LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 5, 1995



 TO:     Honorable John Smithee, Chair          IN RE:  House Bill No. 1988
         Committee on Insurance                         By: Duncan
         House of Representatives
         Austin, Texas






FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
1988 (relating to insurance rates and policy forms for certain
lines of insurance) this office has determined the following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.

The bill would amend the Insurance Code with a number of
provisions, including establishing a benchmark and flexibility
band rate system for private passenger automobile insurance and
residential property insurance.  The bill would change regulation
of commercial automobile insurance from benchmark rates and
minimum standards on policy forms to file-and-use rates and prior
approval of forms.  The bill would repeal provisions relating to
the flexible rating program for certain insurance lines. 
Benchmark rate hearings would be conducted by the State Office of
Administrative Hearings.  The approval process for rating manuals
filed by individual insurers writing private passenger motor
vehicle insurance or private property insurance would change from
a formal hearing to prior approval with a deemer period.  Greater
participation of advisory organizations would be allowed for the
exchange of information and experience data and the Insurance
Commissioner would be allowed to designate one or more
statistical agents to assist in gathering and compiling loss and
expense experience.

The bill would repeal several provisions governing rates and
forms for fidelity, surety and guaranty bonds, personal lines
other than automobile and homeowners and involuntary unemployment    




insurance.
 
The change from benchmark automobile insurance rates to file-and-
use rates would eliminate the need for the experience rating
function by the Department of Insurance.  According to the
Department, however, savings resulting from elimination of the
function would be offset by the need to review and approve forms
for commercial automobile insurance.  Eliminating the equivalent
coverage requirement and eliminating the prohibition against
restrictive endorsements would increase the number of filings for
property and casualty insurance lines other than private
passenger, residential property and workers' compensation.


No significant fiscal implication to the State is anticipated.

No fiscal implication to units of local government is
anticipated.


Source:   Department of Insurance
          LBB Staff: JK, RM, RR