By McCall                                       H.B. No. 2941

      75R7656 DLF-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to rates and forms for certain commercial lines of

 1-3     insurance.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Sections 1 and 2, Article 5.13-2, Insurance Code,

 1-6     are amended to read as follows:

 1-7           Sec. 1.  PURPOSE.  (a)  This article governs the regulation

 1-8     of general liability, commercial automobile, commercial property,

 1-9     all  commercial casualty, and medical professional liability

1-10     insurance rates and forms.  It does not govern personal automobile

1-11     insurance, fidelity, surety, or guaranty bonds.

1-12           (b)  The purposes of this article are to:

1-13                 (1)  promote the public welfare by regulating insurance

1-14     rates to prohibit excessive, inadequate, or unfairly discriminatory

1-15     rates;

1-16                 (2)  promote availability of insurance;

1-17                 (3)  promote price competition among insurers to

1-18     provide rates and premiums that are responsive to competitive

1-19     market conditions;

1-20                 (4)  prohibit price-fixing agreements and other

1-21     anticompetitive behavior by insurers;

1-22                 (5)  regulate the insurance forms used for lines of

1-23     insurance subject to this article to ensure that they are not

1-24     unjust, unfair, inequitable, misleading, or deceptive; and

 2-1                 (6)  provide regulatory procedures for the maintenance

 2-2     of appropriate information reporting systems.

 2-3           Sec. 2.  SCOPE.  This article applies to all lines of general

 2-4     liability, commercial property, commercial automobile, all

 2-5     commercial casualty, and medical professional liability insurance

 2-6     written under policies or contracts of insurance issued by a

 2-7     licensed insurer, other than a fidelity, surety, or guaranty bond

 2-8     [or an automobile insurance policy].

 2-9           SECTION 2.  Section 8(e), Article 5.13-2, Insurance Code, is

2-10     amended to read as follows:

2-11           (e)  The commissioner may promulgate standard insurance

2-12     policy forms, endorsements, and other related forms that may be

2-13     used, at the discretion of the insurer, by an insurer instead of

2-14     the insurer's own forms in writing insurance subject to this

2-15     article.  [Forms submitted by insurers for approval under this

2-16     section must provide coverage equivalent to that provided in the

2-17     policy forms used for these lines of coverage on the effective date

2-18     of this article.  An endorsement may not reduce coverage provided

2-19     under the approved policy form.]

2-20           SECTION 3.  Article 5.01(f), Insurance Code, is amended to

2-21     read as follows:

2-22           (f)  Notwithstanding Subsections (a) through (d) of this

2-23     article, [on and after March 1, 1992,] rates for motor vehicle

2-24     insurance in this state are determined as provided by Article

2-25     5.13-2 of this code or by the flexible rating program adopted under

2-26     Subchapter M  of this chapter, as applicable.

2-27           SECTION 4.  Article 5.01-2(b), Insurance Code, is amended to

 3-1     read as follows:

 3-2           (b)  Rates [On and after March 1, 1992, rates] for motor

 3-3     vehicle insurance written by a Lloyd's plan insurer or a reciprocal

 3-4     or interinsurance exchange are determined as provided by Article

 3-5     5.13-2 of this code or by the flexible rating program adopted under

 3-6     Subchapter  M of this chapter, as applicable.

 3-7           SECTION 5.  Article 5.03(g), Insurance Code, is amended to

 3-8     read as follows:

 3-9           (g)  Notwithstanding Sections (a) through (e) of this

3-10     article, [on and after March 1, 1992,] rates for motor vehicles are

3-11     determined as provided by Article 5.13-2 of this code or by

3-12     Subchapter M of this chapter, as applicable.

3-13           SECTION 6.  Article 5.04(c), Insurance Code, is amended to

3-14     read as follows:

3-15           (c)  Notwithstanding Subsections (a) and (b) of this article,

3-16     [on and after March 1, 1992,] rates for motor vehicles are

3-17     determined as provided by Article 5.13-2 of this code or by

3-18     Subchapter M of this chapter, as applicable.

3-19           SECTION 7.  Article 5.06, Insurance Code, is amended by

3-20     adding Subsection (11) to read as follows:

3-21           (11)  This article does not apply to forms used by insurers

3-22     for commercial automobile insurance.

3-23           SECTION 8.  Article 5.09(c), Insurance Code, is amended to

3-24     read as follows:

3-25           (c)  Notwithstanding Subsection (a) of this article, [on and

3-26     after March 1, 1992,] rates for motor vehicles are determined as

3-27     provided by Article 5.13-2 of this code or by Subchapter M of this

 4-1     chapter, as applicable.

 4-2           SECTION 9.  Article 5.11(c), Insurance Code, is amended to

 4-3     read as follows:

 4-4           (c)  Notwithstanding Subsections (a) and (b) of this article,

 4-5     [on and after March 1, 1992,] rates for motor vehicles are

 4-6     determined as provided by Article 5.13-2 of this code or by

 4-7     Subchapter M of this chapter, as applicable.

 4-8           SECTION 10.  Article 5.12(a), Insurance Code, is amended to

 4-9     read as follows:

4-10           (a)  The State of Texas by and through the commissioner shall

4-11     annually determine the rate of assessment of a maintenance tax to

4-12     be paid on an annual or semiannual basis, as determined by the

4-13     comptroller.  The rate of assessment may not exceed one-fifth of

4-14     one percent of the correctly reported gross motor vehicle insurance

4-15     premiums of all authorized insurers writing motor vehicle

4-16     insurance, other than commercial automobile insurance, in this

4-17     state.  The comptroller shall collect the maintenance tax.

4-18           SECTION 11.  Article 5.14(b), Insurance Code, is amended to

4-19     read as follows:

4-20           (b)  Notwithstanding Subsection (a) of this article, [on and

4-21     after October 1, 1991,] rates and forms for general liability,

4-22     commercial automobile, and commercial property insurance coverage

4-23     subject to  this subchapter are determined as provided by Article

4-24     5.13-2 of this code.

4-25           SECTION 12.  Article 5.15(h), Insurance Code, is amended to

4-26     read as follows:

4-27           (h)  Notwithstanding Subsections (a)-(g) of this article,

 5-1     rates for general liability, commercial automobile, commercial

 5-2     property, and all  commercial casualty insurance coverage under

 5-3     this article are determined, and hearings related to those rates

 5-4     are conducted, as provided by Article 5.13-2 of this code.

 5-5           SECTION 13.  Article 5.24(a), Insurance Code, is amended to

 5-6     read as follows:

 5-7           (a)  The State of Texas by and through the commissioner shall

 5-8     annually determine the rate of assessment of a maintenance tax to

 5-9     be paid on an annual or semiannual basis, as determined by the

5-10     comptroller.  The rate of assessment may not exceed two-fifths of

5-11     one percent of the correctly reported gross premiums of all classes

5-12     of insurance covered by this subchapter, other than commercial

5-13     automobile insurance, of all authorized insurers writing those

5-14     classes of  insurance in this state.  The rate of assessment may

5-15     not exceed one-fifth of one percent of the correctly reported gross

5-16     premiums of all insurers writing commercial automobile insurance in

5-17     this state. The comptroller shall collect the maintenance tax.

5-18           SECTION 14.  Article 5.96(a-1), Insurance Code, is amended to

5-19     read as follows:

5-20           (a-1)  This article does not apply to commercial automobile

5-21     insurance. Except as provided by Section 5(d), Article 5.101, of

5-22     this code, this  article does not apply to the setting of benchmark

5-23     rates for motor vehicle insurance and fire and allied lines

5-24     insurance under Subchapter M of this chapter.

5-25           SECTION 15.  Section 1, Article 5.101, Insurance Code, is

5-26     amended to read as follows:

5-27           Sec. 1.  PURPOSE.  (a)  The program on flexible rating is

 6-1     designed to help stabilize the rates charged for insurance in lines

 6-2     of property and casualty insurance covered by Subchapters A and C

 6-3     of this chapter.

 6-4           (b)  This article does not apply to:

 6-5                 (1)  ocean marine insurance;

 6-6                 (2)  inland marine insurance;

 6-7                 (3)  fidelity, surety and guaranty bond insurance;

 6-8                 (4)  errors and omissions insurance;

 6-9                 (5)  directors' and officers' liability insurance;

6-10                 (6)  general liability insurance;

6-11                 (7)  commercial property insurance or commercial

6-12     automobile insurance;

6-13                 (8)  workers' compensation insurance;

6-14                 (9)  professional liability insurance for physicians

6-15     and health care providers as defined in Article 5.15-1 of this

6-16     code;  or

6-17                 (10)  attorney's professional liability insurance.

6-18           SECTION 16.  Section 5.01B, Insurance Code, is repealed.

6-19           SECTION 17.  This Act takes effect September 1, 1997, and

6-20     applies only to an insurance policy that is delivered, issued for

6-21     delivery, or renewed on or after January 1, 1998.  A policy that is

6-22     delivered, issued for delivery, or renewed before January 1, 1998,

6-23     is governed by the law as it existed immediately before the

6-24     effective date of this Act, and that law is continued in effect for

6-25     this purpose.

6-26           SECTION 18.  The importance of this legislation and the

6-27     crowded condition of the calendars in both houses create an

 7-1     emergency and an imperative public necessity that the

 7-2     constitutional rule requiring bills to be read on three several

 7-3     days in each house be suspended, and this rule is hereby suspended.