1-1 AN ACT
1-2 relating to joint underwriting and reinsurance advisory
1-3 organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1, Article 5.73, Insurance Code, is
1-6 amended to read as follows:
1-7 Sec. 1. Except as provided by Section 4A(c) of this article,
1-8 an [Every] insurer transacting business in the state may, but is
1-9 not required to, subscribe to an advisory organization and is
1-10 permitted to submit to and receive from any advisory organization
1-11 statistical plans, historical data, prospective loss costs,
1-12 supplementary rating information, policy forms and endorsements,
1-13 research, rates of individual insurers that are effective at the
1-14 time the information is submitted or received or that have been
1-15 effective, and performance of inspections except [final rates or]
1-16 recommendations regarding profit or expense provisions, other than
1-17 loss adjustment expenses.
1-18 SECTION 2. Section 4A, Article 5.73, Insurance Code, is
1-19 amended to read as follows:
1-20 Sec. 4A. (a) An advisory organization may file prospective
1-21 loss costs, supplementary rating information, and policy forms with
1-22 the commissioner. An insurer that subscribes to an advisory
1-23 organization may use this information and may incorporate the
1-24 information into the insurer's filings. A filing made by an
2-1 advisory organization under this section is subject to the
2-2 provisions of this code or the other insurance laws of this state
2-3 governing rate filings [not receive from or supply to insurers
2-4 transacting insurance in this state the information described in
2-5 Section 1 of this article unless the advisory organization
2-6 establishes a subsidiary that:]
2-7 [(1) is domiciled in this state;]
2-8 [(2) has an office in this state; and]
2-9 [(3) has a governing board composed of:]
2-10 [(A) an ex officio member appointed by the
2-11 commissioner; and]
2-12 [(B) five representatives of property and
2-13 casualty insurers licensed in this state who subscribe to or
2-14 purchase products from the advisory organization].
2-15 (b) A corporation, unincorporated association, partnership,
2-16 or individual may apply to the commissioner for a license as an
2-17 [Each] advisory organization for the types of insurance the
2-18 applicant specifies in the application. An applicant must:
2-19 (1) [shall] file with the commissioner:
2-20 (A) a copy of the applicant's:
2-21 (i) [its] constitution and bylaws;
2-22 (ii)[,] article of agreement or
2-23 association, or certificate of incorporation; and
2-24 (iii) [a copy of the] rules governing the
2-25 applicant's [its] activities as an advisory organization; and
2-26 (B) a statement of qualifications to act as an
2-27 advisory organization; and
3-1 (2) pay a $100 license fee.
3-2 (c) An insurer may not submit information to or receive
3-3 information from an advisory organization as described by Section 1
3-4 of this article unless the advisory organization holds a license
3-5 issued under this article.
3-6 (d) The commissioner shall issue a license to an applicant,
3-7 without regard to the state of domicile or residence of the
3-8 applicant or the location of the applicant's place of business if
3-9 the commissioner determines that the applicant is qualified.
3-10 (e) The commissioner shall grant or deny a license to an
3-11 applicant on or before the 60th day after the date the commissioner
3-12 receives the application.
3-13 (f) A license issued under this article remains in effect
3-14 until the commissioner suspends or revokes the license.
3-15 (g) Each advisory organization shall file with the
3-16 commissioner a list showing each subscriber company doing business
3-17 in this state and the products or information the subscriber
3-18 company purchases. The filing required by this subsection shall be
3-19 made at least quarterly.
3-20 (h) [(d)] On request by the commissioner, each advisory
3-21 organization shall report to the department a summary of the
3-22 actuarial assumptions, trend factors, economic factors, and other
3-23 criteria used in trending data for companies doing business in this
3-24 state.
3-25 SECTION 3. Section 4B, Article 5.73, Insurance Code, is
3-26 amended to read as follows:
3-27 Sec. 4B. The commissioner may review the rate filing of an
4-1 [Each] insurer that relies [relying] on the prospective loss costs
4-2 provided by an advisory organization and may require the insurer to
4-3 provide the insurer's actual data and loss experience in addition
4-4 to the information provided by the advisory organization [must
4-5 justify, by expert evidence, its need for that information on the
4-6 grounds of insufficiency of that insurer's data and experience.
4-7 Such justification may be made by affidavit by a qualified actuary
4-8 or after notice and opportunity for a hearing. An insurer unable
4-9 to demonstrate its need for prospective loss costs provided by an
4-10 advisory organization may not file or use that information].
4-11 SECTION 4. (a) This Act takes effect September 1, 1999.
4-12 (b) An advisory organization that is in existence and
4-13 operating as an advisory organization on the effective date of this
4-14 Act may provide information as described by Section 1, Article
4-15 5.73, Insurance Code, as amended by this Act, pending issuance or
4-16 denial of a license under Section 4A, Article 5.73, Insurance Code,
4-17 as amended by this Act.
4-18 SECTION 5. The importance of this legislation and the
4-19 crowded condition of the calendars in both houses create an
4-20 emergency and an imperative public necessity that the
4-21 constitutional rule requiring bills to be read on three several
4-22 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2752 was passed by the House on April
28, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2752 was passed by the Senate on May
20, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor