what respects the rate fails to meet the
181	181	requirements of this chapter; and
182	182	(2) state the date on which further use of the rate is
183	183	prohibited, which may not be earlier than the 45th day after the
184	184	close of the hearing under this section.
185	185	SECTION 12. Section 2251.155, Insurance Code, is repealed.
186	186	SECTION 13. The commissioner of insurance shall adopt all
187	187	rules necessary to implement this Act on or before December 1, 2009.
188	188	SECTION 14. The change in law made by this Act applies to
189	189	insurance policies delivered, issued for delivery, or renewed on or
190	190	after January 1, 2010, and to rates for those policies. An
191	191	insurance policy delivered, issued for delivery, or renewed before
192	192	January 1, 2010, and rates for the policy are governed by the law as
193	193	it existed immediately before the effective date of this Act, and
194	194	that law is continued in effect for that purpose.
195	195	SECTION 15. This Act takes effect September 1, 2009.