| 4 | 6 | | AN ACT |
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| 5 | 7 | | relating to the workers' compensation classification system and |
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| 6 | 8 | | rate filings. |
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| 7 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 8 | 10 | | SECTION 1. Section 2051.157, Insurance Code, is amended to |
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| 9 | 11 | | read as follows: |
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| 10 | 12 | | Sec. 2051.157. PENALTY FOR CERTAIN VIOLATIONS. An officer |
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| 11 | 13 | | or other representative of an insurance company is subject to a fine |
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| 12 | 14 | | of not less than $100 or more than $500 if the officer or other |
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| 13 | 15 | | representative violates any provision of the following relating to |
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| 14 | 16 | | the company's business: |
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| 15 | 17 | | (1) Subchapter A or B; |
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| 16 | 18 | | (2) Section 2051.156 or 2051.201; |
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| 17 | 19 | | (3) Chapter 426 or 2052; |
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| 18 | 20 | | (4) Subchapter A, C, or D, Chapter 2053; or |
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| 19 | 21 | | (5) Section 2053.051, 2053.052, [2053.053,] or |
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| 20 | 22 | | 2053.055. |
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| 21 | 23 | | SECTION 2. Section 2053.001(5), Insurance Code, is amended |
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| 22 | 24 | | to read as follows: |
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| 23 | 25 | | (5) "Supplementary rating information" means any |
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| 24 | 26 | | manual, rating plan or schedule, plan of rules, rating rule, |
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| 25 | 27 | | classification system, territory code or description, or other |
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| 26 | 28 | | similar information required to determine the applicable premium |
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| 27 | 29 | | for an insured. The term includes increased limits factors, |
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| 28 | 30 | | [classification relativities,] deductible relativities, and other |
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| 29 | 31 | | similar factors and relativities. |
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| 30 | 32 | | SECTION 3. Section 2053.051, Insurance Code, is amended to |
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| 31 | 33 | | read as follows: |
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| 32 | 34 | | Sec. 2053.051. HAZARD CLASSIFICATION SYSTEM. (a) For |
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| 33 | 35 | | workers' compensation insurance, the department shall: |
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| 34 | 36 | | (1) determine hazards by class; and |
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| 35 | 37 | | (2) [establish classification relativities applicable |
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| 36 | 38 | | to an employer's payroll in each of the classes at levels adequate |
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| 37 | 39 | | to the risks to which the relativities apply. |
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| 38 | 40 | | [(b) The classification relativities established under |
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| 39 | 41 | | Subsection (a)(2): |
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| 40 | 42 | | [(1) must be designed to encourage safety; |
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| 41 | 43 | | [(2) may be territorially based; and |
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| 42 | 44 | | [(3) may reflect a difference in losses between |
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| 43 | 45 | | employers of high wage earners and employers of low wage earners |
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| 44 | 46 | | within the same class. |
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| 45 | 47 | | [(c) The department shall] revise the classification system |
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| 46 | 48 | | as necessary to carry out the purposes of this chapter [at least |
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| 47 | 49 | | once every five years]. |
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| 48 | 50 | | (b) A stock company, mutual insurance company, reciprocal |
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| 49 | 51 | | or interinsurance exchange, or Lloyd's plan authorized to engage in |
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| 50 | 52 | | the business of workers' compensation insurance in this state may |
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| 51 | 53 | | not use hazard classifications other than the classifications |
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| 52 | 54 | | established by the department. |
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| 53 | 55 | | SECTION 4. Section 2053.056(c), Insurance Code, is amended |
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| 54 | 56 | | to read as follows: |
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| 55 | 57 | | (c) The commissioner shall review the information submitted |
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| 56 | 58 | | under Subsection (b) to determine the positive or negative impact |
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| 57 | 59 | | of the enactment of workers' compensation reform legislation |
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| 58 | 60 | | enacted by the 79th Legislature, Regular Session, 2005, on workers' |
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| 59 | 61 | | compensation rates and premiums. The commissioner may consider |
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| 60 | 62 | | other factors[, including relativities under Section 2053.051,] in |
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| 61 | 63 | | determining whether a change in rates has impacted the premium |
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| 62 | 64 | | charged to policyholders. |
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| 63 | 65 | | SECTION 5. Sections 407A.351(a) and (b), Labor Code, are |
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| 64 | 66 | | amended to read as follows: |
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| 65 | 67 | | (a) Except as provided by Subsection (b), each group shall |
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| 66 | 68 | | use the uniform classification system and[,] experience rating |
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| 67 | 69 | | plan[, and rate relativities] of the department. |
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| 68 | 70 | | (b) A group may [: |
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| 69 | 71 | | [(1) use the relativities promulgated by the |
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| 70 | 72 | | department modified to produce rates in accordance with the group's |
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| 71 | 73 | | historical experience; or |
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| 72 | 74 | | [(2)] file [its own] rates with the department, |
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| 73 | 75 | | including any reasonable and supporting information required by the |
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| 74 | 76 | | commissioner. |
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| 75 | 77 | | SECTION 6. Effective July 1, 2020, Sections 2053.053 and |
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| 76 | 78 | | 2054.354(b), Insurance Code, are repealed. |
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| 77 | 79 | | SECTION 7. Sections 2051.157, 2053.001(5), 2053.051, and |
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| 78 | 80 | | 2053.056(c), Insurance Code, as amended by this Act, and Sections |
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| 79 | 81 | | 407A.351(a) and (b), Labor Code, as amended by this Act, apply only |
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| 80 | 82 | | to an insurance policy that is delivered, issued for delivery, or |
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| 81 | 83 | | renewed on or after July 1, 2020. A policy delivered, issued for |
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| 82 | 84 | | delivery, or renewed before July 1, 2020, is governed by the law as |
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| 83 | 85 | | it existed immediately before the effective date of this Act, and |
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| 84 | 86 | | that law is continued in effect for that purpose. |
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| 85 | 87 | | SECTION 8. This Act takes effect September 1, 2019. |
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