By: Creighton S.B. No. 1367
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of commercial property and casualty
insurance and insurance for certain large risks.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 981.004, Insurance Code, is amended by
adding Subsection (g) to read as follows:
(g) Except with respect to a line of insurance for which the
commissioner has temporarily reinstated the requirements for rate
and form filings under Section 2251.0031(d) or 2301.0031(d),
Subsections (a)(1) and (b) do not apply to an insurance policy
issued by an eligible surplus lines insurer for any line of the
kinds of insurance described by Sections 2251.0031(a) and
2301.0031(a) or exempted under Section 2251.0031(c) or
2301.0031(c).
SECTION 2. Section 2251.003(b), Insurance Code, is amended
to read as follows:
(b) Except as provided by Section 2251.0031, this [This]
subchapter and Subchapters B, C, and D apply to all lines of the
following kinds of insurance written under an insurance policy or
contract issued by an insurer authorized to engage in the business
of insurance in this state:
(1) general liability insurance;
(2) residential and commercial property insurance,
including farm and ranch insurance and farm and ranch owners
insurance;
(3) personal and commercial casualty insurance,
except as provided by Section 2251.004;
(4) medical professional liability insurance;
(5) fidelity, guaranty, and surety bonds other than
criminal court appearance bonds;
(6) personal umbrella insurance;
(7) personal liability insurance;
(8) guaranteed auto protection (GAP) insurance;
(9) involuntary unemployment insurance;
(10) financial guaranty insurance;
(11) inland marine insurance;
(12) rain insurance;
(13) hail insurance on farm crops;
(14) personal and commercial automobile insurance;
(15) multi-peril insurance; and
(16) identity theft insurance issued under Chapter
706.
SECTION 3. Subchapter A, Chapter 2251, Insurance Code, is
amended by adding Section 2251.0031 to read as follows:
Sec. 2251.0031. EXCEPTIONS FOR CERTAIN LINES. (a) Except
as provided by Subsection (d), Subchapter C does not apply to any
line of the following kinds of insurance written under a commercial
insurance policy or contract issued by an insurer authorized to
engage in the business of insurance in this state:
(1) surety bonds;
(2) fidelity bonds;
(3) commercial inland marine;
(4) boiler and machinery;
(5) environmental impairment or pollution liability;
(6) kidnap and ransom;
(7) political risk or expropriation;
(8) commercial excess liability or umbrella
liability;
(9) directors' and officers' liability;
(10) fiduciary liability;
(11) employment practices liability;
(12) errors and omission and professional liability
other than medical professional liability;
(13) media liability;
(14) product liability, product recall, or completed
operations;
(15) commercial cybersecurity, including first- and
third-party commercial lines coverage for losses arising out of or
relating to data privacy breaches, network security, computer
viruses, and similar exposures;
(16) highly protected commercial property;
(17) commercial flood insurance not provided through
the National Flood Insurance Program; or
(18) any combination of only the kinds of insurance
listed in this subsection or exempted under Subsection (c).
(b) For purposes of Subsection (a), "highly protected
commercial property" is commercial property that is subject to a
much lower than normal probability of loss due to low-hazard
occupancy or property type, superior construction, special fire
protection equipment and procedures, and management commitment to
loss prevention.
(c) The commissioner by rule may exempt a commercial line of
insurance or commercial risk not listed in Subsection (a) from the
rate filing requirements of Subchapter C to promote enhanced
competition or more effectively use the resources of the department
that might otherwise be used to review commercial lines filings.
(d) Notwithstanding Subsection (a), the commissioner may
temporarily require rate filings under Subchapter C for a specific
kind of insurance listed in Subsection (a) for a period of not
longer than one year if, after notice and hearing, the commissioner
issues an order that:
(1) includes a finding that a reasonable degree of
competition does not exist for that specific kind of insurance; and
(2) specifies the relevant tests and test results used
to determine the degree of competition for that kind of insurance.
(e) In the absence of a finding described by Subsection (d)
with respect to a specific kind of insurance, a competitive market
is presumed to exist for that kind of insurance.
(f) The commissioner may adopt reasonable and necessary
rules to implement this section.
SECTION 4. Section 2251.101, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) This section does not apply to rates for use with an
insured that has:
(1) total insured property values of $5 million or
more;
(2) total annual gross revenues of $10 million or
more; or
(3) a total premium of $25,000 or more for property
insurance, $25,000 or more for general liability insurance, or
$50,000 or more for multi-peril insurance.
SECTION 5. Section 2301.003(b), Insurance Code, is amended
to read as follows:
(b) Except as provided by Section 2301.0031, this [This]
subchapter applies to all lines of the following kinds of insurance
written under an insurance policy or contract issued by an insurer
authorized to engage in the business of insurance in this state:
(1) general liability insurance;
(2) residential and commercial property insurance,
including farm and ranch insurance and farm and ranch owners
insurance;
(3) personal and commercial casualty insurance,
except as provided by Section 2301.005;
(4) medical professional liability insurance;
(5) fidelity, guaranty, and surety bonds other than
criminal court appearance bonds;
(6) personal umbrella insurance;
(7) personal liability insurance;
(8) guaranteed auto protection (GAP) insurance;
(9) involuntary unemployment insurance;
(10) financial guaranty insurance;
(11) inland marine insurance;
(12) rain insurance;
(13) hail insurance on farm crops;
(14) personal and commercial automobile insurance;
(15) multi-peril insurance; and
(16) identity theft insurance issued under Chapter
706.
SECTION 6. Subchapter A, Chapter 2301, Insurance Code, is
amended by adding Section 2301.0031 to read as follows:
Sec. 2301.0031. EXCEPTIONS FOR CERTAIN LINES. (a) Except
as provided by Subsection (d), Sections 2301.006, 2301.007(a) and
(b), and 2301.008 do not apply to any line of the following kinds of
insurance written under a commercial insurance policy or contract
issued by an insurer authorized to engage in the business of
insurance in this state:
(1) surety bonds;
(2) fidelity bonds;
(3) commercial inland marine;
(4) boiler and machinery;
(5) environmental impairment or pollution liability;
(6) kidnap and ransom;
(7) political risk or expropriation;
(8) commercial excess liability or umbrella
liability;
(9) directors' and officers' liability;
(10) fiduciary liability;
(11) employment practices liability;
(12) errors and omission and professional liability
other than medical professional liability;
(13) media liability;
(14) product liability, product recall, or completed
operations;
(15) commercial cybersecurity, including first- and
third-party commercial lines coverage for losses arising out of or
relating to data privacy breaches, network security, computer
viruses, and similar exposures;
(16) highly protected commercial property;
(17) commercial flood insurance not provided through
the National Flood Insurance Program; or
(18) any combination of only the kinds of insurance
listed in this subsection or exempted under Subsection (c).
(b) For purposes of Subsection (a), "highly protected
commercial property" is commercial property that is subject to a
much lower than normal probability of loss due to low-hazard
occupancy or property type, superior construction, special fire
protection equipment and procedures, and management commitment to
loss prevention.
(c) The commissioner by rule may exempt a commercial line of
insurance or commercial risk not listed in Subsection (a) from the
form filing requirements of this subchapter to promote enhanced
competition or more effectively use the resources of the department
that might otherwise be used to review commercial lines filings.
(d) Notwithstanding Subsection (a), the commissioner may
temporarily impose the requirements of Sections 2301.006,
2301.007(a) and (b), and 2301.008 for a specific kind of insurance
listed in Subsection (a) for a period of not longer than one year
if, after notice and hearing, the commissioner issues an order
that:
(1) includes a finding that a reasonable degree of
competition does not exist for that specific kind of insurance; and
(2) specifies the relevant tests and test results used
to determine the degree of competition for that kind of insurance.
(e) In the absence of a finding described by Subsection (d)
with respect to a specific kind of insurance, a competitive market
is presumed to exist for that kind of insurance.
(f) The commissioner may adopt reasonable and necessary
rules to implement this section.
SECTION 7. The changes in law made by this Act apply only to
an insurance policy that is delivered, issued for delivery, or
renewed on or after September 1, 2021. An insurance policy
delivered, issued for delivery, or renewed before September 1,
2021, is 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 8. This Act takes effect September 1, 2021.