By Pitts                                         H.B. No. 428

      75R3182 PB-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to certain classification systems used for workers'

 1-3     compensation insurance purposes by the Texas Department of

 1-4     Insurance.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Article 5.60, Insurance Code, is amended to read

 1-7     as follows:

 1-8           Art. 5.60.  CLASSIFICATION SYSTEM; RATING.  (a)  For workers'

 1-9     compensation insurance, the department [Board] shall determine

1-10     hazards by classes and fix classification relativities applicable

1-11     to the payroll in each of the classes as shall be adequate to the

1-12     risks to which they apply.  The relativities:

1-13                 (1)  shall be designed to encourage safety;

1-14                 (2)  may be territorially based;  and

1-15                 (3)  may reflect differences in losses between

1-16     employers of high and low wage earners within the same class.

1-17           (b)  In determining job classifications for purposes of this

1-18     subchapter, the department shall use the "Basic Manual for Workers

1-19     Compensation and Employers Liability Insurance" published by the

1-20     National Council on Compensation Insurance or a similar publication

1-21     produced by an analogous nationally recognized organization.

1-22           (c)  The department [Board] shall adopt a uniform experience

1-23     rating plan.  The rating plan shall encourage the prevention of

1-24     accidents and consider the peculiar hazard and experience of

 2-1     individual risks, past and prospective, within and outside this

 2-2     state, and all other relevant factors.

 2-3           (d) [(c)]  This subchapter may not be construed to prohibit

 2-4     any stock company, mutual company, reciprocal or interinsurance

 2-5     exchange, the Texas Workers' Compensation Insurance Fund, or

 2-6     Lloyd's association from issuing participating policies;  however,

 2-7     a dividend to policyholders under Subtitle A, Title 5, Labor Code,

 2-8     [the Texas Workers' Compensation Act (Article 8308-1.01 et seq.,

 2-9     Vernon's Texas Civil Statutes)] may not take effect until approved

2-10     by the department [Board].  Such a dividend may not be approved

2-11     until adequate reserves have been provided, those reserves to be

2-12     computed on the same basis for all classes of companies operating

2-13     under this subchapter.

2-14           (e) [(d)]  The department [Board] shall revise the

2-15     classification system and rating plans [not later than March 1,

2-16     1993, and subsequently shall revise the system and plans] at least

2-17     once every five years.

2-18           SECTION 2.  This Act takes effect September 1, 1997.

2-19           SECTION 3.  The importance of this legislation and the

2-20     crowded condition of the calendars in both houses create an

2-21     emergency and an imperative public necessity that the

2-22     constitutional rule requiring bills to be read on three several

2-23     days in each house be suspended, and this rule is hereby suspended.