Texas 2009 - 81st Regular

Texas House Bill HB3258 Compare Versions

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

Old	New	Differences
1	1	81R14635 TJS-D
2	2	By: McClendon H.B. No. 3258
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to automobile insurance loss ratios and premiums, and the
8	8	collection and use of certain data by insurers regarding automobile
9	9	insurance; providing administrative penalties.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Chapter 1953, Insurance Code, is amended by
12	12	adding Subchapter D to read as follows:
13	13	SUBCHAPTER D. DATA MINING AND PATTERN RECOGNITION
14	14	Sec. 1953.151. APPLICABILITY OF SUBCHAPTER. This
15	15	subchapter applies to an insurer writing automobile insurance in
16	16	this state, including an insurance company, reciprocal or
17	17	interinsurance exchange, county mutual insurance company, farm
18	18	mutual insurance company, Lloyd's plan, or other insurer.
19	19	Sec. 1953.152. COLLECTION OF INFORMATION CONCERNING DATA
20	20	MINING AND PATTERN RECOGNITION. (a) The commissioner by rule may
21	21	require an insurer to report to the department concerning:
22	22	(1) technologies to be used by the insurer to identify
23	23	relationships among variables that are used to predict differences
24	24	in expected losses of covered persons or applicants for automobile
25	25	insurance coverage or are otherwise used in the activities of
26	26	regulated entities; and
27	27	(2) the manner in which the insurer intends to use the
28	28	relationships derived from the technologies described by
29	29	Subdivision (1) in:
30	30	(A) underwriting and creating and defining risk
31	31	classifications;
32	32	(B) setting rates and premiums, as applicable;
33	33	(C) detecting fraudulent claims;
34	34	(D) identifying subrogation opportunities;
35	35	(E) improving marketing; or
36	36	(F) performing other activities identified by
37	37	the commissioner.
38	38	(b) In exercising the commissioner's authority under this
39	39	section, the commissioner may require that insurers report with
40	40	respect to selected segments of the market and may limit the
41	41	reporting to specific uses of relationships derived from the
42	42	technologies.
43	43	(c) Underwriting guidelines and related information
44	44	obtained by the commissioner under this section are subject to
45	45	Section 38.003. Other information obtained under this section is
46	46	commercial information not subject to the disclosure requirements
47	47	of Chapter 552, Government Code.
48	48	Sec. 1953.153. ADMINISTRATIVE PENALTIES. If the department
49	49	determines that an insurer has violated this chapter or a rule
50	50	adopted under this chapter, the department shall assess
51	51	administrative penalties against the insurer in the manner provided
52	52	by Chapter 84. The amount of an administrative penalty imposed
53	53	under this section shall be based on:
54	54	(1) the seriousness of the violation, including the
55	55	nature, circumstances, extent, or gravity of the violation; and
56	56	(2) the economic harm caused by the violation.
57	57	Sec. 1953.154. REPORT TO LEGISLATURE. The department shall
58	58	include in its biennial report to the legislature under Section
59	59	32.022 information concerning the use of relationships derived from
60	60	the technologies described by Section 1953.152 by insurers. The
61	61	information must include the impact of the use of those
62	62	relationships on insurance and other coverage to covered persons
63	63	and applicants for coverage in this state. The report must include,
64	64	as applicable, recommendations for proposed legislation
65	65	appropriate to regulate the use of relationships derived from the
66	66	technologies and means to facilitate availability of insurance in
67	67	underserved markets.
68	68	SECTION 2. Subtitle C, Title 10, Insurance Code, is amended
69	69	by adding Chapter 1956 to read as follows:
70	70	CHAPTER 1956. AUTOMOBILE INSURANCE LOSS RATIO AND PREMIUMS
71	71	Sec. 1956.001. DEFINITIONS. In this chapter:
72	72	(1) "Direct losses incurred" means the sum of direct
73	73	losses paid plus an estimate of losses to be paid in the future for
74	74	all claims arising from the current reporting period and all prior
75	75	periods, minus the corresponding estimate made at the close of
76	76	business for the preceding period. This amount does not include
77	77	home office and overhead costs, advertising costs, commissions and
78	78	other acquisition costs, taxes, capital costs, administrative
79	79	costs, or claims processing costs.
80	80	(2) "Direct losses paid" means the sum of all payments
81	81	made during the period for claimants under a policy to which this
82	82	chapter applies before any reinsurance has been ceded or assumed.
83	83	This amount does not include home office and overhead costs,
84	84	advertising costs, commissions and other acquisition costs, taxes,
85	85	capital costs, administrative costs, or claims processing costs.
86	86	(3) "Direct premiums earned" means the amount of
87	87	premium attributable to the coverage already provided in a given
88	88	period before reinsurance has been ceded or assumed.
89	89	(4) "Loss ratio" means direct losses incurred divided
90	90	by direct premiums earned.
91	91	Sec. 1956.002. APPLICABILITY OF CHAPTER. This chapter
92	92	applies to an insurer writing automobile insurance in this state,
93	93	including an insurance company, reciprocal or interinsurance
94	94	exchange, county mutual insurance company, farm mutual insurance
95	95	company, Lloyd's plan, or other insurer.
96	96	Sec. 1956.003. LOSS RATIO REPORTING. The commissioner by
97	97	rule shall require each insurer to which this chapter applies to
98	98	report at least annually the insurer's loss ratio for the preceding
99	99	year for each policy issued.
100	100	Sec. 1956.004. REVIEW OF PREMIUMS. (a) The commissioner by
101	101	rule shall establish a minimum loss ratio below which a policy's
102	102	premiums are excessive for the benefits provided under the policy.
103	103	(b) If the commissioner determines that a policy's loss
104	104	ratio falls below the minimum established under Subsection (a), the
105	105	commissioner may order an insurer to:
106	106	(1) implement a premium rate adjustment;
107	107	(2) issue appropriate rebates to policyholders;
108	108	(3) file with the department an actuarial memorandum,
109	109	prepared by a qualified actuary, in accordance with rules adopted
110	110	to implement this section; or
111	111	(4) take any other remedial action the commissioner
112	112	determines is appropriate.
113	113	(c) The commissioner shall adopt rules as necessary to
114	114	implement this section, including rules regarding the frequency and
115	115	form of reporting loss ratios.
116	116	SECTION 3. This Act takes effect September 1, 2009.