SRC-CDH C.S.H.B. 1662 75(R)BILL ANALYSIS Senate Research CenterC.S.H.B. 1662 By: Counts (Sibley) Economic Development 5-18-97 Committee Report (Substituted) DIGEST Currently, county mutual insurance companies are not subject to rate regulation for automobile insurance. Insurers that are subject to rate regulation under the benchmark rate and flexibility program have transferred business from the rate regulated company to an affiliated county mutual insurance company, thereby removing rate regulation for automobile insurance and eliminating assignments from the assigned risk plan (TAIPA). County mutual insurance companies are not subject to assignments from TAIPA. C.S.H.B. 1662 eliminates the circumvention of the flexible rating program by prohibiting any county mutual insurance company from using a rate for an insured on a private passenger automobile after application of all discounts, that is lower than the highest flexibility band for automobile insurance. This prohibition only applies to a county mutual insurance company that is directly or indirectly controlled by a holding company that also directly or indirectly controls another insurance company writing private passenger automobile insurance in Texas. PURPOSE As proposed, C.S.H.B. 1662 establishes rates for certain lines of insurance. RULEMAKING AUTHORITY 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, Article 5.101, Insurance Code, by adding Subsection (r), to prohibit a county mutual insurer from writing private passenger automobile insurance for any risk at a rate, after applying all applicable discounts and policy fees, which is lower than the highest rate allowed under the flexibility band for that line in order to avoid the circumvention of the flexible rating program, and notwithstanding the provisions of Article 17.22(b). Requires a county mutual, from the effective date of each benchmark rate, to make any filing necessary within 60 days to comply with this subsection and its rates in effect on the effective date of the benchmark rate shall continue in effect until such filing. Prohibits the limitation in this subsection from applying to single interest insurance or insurance on mobile homes, motor homes, travel trailers, or motorcycles. SECTION 2. Makes application of this Act prospective to January 1, 1998. SECTION 3. Effective date: September 1, 1997. SECTION 4. Emergency clause. SUMMARY OF COMMITTEE CHANGES SECTION 1. Amends Section 3(r), Article 5.101, Insurance Code, to set forth regulations regarding the benchmark rate. Provides that the limitation in this subsection does not apply to certain types of insurance. Makes nonsubstantive changes.