BILL ANALYSIS C.S.H.B. 2122 By: Brimer 4-11-95 Committee Report (Substituted) BACKGROUND When the Texas Workers' Compensation Reform Act was passed, it included a provision mandating the offering of deductibles on all workers' compensation insurance policies issued in Texas. At the same time, deductibles were a relatively new feature for workers' compensation policies, as only one other state permitted the offering of deductibles. The bill sponsors felt it was necessary to mandate the offering of deductibles in order to make sure policyholders had the opportunity to take advantage of this cost lowering feature. Since then, deductibles have become very common, and the insurance industry has embraced their use. In fact, deductibles are used as a competitive tool in the marketplace today. As a result, the mandating of deductibles is no longer necessary. PURPOSE HB 2122 amends the current Article 5.55C, Texas Insurance Code, establishing the Board to require optional deductible plans on the part of insurers. RULEMAKING AUTHORITY It is the committee's opinion that this bill may grant additional rulemaking authority under SECTION 1, Section (a), Article 5.55C of the Insurance Code to the Department of Insurance who shall require companies and associations to provide upon request optional deductible plans. Rulemaking authority may also be found under SECTION 2, giving the Texas Department of Insurance authority to review and make recommendations regarding the amount of the premium reduction allowable for deductible options. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section (a), Article 5.55C, Texas Insurance Code, that specifies the Board shall require companies or associations who write workers' compensation insurance policies to provide, upon request optional deductible plans that permit policyholders to self-insure for the deductible amount. SECTION 2. The Department of Insurance shall review and analyze data applicable to optional deductible plans as explained under Article 5.55C and make recommendations to the commissioner of insurance regarding the amount of the premium reduction allowable for deductible options no later January 1, 1996. SECTION 3. Emergency Clause; The effective date of this Act occurs after its passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The major points of difference between H.B. 2122, as introduced and the committee substitute are: SECTION 1. Deletes "commissioner" and reinstates the "Board". Deletes "allow" and adds a re- establishes a requirement on the part of companies and associations who write workers' compensation insurance to provide upon request by the Board, optional deductible plans. A techical correction is also added to clarify the language under this section. SECTION 2. The substitute provides that the Department of Insurance shall review and analyze the data applicable to the optional deductible plans and shall make a recommendation regarding the amount of the premium reduction allowable for deductibles to the commissioner of insurance no later than January 1, 1996. SECTION 3. Emergency Clause. SUMMARY OF COMMITTEE ACTION The Business and Industry Committee considered HB 2122 in a public hearing on April 4, 1995. Testifying in support of HB 2122 were Ron Cobb, representing American Insurance Association and David Pinkus, representing Small Business United of Texas. Testifying against H.B. 2122 was Pam Beachley, representing Business Insurance Consumers Association. A complete committee substitute was considered by the committee. Without objection, the complete committee substitute to H.B. 2122 was withdrawn. H.B. 2122 was referred to subcommittee consisting of Representative Brady. After being recalled from subcommittee, H.B. 2122 was considered by the committee on April 11, 1995. A complete comittee substitute was considered by the committee. Without objection, the complete committee substitute to H.B. 2122 was adopted. A motion to report H.B. 2122 as substituted to the full house with the recommendation that it do pass and be printed carried with a record vote of 9 (nine) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero) absent.