BILL ANALYSIS
H.B. 2593
By: Eiland (Henderson)
Economic Development
05-25-95
Senate Committee Report (Unamended)
BACKGROUND
Under current law, the commissioner of insurance has the duty to
promulgate the manual rate for commercial risks and classes of
risks written by the Texas Catastrophe Property Insurance
Association. The association is foreclosed from using the file and
use system available to other commercial property insurers who
compete in the marketplace. Also, the rates for commercial
windstorm and hail insurance written by the association must be 90
percent of the manual rates for extended coverage for commercial
risks.
PURPOSE
As proposed, H.B. 2593 redefines "catastrophe area" and provides an
alternate process for ratemaking for windstorm and hail insurance.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 3(h), Article 21.49, Insurance Code
(Texas Catastrophe Property Insurance Pool Act), to redefine
"catastrophe area" to include a city or part of a city or a county
or a part of a county in which it may be determined by the
commissioner of insurance (commissioner), rather than the State
Board of Insurance (board), that windstorm and hail insurance is
not available to the owner of insurable property within that area.
Makes conforming changes.
SECTION 2. Amends Section 8(h), Article 21.49, Insurance Code, as
follows:
(1) Makes a conforming change.
(2) Deletes the requirement that only the rates for
noncommercial windstorm and hail insurance written by the
Texas Catastrophe Property Insurance Association (association)
before December 31, 1995, be 90 percent of the modified
extended coverage rates. Makes conforming changes.
(3) Deletes the requirement that the rates for noncommercial
windstorm and hail insurance written by the association after
December 31, 1995, be 90 percent of the manual rate for
monoline extended coverage promulgated by the board for
noncommercial risks under Chapter 5C, Insurance Code. Requires
the association not later than August 1 of each year to file
with the Department of Insurance (department) for approval by
the commissioner a manual rate for commercial risks and
classes of risks written by the association developed in
accordance with Chapter 5C, Insurance Code, which is
applicable only to the extent consistent with this article.
Prohibits the association from making such a filing more than
one time in any 12-month period. Requires the rate for
commercial windstorm and hail insurance written by the
association to be 90 percent of the rate for extended coverage
for commercial risks as developed in accordance with Chapter
5C, Insurance Code, to the extent consistent with this
article. Provides that Article 1.33B of this code does not
apply to a filing made under this subdivision and Subdivisions
(4)-(10) of this subsection, or a department action with
respect to the filing. Deletes the provision that rates for
commercial windstorm and hail insurance written by the
association shall be 90 percent of the manual rates for
extended coverage promulgated by the board for commercial
rates under Chapter 5C, Insurance Code.
(4) Requires the commissioner to provide all interested
persons an opportunity to review the filing, obtain copies of
the filing on payment of any legally required copying cost,
and submit to the commissioner written comments or information
related to the filing.
(5) Requires the commissioner to schedule an open meeting no
later than 45 days after the date on which the department
receives the filing at which interested persons may present
comments relating to the filing. Subjects an open meeting
under this subdivision to Chapter 551, Government Code, but is
not a contested case hearing under Chapter 2001, Government
Code.
(6) Requires the department to file with the Texas Register
notice that a filing has been made under Subdivision (3) of
this subsection no later than seven days after the date the
filing is received by the department. Sets forth information
the notice must include.
(7) Requires the commissioner, after the conclusion of the
open meeting, to approve or disapprove or modify the filing in
writing on or before November 1 of the year in which the
filing is made or the filing is deemed approved. Requires the
commissioner, if the commissioner disapproves a filing, to
state in writing the reasons for the disapproval and the
criteria to be met by the association to obtain approval.
Authorizes the association to file with the commissioner, no
later than 10 days after the date on which the association
receives the commissioner's written disapproval, an amended
filing bringing the filing into conformity with all criteria
stated in the commissioner's written disapproval.
(8) Requires the commissioner, before approving or
disapproving an amended filing, to provide all interested
persons an opportunity to review the amended filing, obtain
copies of the amended filing on payment of any legally
required copying costs, and submit to the commissioner
comments or information related to the amended filing in the
manner provided by Subdivision (4) of this subdivision, and
may hold a hearing not later than 20 days after the date on
which the department receives the amended filing in the manner
provided by Subdivision (5) of this subsection. Requires the
commissioner, no later than 10 days after the date on which
the hearing on the amended filing is concluded, to approve or
disapprove the amended filing. Requires the commissioner,
within 30 days after the amended filing is received, to
approve or disapprove an amended filing or it is deemed
approved. Provides that the requirements imposed under
Subdivisions (6 and (7) of this subsection apply to a hearing
conducted under this subdivision.
(9) Authorizes the commissioner, in conjunction with the
review of a filing or amended filing, to request the
association to provide additional supporting information
relating to the filing or amended filing, and any interested
person may file a request with the commissioner for additional
supporting information relating to the filing or amended
filing. Requires a request under this subdivision to be
reasonable and directly related to the filing. Requires the
commissioner to submit to the association all request for
additional supporting information made under this subdivision
for the commissioner's use and the use of any interested
person. Requires the association to provide the information to
the commissioner no later than five days after the request for
additional supporting information is delivered to the
association. Requires the department to notify an interested
person who has requested additional information of the
availability of the information no later than one business day
after the date on which the commissioner receives the
information from the association.
(10) Prohibits a filing made under this subsection from
reflecting an annual premium rate change that is more than 15
percent of the rate for commercial windstorm and hail
insurance in each rate classification in effect on September
1, 1995. Provides that this subdivision expires January 1,
2001, provided however, that the commissioner may, after
notice and hearing, suspend this subdivision upon a finding
that a catastrophe loss or series of occurrences resulting in
losses in the catastrophe area justify a need to assure rate
adequacy in the catastrophe area and also justify a need to
assure availability of insurance outside the catastrophe area.
(11)-(12) Make conforming changes.
(13) Created from existing text.
SECTION 3. Requires the commissioner, no later than December 31,
1995, to submit to the governor, lieutenant governor, and speaker
of the house of representatives a report containing the
commissioner's conclusions and recommendations for further action
regarding the treatment of claims resulting from a significant
natural catastrophe. Sets forth provisions the report must include.
SECTION 4. Effective date: September 1, 1995.
Makes application of this Act prospective beginning
January 1, 1996.
SECTION 5. Emergency clause.