By: Cain S.B. No. 1434
A BILL TO BE ENTITLED
AN ACT
1-1 relating to collection of insurance data.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Article 5.58, Insurance Code, is amended to read
1-4 as follows:
1-5 Art. 5.58. RATE ADMINISTRATION. (a) Recording and
1-6 Reporting of Loss Experience and Other Financial Data. The
1-7 commissioner <Board> shall develop reasonable statistical plans,
1-8 which may be modified from time to time and which shall be used
1-9 thereafter by each insurer in the recording and reporting of its
1-10 loss experience and such other financial data as may be required,
1-11 in order that the total loss and expense experience of all insurers
1-12 may be made available at least annually in such form and detail as
1-13 may be necessary to aid in determining whether rates meet the
1-14 standards imposed under Section 2, Article 5.55 of this code. If
1-15 the commissioner <Board> determines that any insurer's rates do not
1-16 meet those standards, the commissioner <Board> may order the
1-17 insurer to adjust its rates to meet those standards. A
1-18 commissioner's <Board> order under this article may be appealed
1-19 under Article 1.04 of this code. <The Board may not contract with
1-20 or designate an insurer or advisory organization to gather or
1-21 compile data for statistical plans; however, an insurer may provide
1-22 to one or more advisory organizations the information provided by
1-23 the insurer to the Board 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;
3-1 (7) the amount paid for temporary income benefits;
3-2 (8) the amount paid for impairment income benefits;
3-3 (9) the amount paid for supplemental income benefits;
3-4 (10) the amount paid for death and burial benefits;
3-5 (11) the total amount paid for income, death, or
3-6 burial benefits;
3-7 (12) the total amount of incurred losses for income,
3-8 death, or burial benefits;
3-9 (13) the amount paid to doctors and other health care
3-10 providers;
3-11 (14) the amount paid to hospitals and other health
3-12 care facilities;
3-13 (15) the total amount paid for medical benefits;
3-14 (16) the total amount of incurred losses for medical
3-15 benefits; and
3-16 (17) other information required by the commissioner
3-17 <Board>.
3-18 (d) For good cause, the commissioner by order may exclude
3-19 any of the requirements stated in Subsection (c) of this article
3-20 from unit statistical data reports.
3-21 (e) Information Confidential. A person may not distribute
3-22 or otherwise disclose a social security number or any other
3-23 information collected under Subsection (c) of this article which
3-24 would disclose the identity of any claimant.
3-25 (f) <(e)> Payments Excluded From Rates. In any statistical
4-1 plan developed by the commissioner <Board>, direct expenditures by
4-2 an insurer to influence public policy and any amounts paid by an
4-3 insurer as damages in a suit against the insurer for malice or bad
4-4 faith or as fines or penalties shall be reported separately, and
4-5 the expenditures and payments shall not be considered as a loss or
4-6 expense for the calculation of any premium rate modifier or
4-7 surcharge of an insured.
4-8 (g) <(f)> Transmission of Statistical Reports. The
4-9 statistical reports filed under Subsection (c) of this article
4-10 shall be updated by each insurer and transmitted to the department
4-11 <Board> in accordance with the filing requirements of the
4-12 commissioner's <Board's> statistical plan. Each insurer writing at
4-13 least one-half of one percent of the workers' compensation
4-14 insurance in this state shall report its data in a compatible
4-15 electronic format prescribed by the commissioner <Board>. The
4-16 commissioner <Board> shall take necessary measures to ensure the
4-17 accuracy of the data and the adequacy of the format for data
4-18 reported in an electronic format.
4-19 (h) <(g)> Reports of Aggregate Data. The commissioner
4-20 <Board> may permit the information required by Subsection (c) of
4-21 this article to be reported in the aggregate for each risk for
4-22 claims in which benefit payments are less than $5,000. The
4-23 commissioner <Board> may adjust the dollar threshold for aggregate
4-24 reporting to account for inflationary changes.
4-25 (i) <(h)> Interchange of Rating Plan Data. Reasonable rules
5-1 and plans may be promulgated by the commissioner <Board> after due
5-2 consideration, requiring the interchange of loss experience
5-3 necessary for the application of rating plans promulgated by the
5-4 commissioner <Board> under this subchapter.
5-5 (j) <(i)> Consultation with Other States. In order to
5-6 further uniform administration of rating laws, the commissioner
5-7 <Board> and every insurer may exchange information and experience
5-8 data with the National Association of Insurance Commissioners,
5-9 insurance supervisory officials, insurers, and advisory
5-10 organizations in other states and may consult and cooperate with
5-11 them with respect to rate-making and the application of rating
5-12 systems.
5-13 (k) An insurer may provide to one or more advisory
5-14 organizations the same information provided by the insurer to the
5-15 commissioner under this article.
5-16 (l) The commissioner may designate a qualified organization
5-17 as statistical agent to assist in the gathering and compilation of
5-18 the data required to be reported under this article. The
5-19 commissioner may appoint as a statistical agent any organization
5-20 that applies for such appointment and that is technically qualified
5-21 to perform the duties assigned to it by the commissioner. Insurers
5-22 may fulfill their obligations under this article by reporting data
5-23 to an organization that has been appointed as a statistical agent.
5-24 SECTION 2. Article 5.73, Insurance Code, is amended to read
5-25 as follows:
6-1 Art. 5.73. Advisory Organizations
6-2 Sec. 1. Every insurer transacting business in the state may,
6-3 but is not required to, subscribe to an advisory organization and
6-4 is permitted to submit to and receive from any advisory
6-5 organization statistical plans, historical data, prospective loss
6-6 costs, supplementary rating information, policy forms and
6-7 endorsements, research and performance of inspections <except final
6-8 rates or recommendations regarding profit or expense provisions,
6-9 other than loss adjustment expenses>.
6-10 Sec. 2. An <No> advisory organization may not <shall>
6-11 compile or distribute, and an <no> insurer may not accept from an
6-12 advisory organization, recommendations for rates, <or for> profit,
6-13 or <and> expenses, other than loss adjustment expenses.
6-14 Sec. 3. (a) An insurer or advisory organization may not:
6-15 (1) attempt to monopolize, combine, or conspire with
6-16 any other person to monopolize an insurance market; or
6-17 (2) engage in a boycott, on a concerted basis, of an
6-18 insurance market.
6-19 (b) An insurer or advisory organization may not make an
6-20 agreement with any other <insurer,> advisory organization<,> or any
6-21 insurer or other person if the agreement has the purpose or effect
6-22 of restraining trade unreasonably or of substantially lessening
6-23 competition in the business of insurance.
6-24 (c) If, after a hearing, the commissioner <Board> finds that
6-25 the furnishing of specified services by an advisory organization
7-1 involves any act or practice which is unfair or unreasonable or
7-2 otherwise inconsistent with the provisions of this article
7-3 <subchapter> or with the applicable laws of this State, the
7-4 commissioner <it> may issue a written order specifying in what
7-5 respects such act or practice is unfair or unreasonable or
7-6 otherwise inconsistent with the provisions of law and requiring the
7-7 discontinuance of such act or practice. In addition to any other
7-8 remedies available at law, the commissioner <Board> may impose any
7-9 sanction authorized under Article 1.10 of this code.
7-10 Sec. 4. (a) The commissioner <Board> shall periodically
7-11 <annually> require an audit of any advisory organization that
7-12 provides statistics or other information to the commissioner
7-13 <Board> in a proceeding to set rates. The audit shall be conducted
7-14 by a person or entity designated by the commissioner at the expense
7-15 of the advisory organization under rules adopted by the
7-16 commissioner <Board, at the expense of the advisory organization>.
7-17 The audit must examine the advisory organization's method of
7-18 collecting, analyzing, and reporting data to assure the accuracy of
7-19 the data. The audit may examine source documents within individual
7-20 companies. Except for individual company information, an audit is
7-21 public information.
7-22 (b) In addition to the audit required by Section 4(a) of
7-23 this article, an <An> advisory organization is subject to
7-24 examination under Article 5.74 of this code.
7-25 (c) Reporting <Notwithstanding any provision to the
8-1 contrary, reporting> of data by an insurer under this article does
8-2 not relieve the insurer of responsibility of reporting that same
8-3 data directly to the department <Board> at the department's
8-4 <Board's> request.
8-5 Sec. 5 <4A>. (a) An advisory organization may not receive
8-6 from or supply to insurers transacting insurance in this state the
8-7 information described in Section 1 of this article unless the
8-8 advisory organization establishes a subsidiary that:
8-9 (1) is domiciled in this state;
8-10 (2) has an office in this state; and
8-11 (3) has a governing board composed of:
8-12 (A) an ex officio member appointed by the
8-13 commissioner; and
8-14 (B) five representatives of property and
8-15 casualty insurers licensed in this state who subscribe to or
8-16 purchase products from the advisory organization.
8-17 (b) Each advisory organization shall file with the
8-18 commissioner a copy of its constitution and bylaws, article of
8-19 agreement or association, or certificate of incorporation and a
8-20 copy of the rules governing its activities.
8-21 (c) Each advisory organization shall file with the
8-22 commissioner a list showing each subscriber company doing business
8-23 in this state and the products or information the subscriber
8-24 company purchases. The filing required by this subsection shall be
8-25 made at least quarterly.
9-1 (d) On request by the commissioner, each advisory
9-2 organization shall report to the department a summary of the
9-3 actuarial assumptions, trend factors, economic factors, and other
9-4 criteria used in trending data for companies doing business in this
9-5 state.
9-6 Sec. 6 <4B>. If requested by the department in writing, an
9-7 <Each> insurer relying on prospective loss costs provided by an
9-8 advisory organization must justify, by expert evidence, its need
9-9 for that information on the grounds of insufficiency of that
9-10 insurer's data and experience. Such justification may be made by
9-11 affidavit by a qualified actuary <or after notice and opportunity
9-12 for a hearing>. An insurer unable to demonstrate its need for
9-13 prospective loss costs provided by an advisory organization may not
9-14 file or use that information in any filing made with the
9-15 department.
9-16 Sec. 7 <4C>. An insurer may not receive from an advisory
9-17 organization prospective loss costs for personal automobile,
9-18 homeowners', or dwelling fire insurance.
9-19 <Sec. 4D. The select committee on rate and form regulation
9-20 created under Article 1.50 of this code shall appoint an
9-21 independent consulting firm to evaluate the activities of advisory
9-22 organizations in this state, including their impact on competition
9-23 in the insurance market, their use by insurers, and their impact on
9-24 availability and affordability of coverage, and any other matters
9-25 relevant to determining their continued authorization. The
10-1 committee shall include in its report to the legislature a
10-2 recommendation for the future role of advisory organizations in
10-3 this state.>
10-4 <Sec. 5. The authority granted under this article expires
10-5 September 1, 1997.>
10-6 <Sec. 6. To the extent that this article conflicts with the
10-7 provisions of Articles 5.55, 5.58, and 5.58A of this code with
10-8 respect to the setting of rates for workers' compensation
10-9 insurance, the provisions of those articles control.>
10-10 SECTION 3. Article 5.74, Insurance Code, is amended to read
10-11 as follows:
10-12 Art. 5.74. Examinations. The commissioner <said Board> may,
10-13 as often as the commissioner deems <it may deem> it expedient, make
10-14 or cause to be made an examination of each group, association, or
10-15 other organization referred to in Articles 5.72 and 5.73 of this
10-16 subchapter. The reasonable costs of any such examination shall be
10-17 paid by the group, association, or other organization examined upon
10-18 presentation to it of a detailed account of such costs. The
10-19 officer, manager, agents, and employees of such group, association,
10-20 or other organization may be examined at any time under oath and
10-21 shall exhibit all books, records, accounts, documents, or
10-22 agreements governing its method of operation. In lieu of any such
10-23 examination the commissioner <Board> may accept the report of an
10-24 examination made by the insurance supervisory official of another
10-25 state, pursuant to the laws of such state.
11-1 SECTION 4. Article 21.69, Insurance Code, is repealed.
11-2 SECTION 5. The importance of this legislation and the
11-3 crowded condition of the calendars in both houses create an
11-4 emergency and an imperative public necessity that the
11-5 constitutional rule requiring bills to be read on three several
11-6 days in each house be suspended, and this rule is hereby suspended,
11-7 and that this Act take effect and be in force from and after its
11-8 passage, and it is so enacted.