RS H.B. 2941 75(R) BILL ANALYSIS INSURANCE H.B. 2941 By: McCall 5-10-97 Committee Report (Unamended) BACKGROUND The Legislature has previously deregulated nearly all of the commercial lines of property and casualty insurance; commercial lines refers to that type of insurance sold to businesses. The only major exception to this is commercial automobile insurance. The type of deregulation instituted for the other commercial lines is typically called "file and use", in which the companies file their rates with the Texas Department of Insurance which then reviews the filing. This method of rate regulation is found in Article 5.13-2, Texas Insurance Code, and it permits the Commissioner to disallow any rate filing and require a company to justify it to the Department. In addition, if the Commissioner finds that this general form of rate regulation is contrary to the public's interest, he or she may issue an order requiring the return to a promulgated rate system. When the Legislature enacted Article 5.13-2 in 1991, it also included a transition provision requiring that policy forms be "equivalent" to the standard forms promulgated by the Department and in effect immediately prior to implementation of Article 5.13-2. PURPOSE The purpose of this bill is to add commercial automobile insurance to the rate regulatory scheme provided in Article 5.13-2, delete the equivalency requirement for policy forms, and make the conforming changes to other statutes in the Insurance Code dealing with automobile insurance. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sections 1 and 2, Article 5.13-2, Insurance Code, as follows: Sec. 1. PURPOSE. (a) Adds "commercial automobile" to the types of rates and forms the article would govern. Amends language to exempt "personal" automobile insurance from coverage under this article. Sec. 2. SCOPE. Includes commercial automobile in the types of insurance that are included in the scope of this article. Deletes language "or an automobile insurance policy." SECTION 2. Amends Section 8(e), Article 5.13-2, Insurance Code, to read as follows: (e) Deletes language that forms submitted by insurers for approval under this section must provide coverage equivalent to the coverage provided in the policy forms used for the lines of coverage on the effective date of this article. SECTION 3. Amends Article 5.01(f), Insurance Code, as follows: (f) Deletes time reference. Adds Article 5.13-2, Insurance Code, as the determining factor for rates for motor vehicle insurance in this state. Makes Article 5.13-2 and the flexible rating program under Subchapter M of this chapter apply only "as applicable." SECTION 4. Amends Article 5.01-2(b), Insurance Code, as follows: (b) Removes date reference. Makes conforming changes as in SECTION 3. SECTION 5. Amends Article 5.03(g), Insurance Code, as follows: (b) Removes date reference. Makes conforming changes as in SECTION 3. SECTION 6. Amends Article 5.04(c), Insurance Code, as follows: (b) Removes date reference. Makes conforming changes as in SECTION 3. SECTION 7. Amends Article 5.06, Insurance Code, by adding Subsection 11 as follows: (11) This article does not apply to forms used by insurers for commercial auto insurance. SECTION 8. Article 5.09(c), Insurance Code, is amended as follows: (c) Removes date reference. Makes conforming changes as in SECTION 3. SECTION 9. Article 5.11(c), Insurance Code, is amended as follows: (c) Removes date reference. Makes conforming changes as in SECTION 3. SECTION 10. Article 5.12(a), Insurance Code, as follows: (a) Adds language exempting commercial automobile insurance from figuring the amount of rate of assessment of a maintenance tax. SECTION 11. Amends Article 5.14(b), Insurance Code as follows: (b) Removes reference of date. Adds commercial automobiles to rates and forms subject to Article 5.13-2, Insurance Code. SECTION 12. Amends Article 5.15(h), Insurance Code as follows: (h) Adds "commercial automobile" to those types of coverages falling under Art. 5.13-2, Insurance Code. SECTION 13. Amends Article 5.24(a), Insurance Code as follows: (a) Adds language exempting commercial automobile insurance from the determination of the rate of assessment of a maintenance tax. Adds language to limit the rate of assessment to one-fifth of one percent of the gross premiums of insurers writing commercial auto insurance in Texas. SECTION 14. Amends Article 5.96 (a-1), Insurance Code as follows: (a-1) Adds language to exempt commercial auto insurance from the provisions of this article. SECTION 15. Amends Section 1, Article 5.101, Insurance Code as follows: Sec. 1. PURPOSE. Splits into subsection (a) and (b). Adds language exempting commercial auto insurance from the provisions of article. SECTION 16. Repeals Section 5.01B, Insurance Code. SECTION 17. Effective Date - September 1, 1997. Applies to a policy delivered, issued for delivery, or renewed on of after January 1, 1998. SECTION 18. Emergency Clause.