HBA-TYH, BTC H.B. 499 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 499
By: Ramsay
Insurance
3/27/1999
Introduced



BACKGROUND AND PURPOSE 

Article 5.131, Insurance Code, was enacted in 1995 to ensure that benefits
resulting from the civil justice reforms enacted by the 73rd and 74th Texas
Legislature were passed on to the insured public. The reforms included
measures that reduced the cost of litigation and the maximum amounts that
could be awarded in a judgment.  Such measures should result in the
reduction of the cost of insurance purchased to guard against such
liability claims. 

The legislature realized that the savings could be projected with a
reasonable degree of actuarial certainty, but that insurers would want to
base any savings on data evidencing actual cost reduction experienced under
the reforms.  Accordingly, the law required that, beginning in 1995, annual
hearings be held to determine the appropriate percentage of equitable
across-the-board rate reductions to be applicable to the various lines of
liability insurance during the upcoming calendar year.  The law also
provided that the reductions remain in effect until January 1, 2001. 

Annual hearings were held in 1995, 1996, 1997, and 1998.  The savings
realized in 1996, 1997, and 1998 were $435.5 million, $441.2 million, and
$656.4 million, respectively.  The projected savings for 1999 are $697.9
million.  H.B. 499 extends the rate reductions to January 1, 2003.  The
extension is intended to ensure that all rates continue to reflect the
effects of the civil justice reforms and that the savings are passed on to
the policyholders. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 6, Article 5.131, Insurance Code, by extending
the date from January 1, 2001, to January 1, 2003, in which an insurance
premium rate resulting from a reduction required under Section 3 (Rate
Rollback) of this article, remains in effect, unless the Commissioner of
Insurance grants relief under Section 4 (Administrative Relief) or Section
5 (Declaration of Inapplicability to Certain Lines) of this article. 

SECTION 2.  Effective date:  September 1, 1999.

SECTION 3.  Emergency clause.