SENATE AUTHOR: Jackson et al. |
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EFFECTIVE: See below |
HOUSE SPONSOR: Smithee et al. |
Senate Bill 14 amends Insurance Code provisions relating to the regulation of certain insurance rates, forms, and practices.
• Article 1. Rate Requirements. Establishes standards for determining if a rate is excessive, inadequate, or unfairly discriminatory. Requires an insurer to use certain criteria to set rates and to file with the Texas Department of Insurance (TDI) all rates, supporting information, and supplementary rating information and establishes that these filings are public information. Prohibits an insurer from using a rate until approved by the commissioner. Establishes procedures for appealing an order of the commissioner. Requires an insurer to refund to each policyholder the difference in an overcharged premium, plus interest, and to send written notice to each policyholder of a rate increase that exceeds 10 percent of the current policy. Prohibits an insurer from using rating territories that subdivide a county, with certain exceptions. Provides for flexible rating standards for personal automobile insurance.
• Article 2. Policy Forms and Endorsements. Provides for the regulation of policy forms and endorsements for personal automobile insurance and residential property insurance. Requires all forms to be written in plain language.
• Article 3. Use of Credit Scoring. Prohibits an insurer from using a credit score that is computed using factors that constitute unfair discrimination. Prohibits an insurer from denying, canceling, or nonrenewing a personal insurance policy solely on the basis of credit information. Prohibits an insurer from taking an action that adversely affects a consumer because the consumer does not have a credit card account without considering applicable factors other than credit information. Prohibits an insurer from considering an absence of credit information or an inability to determine credit information as a factor in underwriting or rating a policy unless certain conditions apply. Provides for dispute resolution and error correction of credit information and requires an insurer that uses credit scoring to disclose that use to the applicant. Requires an insurer that uses credit scores to file its credit scoring models or processes with TDI.
• Article 4. Initial Rate Filings; Rate Reduction. Requires an insurer to file rates, supporting information, and supplementary rating information with the commissioner not later than the 20th day after the effective date of this article [the article took effect on June 11, 2003], requires the insurer to use the rate filed not later than the 30th day after the effective date, and authorizes TDI to approve or modify such rates within a specified period. Requires an insurer to refund to each policyholder any difference in an overcharged premium, plus interest.
• Article 5. Rate Regulation Effective Until December 1, 2004. Provides for regulation of rates until new requirements take effect.
• Article 6. Rate Regulation Effective December 1, 2004. Requires insurers to file and immediately use rates that comply with new rate standards. Authorizes the commissioner to require an insurer to obtain prior approval before using new rates if certain conditions apply. Requires an insurer to notify a policyholder in writing 30 days in advance if rates will increase by 10 percent or more.
• Article 7. Exemptions from Certain Rate Requirements. Exempts from rate filing and approval regulations an insurer whose residential property insurance policies written in this state during the preceding calendar year accounted for less than two percent of the total amount of premiums collected, more than 50 percent of which cover property valued at less than $100,000 and located in an area designated as underserved for residential property insurance. Requires such insurers that propose to increase premiums by 10 percent or more to obtain approval of the proposed rate.
• Article 8. Regulation of Underwriting Guidelines. Requires an insurer to submit actuarially justified underwriting guidelines to TDI and authorizes the office of public insurance counsel to obtain copies.
• Article 9. Windstorm Insurance.
• Article 10. Withdrawal Requirements. Requires an insurer to file with the commissioner a plan for orderly withdrawal from the writing of certain insurance if the insurer proposes to reduce its total annual premium volume by 50 percent or more. Authorizes the commissioner to modify, restrict, or limit a withdrawal plan if certain criteria apply.
• Article 11. Revenue Bond Program. Establishes a tax-exempt revenue bond program to raise funds for residential property insurance through the Texas FAIR Plan Association.
• Article 12. Sanctions, Penalties, and Payment Under Certain Policies. Creates a state jail felony for offering insurance or collecting premiums based on a rate that is different because of race, color, religion, ethnicity, or national origin. Requires the establishment of a Holocaust Era Insurance Registry.
• Article 13. Rates Standards. Requires that rates must be just, fair, reasonable, adequate, not confiscatory and not excessive for the risks to which they apply, and not unfairly discriminatory.
• Article 14. Legislative Oversight Committee. Establishes a committee to monitor and report on the progress of property and casualty insurance regulation reform.
• Article 15. Rulemaking. Authorizes the commissioner to adopt any rules necessary and appropriate to implement the powers and duties of TDI.
• Article 16. Cancellation of Certain Insurance Policies. Authorizes an insurer to cancel an insurance policy other than personal automobile or homeowners insurance policies if the policy has been in effect less than 90 days and to cancel a personal automobile or homeowners insurance policy if the policy has been in effect less than 60 days if certain conditions exist.
• Article 17. N.A.I.C. Fees.
• Article 18. Medical Liability Insurance Underwriting Association.
• Article 19. Certain Insurance Trusts.
• Article 20. Insurer Interests in Certain Repair Facilities.
• Article 21. Conforming Amendments; Repealer.
• Article 22. General Transition; Severability; Effective Date. The bill takes effect June 11, 2003, except as follows: Article 6 takes effect December 1, 2004, except provisions relating to the review of rates and notices of a rate increase take effect June 11, 2003, and provisions relating to windstorm insurance take effect January 1, 2004, except as they affect policies delivered or issued before June 11, 2003.