By Smithee H.B. No. 3028
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the collection of insurance data.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 5.73, Insurance Code, is amended to read
1-5 as follows:
1-6 Sec. 1. Every insurer transacting business in the state may,
1-7 but is not required to, subscribe to an advisory organization and
1-8 is permitted to submit to and receive from any advisory
1-9 organization statistical plans, historical data, prospective loss
1-10 costs, supplementary rating information, policy forms and
1-11 endorsements, research and performance of inspections except final
1-12 rates or recommendations regarding profit or expense provisions,
1-13 other than loss adjustment expenses.
1-14 Sec. 2. No advisory organization shall compile or
1-15 distribute, and no insurer may accept from an advisory
1-16 organization, recommendations for rates or for profit and expenses
1-17 other than loss adjustment expenses.
1-18 Sec. 3. (a) An insurer or advisory organization may not:
1-19 (1) attempt to monopolize, combine, or conspire with
1-20 any other person to monopolize an insurance market; or
1-21 (2) engage in a boycott, on a concerted basis, of an
1-22 insurance market.
1-23 (b) An insurer or advisory organization may not make an
1-24 agreement with any other insurer, advisory organization, or other
2-1 person if the agreement has the purpose or effect of restraining
2-2 trade unreasonably or of substantially lessening competition in the
2-3 business of insurance.
2-4 (c) If, after a hearing, the Board finds that the furnishing
2-5 of specified services by an advisory organization involves any act
2-6 or practice which is unfair or unreasonable or otherwise
2-7 inconsistent with the provisions of this subchapter or with the
2-8 applicable laws of this State, it may issue a written order
2-9 specifying in what respects such act or practice is unfair or
2-10 unreasonable or otherwise inconsistent with the provisions of law
2-11 and requiring the discontinuance of such act or practice. In
2-12 addition to any other remedies available at law, the Board may
2-13 impose any sanction authorized under Article 1.10 of this code.
2-14 Sec. 4. (a) The Board shall annually require an audit of
2-15 any advisory organization that provides statistics or other
2-16 information to the Board in a proceeding to set rates. The audit
2-17 shall be conducted under rules adopted by the Board, at the expense
2-18 of the advisory organization. The audit must examine the advisory
2-19 organization's method of collecting, analyzing, and reporting data
2-20 to assure the accuracy of data. The audit may examine source
2-21 documents within individual companies. Except for individual
2-22 company information, an audit is public information.
2-23 (b) An advisory organization is subject to examination under
2-24 Article 5.74 of this code.
2-25 (c) Notwithstanding any provision to the contrary, reporting
2-26 of data by an insurer under this article does not relieve the
2-27 insurer of responsibility of reporting that data directly to the
3-1 Board at the Board's request.
3-2 Sec. 4A. (a) An advisory organization may not receive from
3-3 or supply to insurers transacting insurance in this state the
3-4 information described in Section 1 of this article unless the
3-5 advisory organization establishes a subsidiary that:
3-6 (1) is domiciled in this state;
3-7 (2) has an office in this state; and
3-8 (3) has a governing board composed of:
3-9 (A) an ex officio member appointed by the
3-10 commissioner; and
3-11 (B) five representatives of property and
3-12 casualty insurers licensed in this state who subscribe to or
3-13 purchase products from the advisory organization.
3-14 (b) Each advisory organization shall file with the
3-15 commissioner a copy of its constitution and bylaws, article of
3-16 agreement or association, or certificate of incorporation and a
3-17 copy of the rules governing its activities.
3-18 (c) Each advisory organization shall file with the
3-19 commissioner a list showing each subscriber company doing business
3-20 in this state and the products or information the subscriber
3-21 company purchases. The filing required by this subsection shall be
3-22 made at least quarterly.
3-23 (d) On request by the commissioner, each advisory
3-24 organization shall report to the department a summary of the
3-25 actuarial assumptions, trend factors, economic factors, and other
3-26 criteria used in trending data for companies doing business in this
3-27 state.
4-1 Sec. 4B. Each insurer relying on prospective loss costs
4-2 provided by an advisory organization must justify, by expert
4-3 evidence, its need for that information on the grounds of
4-4 insufficiency of that insurer's data and experience. Such
4-5 justification may be made by affidavit by a qualified actuary or
4-6 after notice and opportunity for a hearing. An insurer unable to
4-7 demonstrate its need for prospective loss costs provided by an
4-8 advisory organization may not file or use that information.
4-9 Sec. 4C. An insurer may not receive from an advisory
4-10 organization prospective loss costs for personal automobile,
4-11 homeowners', or dwelling fire insurance.
4-12 [Sec. 4D. The select committee on rate and form regulation
4-13 created under Article 1.50 of this code shall appoint an
4-14 independent consulting firm to evaluate the activities of advisory
4-15 organizations in this state, including their impact on competition
4-16 in the insurance market, their use by insurers, and their impact on
4-17 availability and affordability of coverage, and any other matters
4-18 relevant to determining their continued authorization. The
4-19 committee shall include in its report to the legislature a
4-20 recommendation for the future role of advisory organizations in
4-21 this state.]
4-22 Sec. 5. The authority granted under this article [expires
4-23 September 1, 1997] shall be reviewed during the normal Sunset cycle
4-24 of the Texas Department of Insurance.
4-25 Sec. 6. To the extent that this article conflicts with the
4-26 provisions of Articles 5.55, 5.58, and 5.58A of this code with
4-27 respect to the setting of rates for workers' compensation
5-1 insurance, the provisions of those articles control.
5-2 SECTION 2. The importance of this legislation and the
5-3 crowded condition of the calendars in both houses create an
5-4 emergency and an imperative public necessity that the
5-5 constitutional rule requiring bills to be read on three several
5-6 days in each house be suspended, and this rule is hereby suspended.