BILL ANALYSIS

Insurance Committee

03-29-95
Committee Report (Substituted)

BACKGROUND

     Insurers use historical loss experience data as a basis to
predict future losses.  The state uses the aggregate loss data to
test the fairness of rates that insurers use in Texas.  The data
can be collected by the Texas Department of Insurance or the
Commissioner can designate an outside organization to collect the
data.  Both of these methods have been used in the past.

PURPOSE

     As substituted, H.B. 1985 would allow, but not require, the
Texas Department of Insurance to use an outside organization to
collect historical financial and loss data for workers compensation
insurance.  It would also eliminate a sunset provision in the law
which governs advisory organizations and repeals a statute that
contains a similar authorization for data collection.

RULEMAKING AUTHORITY

     It is the committee's opinion that this bill does not
expressly grant any additional rulemaking authority to a state
officer, department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1  Amends Article 5.58, Insurance Code as follows:

Re-reference the "Board" and the "State Board of Insurance" to the
"Commissioner."  Deletes a prohibition of the use of advisory
organizations and allows, but does not require, the Commissioner to
use such organizations.  Deletes the term "financial".  Provides
for an exception to the content of Unit Statistical Data Report as
provide by Subsection (d) of this article.

Narrows the scope of data that must be reported by insurers
including workers' compensation statistical reports and ensures
that the two major workers' compensation agencies will have input
into workers' compensation data-reporting decisions.  Specifies
that an insurer can report its information to an advisory
organization in addition to providing that information to the Texas
Department of Insurance.

Provides that while current law permits specific types of
information be reported by insurance companies, the Commissioner
can authorize exclusion of any of those specific reports.

SECTION 2. Amends Article 5.73, Insurance Code as follows:

Re-reference the "Board" and the "State Board of Insurance" to the
"Commissioner."  Changes the requirement for annual audits to
periodic audits. Deletes the expiration (September 1, 1997)
provision in Article 1.50, Insurance Code, allowing insurance
companies to report data to advisory organizations.  Provides for
the chief actuary at TDI to calculate prospective loss costs and
subjects those calculations to open records laws.  Establishes the
statutory authority for advisory organizations, which are subject
to the Sunset review process, and requires advisory organizations
to be reviewed in conjunction with the Texas Department of
Insurance.

SECTION 3.

Amends Article 5.74, Insurance Code to re-reference the "Board" and
the "State Board of Insurance" to the "Commissioner."


SECTION 4. 

Amends Article 21.69, Insurance Code by granting the Commissioner
the flexibility to contract with more than one statistical agency
for each line of insurance.  Provides a cost-sharing system among
insurers for the payment of data collection expenses.  Requires
designated statistical agents to collect data pursuant to a
statistical plan promulgated by the commissioner.

SECTION 5. Effective date

SECTION 6. Emergency Clause

COMPARISON OF ORIGINAL TO SUBSTITUTE

     The substitute to H.B. 1985 includes all of the provisions
contained in filed bill.  However, the substitute omits the word
"financial" from SECTION 1 to eliminate any restrictions the Texas
Department of Insurance might place on data collected from
insurers.  In the filed bill the Commissioner was authorized to
narrow the scope of data that must be reported by insurers
including workers' compensation statistical reports.  The
substitute to H.B. 1985 provides that the executive directors of
the Texas Workers' Compensation Commission and Texas Workers'
Compensation Research Center must also sign off on any exclusions.

     The substitute also provides for public access through the
open records process to information collected by any advisory
organizations designated as a statistical agent by the Texas 
Department of Insurance.  Subjects any loss cost calculations by
the Texas Department of Insurance to open records requests.  The
substitute also creates statutory authority for advisory
organizations, which are subject to the Sunset review process, and
requires advisory organizations to be reviewed in conjunction with
the Texas Department of Insurance.

     Instead of repealing Article 21.69, the substitute to H.B.
1985 amends Article 21.69 by granting the Commissioner the
authority to contract with more than one statistical agency for
each line of insurance; provides for a cost-sharing system among
insurers for the payment of data collection expenses; and requires
designated statistical agents to collect data pursuant to a
statistical plan promulgated by the commissioner.

SUMMARY OF COMMITTEE ACTION

     In accordance with House Rules, H.B. 1985 was heard in a
public hearing on March 22, 1995.  There being a quorum present,
the Chair laid out H.B. 1985 and recognized Representative Duncan
to explain the bill.  The Chair recognized the following persons to
testify in support of H.B. 1985:  Richard S. Geiger, Association of
Fire & Casualty Companies in Texas; Jay Thompson, Texas Insurance
Advisory Association, AFACT; Pam Beachley, Business Insurance
Consumers Association.  The Chair recognized the following person
to testify in opposition to H.B. 1985: Rob Schneider, Consumers
Union.  The Chair recognized the following person to testify
neutrally on H.B. 1985:  C.H. Mah, Texas Department of Insurance. 
The Chair left H.B. 1985 pending before the Committee.

     There being a quorum present on March 29, 1995, the Chair laid
out H.B. 1985 as pending business and recognized Representative
Duncan who offered a substitute to H.B. 1985.  Representative
Counts moved the Committee adopt the substitute to H.B. 1985. The
Chair heard no objections and the substitute to H.B. 1985 was
adopted.

     The Chair recognized Representative Counts who moved the
Committee report H.B. 1985 as substituted to the full House with
the recommendation that it do pass and be printed.  Representative
Driver seconded the motion and the motion prevailed by the
following vote:
AYES (7); NAYES (0); ABSENT (2); PNV (0).