By Duncan H.B. No. 1985
Substitute the following for H.B. No. 1985:
By Duncan C.S.H.B. No. 1985
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the collection of insurance data.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 5.58, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 5.58. Rate Administration. (a) Recording and
1-7 Reporting of Loss Experience and Other Data. The commissioner
1-8 <Board> shall develop reasonable statistical plans, which may be
1-9 modified from time to time and which shall be used thereafter by
1-10 each insurer in the recording and reporting of its loss experience
1-11 and such other data as may be required, in order that the total
1-12 loss and expense experience of all insurers may be made available
1-13 at least annually in such form and detail as may be necessary to
1-14 aid in determining whether rates meet the standards imposed under
1-15 Section 2, Article 5.55 of this code. If the commissioner <Board>
1-16 determines that any insurer's rates do not meet those standards,
1-17 the commissioner <Board> may order the insurer to adjust its rates
1-18 to meet those standards. An <A Board> order of the commissioner
1-19 under this article may be appealed under Article 1.04 of this code.
1-20 <The Board may not contract with or designate an insurer or
1-21 advisory organization to gather or compile data for statistical
1-22 plans; however, an insurer may provide to one or more advisory
1-23 organizations the information provided by the insurer to the Board
1-24 under this article.>
2-1 (b) For purposes of Subsection (c) of this article, the
2-2 commissioner <Board> shall establish standards and procedures for
2-3 categorizing insurance and medical benefits reported on each
2-4 workers' compensation claim. The commissioner <Board> shall
2-5 consult with the Texas Workers' Compensation Commission and the
2-6 Texas Workers' Compensation Research Center in establishing these
2-7 standards to ensure that the data collection methodology will also
2-8 yield data necessary for research and medical cost containment
2-9 efforts.
2-10 (c) Content of Unit Statistical Data Reports. Except as
2-11 provided by Subsection (d) of this article, the <The> following
2-12 information shall be reported on each workers' compensation claim:
2-13 (1) the hazard classification of the affected
2-14 employee;
2-15 (2) the date of injury;
2-16 (3) the social security number of the claimant;
2-17 (4) the severity classification of the claim,
2-18 including separate classifications for claims in which death
2-19 benefits are paid, claims in which lifetime income benefits are
2-20 paid, claims in which only temporary income benefits are paid,
2-21 claims in which impairment benefits are paid, claims in which
2-22 supplemental benefits are paid, and claims in which only medical
2-23 benefits are paid;
2-24 (5) the amount paid in periodic payments;
2-25 (6) the amount paid in lump-sum payments;
2-26 (7) the amount paid for temporary income benefits;
2-27 (8) the amount paid for impairment income benefits;
3-1 (9) the amount paid for supplemental income benefits;
3-2 (10) the amount paid for death and burial benefits;
3-3 (11) the total amount paid for income, death, or
3-4 burial benefits;
3-5 (12) the total amount of incurred losses for income,
3-6 death, or burial benefits;
3-7 (13) the amount paid to doctors and other health care
3-8 providers;
3-9 (14) the amount paid to hospitals and other health
3-10 care facilities;
3-11 (15) the total amount paid for medical benefits;
3-12 (16) the total amount of incurred losses for medical
3-13 benefits; and
3-14 (17) other information required by the commissioner
3-15 <Board>.
3-16 (d) Exclusion. For good cause, and after agreement of the
3-17 executive director of the Texas Workers' Compensation Commission
3-18 and the executive director of the Texas Workers' Compensation
3-19 Research Center or its successor, the commissioner may, by order,
3-20 exclude any of the items required under Subsection (c) of this
3-21 article from unit statistical data reports.
3-22 (e) Information Confidential. A person may not distribute
3-23 or otherwise disclose a social security number or any other
3-24 information collected under Subsection (c) of this article which
3-25 would disclose the identity of any claimant.
3-26 (f) <(e)> Payments Excluded From Rates. In any statistical
3-27 plan developed by the commissioner <Board>, direct expenditures by
4-1 an insurer to influence public policy and any amounts paid by an
4-2 insurer as damages in a suit against the insurer for malice or bad
4-3 faith or as fines or penalties shall be reported separately, and
4-4 the expenditures and payments shall not be considered as a loss or
4-5 expense for the calculation of any premium rate modifier or
4-6 surcharge of an insured.
4-7 (g) <(f)> Transmission of Statistical Reports. The
4-8 statistical reports filed under Subsection (c) of this article
4-9 shall be updated by each insurer and transmitted to the department
4-10 <Board> in accordance with the filing requirements of the
4-11 commissioner's <Board's> statistical plan. Each insurer writing at
4-12 least one-half of one percent of the workers' compensation
4-13 insurance in this state shall report its data in a compatible
4-14 electronic format prescribed by the commissioner <Board>. The
4-15 commissioner <Board> shall take necessary measures to ensure the
4-16 accuracy of the data and the adequacy of the format for data
4-17 reported in an electronic format.
4-18 (h) <(g)> Reports of Aggregate Data. The commissioner
4-19 <Board> may permit the information required by Subsection (c) of
4-20 this article to be reported in the aggregate for each risk for
4-21 claims in which benefit payments are less than $5,000. The
4-22 commissioner <Board> may adjust the dollar threshold for aggregate
4-23 reporting to account for inflationary changes.
4-24 (i) <(h)> Interchange of Rating Plan Data. Reasonable rules
4-25 and plans may be promulgated by the commissioner <Board> after due
4-26 consideration, requiring the interchange of loss experience
4-27 necessary for the application of rating plans promulgated by the
5-1 commissioner <Board> under this subchapter.
5-2 (j) <(i)> Consultation with Other States. In order to
5-3 further uniform administration of rating laws, the commissioner
5-4 <Board> and every insurer may exchange information and experience
5-5 data with the National Association of Insurance Commissioners,
5-6 insurance supervisory officials, insurers, and advisory
5-7 organizations in other states and may consult and cooperate with
5-8 them with respect to rate-making and the application of rating
5-9 systems.
5-10 (k) An insurer may provide to an advisory organization the
5-11 same information provided by the insurer to the commissioner under
5-12 this article.
5-13 (l) The commissioner may designate, as authorized by Article
5-14 21.69, Insurance Code, a qualified organization as a statistical
5-15 agent to assist in the gathering and compilation of the data
5-16 required to be reported under this article. The commissioner may
5-17 appoint as a statistical agent any organization that applies for
5-18 that appointment and that is technically qualified to perform the
5-19 duties assigned to it by the commissioner. Disclosure of data
5-20 furnished to the designated statistical agent is governed by the
5-21 provisions of Chapter 552, Government Code, and any requests for
5-22 this data must be directed to the Texas Department of Insurance
5-23 pursuant to Chapter 552, Government Code. Upon determining that
5-24 the requested information is subject to disclosure under Chapter
5-25 552, Government Code, the department shall direct the statistical
5-26 agent to provide the information to the requestor within 15 days.
5-27 Insurers may fulfill their obligations under this article by
6-1 reporting data to an organization that has been appointed as a
6-2 statistical agent by the commissioner.
6-3 SECTION 2. Article 5.73, Insurance Code, is amended to read
6-4 as follows:
6-5 Art. 5.73. Advisory Organizations
6-6 Sec. 1. Every insurer transacting business in the state may,
6-7 but is not required to, subscribe to an advisory organization and
6-8 is permitted to submit to and receive from any advisory
6-9 organization statistical plans, historical data, prospective loss
6-10 costs, supplementary rating information, policy forms and
6-11 endorsements, research and performance of inspections <except final
6-12 rates or recommendations regarding profit or expense provisions,
6-13 other than loss adjustment expenses>.
6-14 Sec. 2. (A) An <No> advisory organization may not <shall>
6-15 compile or distribute, and an <no> insurer may not accept from an
6-16 advisory organization, recommendations for rates, profits, or <or
6-17 for profit and> expenses, other than loss adjustment expenses.
6-18 (b) Notwithstanding Section 1 of this article, the chief
6-19 actuary of the Texas Department of Insurance may calculate
6-20 prospective loss costs based on historical data and other relevant
6-21 data and information collected by the department or collected by an
6-22 advisory organization pursuant to this article. The department
6-23 shall provide prospective loss costs if so calculated under this
6-24 section to any person on request pursuant to Chapter 552,
6-25 Government Code.
6-26 Sec. 3. (a) An insurer or advisory organization may not:
6-27 (1) attempt to monopolize, combine, or conspire with
7-1 any other person to monopolize an insurance market; or
7-2 (2) engage in a boycott, on a concerted basis, of an
7-3 insurance market.
7-4 (b) An insurer or advisory organization may not make an
7-5 agreement with any other <insurer,> advisory organization<,> or
7-6 any insurer or other person if the agreement has the purpose or
7-7 effect of restraining trade unreasonably or of substantially
7-8 lessening competition in the business of insurance.
7-9 (c) If, after a hearing, the commissioner <Board> finds that
7-10 the furnishing of specified services by an advisory organization
7-11 involves any act or practice which is unfair or unreasonable or
7-12 otherwise inconsistent with the provisions of this article
7-13 <subchapter> or with the applicable laws of this State, the
7-14 commissioner <it> may issue a written order specifying in what
7-15 respects such act or practice is unfair or unreasonable or
7-16 otherwise inconsistent with the provisions of law and requiring the
7-17 discontinuance of such act or practice. In addition to any other
7-18 remedies available at law, the commissioner <Board> may impose any
7-19 sanction authorized under Article 1.10 of this code.
7-20 Sec. 4. (a) The commissioner <Board> shall periodically
7-21 <annually> require an audit of any advisory organization that
7-22 provides statistics or other information to the commissioner
7-23 <Board> in a proceeding to set rates. The audit shall be conducted
7-24 by a person or entity designated by the commissioner at the expense
7-25 of the advisory organization under rules adopted by the
7-26 commissioner <Board, at the expense of the advisory organization>.
7-27 The audit must examine the advisory organization's method of
8-1 collecting, analyzing, and reporting data to assure the accuracy of
8-2 data. The audit may examine source documents within individual
8-3 companies. Except for individual company information, an audit is
8-4 public information.
8-5 (b) In addition to the audit required by Section 4(a) of
8-6 this article, an <An> advisory organization is subject to
8-7 examination under Article 5.74 of this code.
8-8 (c) Reporting <Notwithstanding any provision to the
8-9 contrary, reporting> of data by an insurer under this article does
8-10 not relieve the insurer of responsibility of reporting that same
8-11 data directly to the department <Board> at the department's
8-12 <Board's> request.
8-13 Sec. 5 <4A>. (a) An advisory organization may not receive
8-14 from or supply to insurers transacting insurance in this state the
8-15 information described in Section 1 of this article unless the
8-16 advisory organization establishes a subsidiary that:
8-17 (1) is domiciled in this state;
8-18 (2) has an office in this state; and
8-19 (3) has a governing board composed of:
8-20 (A) an ex officio member appointed by the
8-21 commissioner; and
8-22 (B) five representatives of property and
8-23 casualty insurers licensed in this state who subscribe to or
8-24 purchase products from the advisory organization.
8-25 (b) Each advisory organization shall file with the
8-26 commissioner a copy of its constitution and bylaws, article of
8-27 agreement or association, or certificate of incorporation and a
9-1 copy of the rules governing its activities.
9-2 (c) Each advisory organization shall file with the
9-3 commissioner a list showing each subscriber company doing business
9-4 in this state and the products or information the subscriber
9-5 company purchases. The filing required by this subsection shall be
9-6 made at least quarterly.
9-7 (d) On request by the commissioner, each advisory
9-8 organization shall report to the department a summary of the
9-9 actuarial assumptions, trend factors, economic factors, and other
9-10 criteria used in trending data for companies doing business in this
9-11 state.
9-12 Sec. 6 <4B>. If requested by the department in writing, an
9-13 <Each> insurer relying on prospective loss costs provided by an
9-14 advisory organization must justify, by expert evidence, its need
9-15 for that information on the grounds of insufficiency of that
9-16 insurer's data and experience. Such justification may be made by
9-17 affidavit by a qualified actuary <or after notice and opportunity
9-18 for a hearing>. An insurer unable to demonstrate its need for
9-19 prospective loss costs provided by an advisory organization may not
9-20 file or use that information in any filing made with the
9-21 department.
9-22 Sec. 7 <4C>. An insurer may not receive from an advisory
9-23 organization prospective loss costs for personal automobile,
9-24 homeowners', or dwelling fire insurance.
9-25 Sec. 8. The authority granted under this article is subject
9-26 to the Sunset process and shall be reviewed during the regular
9-27 Sunset cycle of the Texas Department of Insurance.
10-1 <Sec. 4D. The select committee on rate and form regulation
10-2 created under Article 1.50 of this code shall appoint an
10-3 independent consulting firm to evaluate the activities of advisory
10-4 organizations in this state, including their impact on competition
10-5 in the insurance market, their use by insurers, and their impact on
10-6 availability and affordability of coverage, and any other matters
10-7 relevant to determining their continued authorization. The
10-8 committee shall include in its report to the legislature a
10-9 recommendation for the future role of advisory organizations in
10-10 this state.>
10-11 <Sec. 5. The authority granted under this article expires
10-12 September 1, 1997.>
10-13 <Sec. 6. To the extent that this article conflicts with the
10-14 provisions of Articles 5.55, 5.58, and 5.58A of this code with
10-15 respect to the setting of rates for workers' compensation
10-16 insurance, the provisions of those articles control.>
10-17 SECTION 3. Article 5.74, Insurance Code, is amended to read
10-18 as follows:
10-19 Art. 5.74. Examinations. The commissioner <said Board> may,
10-20 as often as it may be considered <deem it> expedient, make or cause
10-21 to be made an examination of each group, association, or other
10-22 organization referred to in Articles 5.72 and 5.73 of this
10-23 subchapter. The reasonable costs of any such examination shall be
10-24 paid by the group, association or other organization examined upon
10-25 presentation to it of a detailed account of such costs. The
10-26 officer, manager, agents and employees of such group, association
10-27 or other organization may be examined at any time under oath and
11-1 shall exhibit all books, records, accounts, documents, or
11-2 agreements governing its method of operation. In lieu of any such
11-3 examination the commissioner <Board> may accept the report of an
11-4 examination made by the insurance supervisory official of another
11-5 state, pursuant to the laws of such state.
11-6 SECTION 4. Article 21.69, Insurance Code, is amended to read
11-7 as follows:
11-8 Art. 21.69. Statistical Data Collection. (a) The
11-9 Commissioner may designate one or more qualified organizations as
11-10 statistical agents to aid the Commissioner in gathering data
11-11 relevant for regulatory purposes or otherwise provided for in this
11-12 Code. An organization may qualify as a statistical agent if it
11-13 demonstrates five years of experience in data collection, data
11-14 maintenance, data quality control, accounting and related areas.
11-15 <Except as provided in Article 5.58 of this code, the commissioner
11-16 shall contract with one statistical entity for each line of
11-17 insurance to compile and maintain historical premium and loss data
11-18 pursuant to statistical plans adopted by the commissioner. A
11-19 statistical entity designated by the commissioner must provide
11-20 sufficient evidence of five years of experience in data collection,
11-21 data maintenance, data quality control, accounting and related
11-22 areas.>
11-23 (b) For any statistical agent that does not establish its
11-24 own fees for collecting and reporting data that insurers
11-25 voluntarily agree to pay, either by custom and practice or by
11-26 agreement with the insurers that report data to it, or for any
11-27 statistical agent that requests it, the Commissioner may contract
12-1 with the statistical agent to compile and maintain historical
12-2 premium and loss data pursuant to statistical plans adopted or
12-3 approved by the Commissioner and pay for the contracted services
12-4 out of funds separately allocated for that purpose. The funds
12-5 shall be allocated and assessed among insurers that report data to
12-6 that agent according to the provisions and procedures in Article
12-7 5.24. <An insurer may continue to provide historical premium and
12-8 loss data to a statistical agent designated by the board prior to
12-9 April 1, 1993, as required by a statistical plan in use on that
12-10 date. The board shall receive that information, and the
12-11 statistical agent may return that information to its subscribers.
12-12 The board may utilize this information in all rate hearings.>
12-13 (c) Any designated statistical agent shall collect data from
12-14 insurers pursuant to a statistical plan promulgated by the
12-15 Commissioner. <The select committee on rate and form regulation
12-16 created under Article 1.50 of this code shall appoint an
12-17 independent consulting firm to evaluate the costs and benefits of
12-18 each of the systems and include in its report to the legislature a
12-19 recommendation for future data collection consistent with its
12-20 recommendations on rates.>
12-21 SECTION 5. This Act takes effect September 1, 1995, and
12-22 applies only to data that is reported to the Texas Department of
12-23 Insurance on or after January 1, 1996. Data reported before
12-24 January 1, 1996, is governed by the law as it existed immediately
12-25 before the effective date of this Act, and that law is continued in
12-26 effect for that purpose.
12-27 SECTION 6. The importance of this legislation and the
13-1 crowded condition of the calendars in both houses create an
13-2 emergency and an imperative public necessity that the
13-3 constitutional rule requiring bills to be read on three several
13-4 days in each house be suspended, and this rule is hereby suspended.