81R611 AJA-D
By: Van de Putte, Ellis, Lucio S.B. No. 91
A BILL TO BE ENTITLED
AN ACT
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, as effective
April 1, 2009, 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 [A-E], Chapter 2251;
(2) Subchapter A, Chapter 2301; and
(3) Article 5.13-2.
SECTION 2. Section 912.002(c), Insurance Code, as effective
April 1, 2009, is amended to read as follows:
(c) Rate regulation for a residential fire and allied lines
insurance policy written by a county mutual insurance company is
subject to Chapters 2251 and [Chapter] 2253. Rate [On and after
December 1, 2004, rate] regulation for a personal automobile
insurance policy and a residential fire and allied lines insurance
policy written by a county mutual insurance company is subject to
Article 5.13-2 and Chapter 2251. A county mutual 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 [is filed in accordance] with the
requirements of Chapter 2251 or Article 5.13-2, as applicable,
[that has not been disapproved by the commissioner,] and that is
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 2151.001(2), Insurance Code, is amended
to read as follows:
(2) "Authorized insurer" means an insurer authorized
by the department to write automobile liability coverage under this
title. The [Except as provided by Section 2251.204, the] term does
not include a county mutual insurance company organized under
Chapter 912.
SECTION 5. Section 2251.003(c), Insurance Code, is amended
to read as follows:
(c) Sections 2251.008, 2251.052, 2251.101, 2251.102,
[2251.103,] 2251.104, 2251.105, [and] 2251.107, and 2251.151(a) do
not apply to a 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 [Except as provided by Subchapter D, for] risks
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 [UNDER CERTAIN
CIRCUMSTANCES]
SECTION 8. Section 2251.151, Insurance Code, is amended to
read as follows:
Sec. 2251.151. FILING OF [REQUIREMENT TO FILE] RATES FOR
PRIOR APPROVAL [UNDER CERTAIN CIRCUMSTANCES]. (a) An insurer may
not use a rate 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 rates that are exempt from Subsection (a) under
Section 2251.003(c), the [The] commissioner by order may require an
insurer to file with 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) [(a-1)] If an insurer subject to an order under
Subsection (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) [(b)] From the date a [of the filing of the] rate is
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) [(c)] The commissioner may require an insurer to file
the insurer's rates under Subsection (b) [this section] until the
commissioner determines that the conditions described by that
subsection [Subsection (a)] no longer exist.
(f) [(d)] For purposes of this section, a rate is filed with
the department on the date the department receives the rate filing.
(g) [(e)] If the commissioner requires an insurer to file
the insurer's rates under Subsection (b) [this section], the
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. [RATE APPROVAL REQUIRED;] EXCEPTION TO
CERTAIN RATE APPROVAL REQUIREMENTS. (a) After [An insurer subject
to this subchapter may not use a rate until the rate has been filed
with the department and approved by the commissioner in accordance
with this subchapter.
[(b) Notwithstanding Subsection (a), after] a rate filing
required of an insurer under Section 2251.151(b) is approved under
this subchapter, the [an] insurer, without prior approval of the
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) [(c)] Filed rates under Subsection (a) [(b)] take
effect on the date specified by the insurer.
SECTION 10. Section 2251.153(a), Insurance Code, is amended
to read as follows:
(a) Not later than the 30th day after the date a rate 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.
SECTION 11. Section 2251.156, Insurance Code, is amended to
read as follows:
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
HEARING. (a) If the commissioner disapproves a rate filing under
this chapter [Section 2251.153(a)(2)], the commissioner 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 [disapproving
the filing in accordance with Section 2251.103(b)].
(b) An insurer whose rate filing is disapproved is 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 [in accordance with Section 2251.103(c)].
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 [2251.104]. DISAPPROVAL OF RATE IN EFFECT;
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) Subchapter E, Chapter 2251; and
(3) Chapter 2254.
SECTION 14. The commissioner of insurance shall adopt all
rules necessary to implement this Act on or before December 1, 2009.
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, 2010, and to rates for those policies. An
insurance policy delivered, issued for delivery, or renewed before
January 1, 2010, 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, 2009.