By: Lucio S.B. No. 871
A BILL TO BE ENTITLED
AN ACT
relating to corrective action with regard to excessive or unfairly
discriminatory residential property or personal automobile premium
rates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2254.003, Insurance Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (a-2), and
(a-3) to read as follows:
(a) This section applies to a rate for personal automobile
insurance or residential property insurance filed on or after the
effective date of Chapter 206, Acts of the 78th Legislature,
Regular Session, 2003.
(a-1) If the department provides an insurer with formal
written notice that a rate is excessive or unfairly discriminatory,
then the insurer may file a new rate or take other corrective action
to substantially address the departments concerns. The new rate or
other corrective action must be filed on or before the 60th day
following the date of formal written notice. At the commissioner's
discretion, the commissioner may extend the deadline to file by an
additional 30 days. If the department accepts the new rate or other
corrective action, then the insurer shall, according to
commissioner order, refund or issue a premium discount directly to
each affected policyholder on the portion of the premium found to be
excessive or unfairly discriminatory, plus interest on that amount.
The interest rate to be paid on refunds or discounts under this
subsection is the sum of six percent and the prime rate for the
calendar year in which formal written notice is given. For purposes
of this subsection, the prime rate is the prime rate as published in
The Wall Street Journal for the first day of the calendar year that
is not a Saturday, Sunday, or legal holiday.
(a-2) If the insurer does not file or take, or the
department does not accept, a new rate or other corrective action as
provided under Subsection (a-1), and the commissioner issues an
order disapproving the rate as excessive or unfairly discriminatory
under Section 2251.104, then the insurer must refund or issue a
premium discount directly to each affected policyholder on the
portion of the premium found to be excessive or unfairly
discriminatory, plus interest on that amount. The interest rate to
be paid on refunds or discounts under this subsection is 18 percent.
An insurer is not required to pay any interest penalty if the
insurer prevails in an appeal of the commissioner's order under
Subchapter D, Chapter 36.
(a-3) The period for the refund and interest begins on the
date the department first provides the insurer with formal written
notice that the insurer's filed rate is excessive or unfairly
discriminatory, and interest continues to accrue until the refund
or discount is paid or issued.
SECTION 2. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.