1-1 By: Smithee (Senate Sponsor - Sibley) H.B. No. 2752
1-2 (In the Senate - Received from the House April 29, 1999;
1-3 April 30, 1999, read first time and referred to Committee on
1-4 Economic Development; May 11, 1999, reported favorably by the
1-5 following vote: Yeas 6, Nays 0; May 11, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to joint underwriting and reinsurance advisory
1-9 organizations.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 1, Article 5.73, Insurance Code, is
1-12 amended to read as follows:
1-13 Sec. 1. Except as provided by Section 4A(c) of this article,
1-14 an [Every] insurer transacting business in the state may, but is
1-15 not required to, subscribe to an advisory organization and is
1-16 permitted to submit to and receive from any advisory organization
1-17 statistical plans, historical data, prospective loss costs,
1-18 supplementary rating information, policy forms and endorsements,
1-19 research, rates of individual insurers that are effective at the
1-20 time the information is submitted or received or that have been
1-21 effective, and performance of inspections except [final rates or]
1-22 recommendations regarding profit or expense provisions, other than
1-23 loss adjustment expenses.
1-24 SECTION 2. Section 4A, Article 5.73, Insurance Code, is
1-25 amended to read as follows:
1-26 Sec. 4A. (a) An advisory organization may file prospective
1-27 loss costs, supplementary rating information, and policy forms with
1-28 the commissioner. An insurer that subscribes to an advisory
1-29 organization may use this information and may incorporate the
1-30 information into the insurer's filings. A filing made by an
1-31 advisory organization under this section is subject to the
1-32 provisions of this code or the other insurance laws of this state
1-33 governing rate filings [not receive from or supply to insurers
1-34 transacting insurance in this state the information described in
1-35 Section 1 of this article unless the advisory organization
1-36 establishes a subsidiary that:]
1-37 [(1) is domiciled in this state;]
1-38 [(2) has an office in this state; and]
1-39 [(3) has a governing board composed of:]
1-40 [(A) an ex officio member appointed by the
1-41 commissioner; and]
1-42 [(B) five representatives of property and
1-43 casualty insurers licensed in this state who subscribe to or
1-44 purchase products from the advisory organization].
1-45 (b) A corporation, unincorporated association, partnership,
1-46 or individual may apply to the commissioner for a license as an
1-47 [Each] advisory organization for the types of insurance the
1-48 applicant specifies in the application. An applicant must:
1-49 (1) [shall] file with the commissioner:
1-50 (A) a copy of the applicant's:
1-51 (i) [its] constitution and bylaws;
1-52 (ii)[,] article of agreement or
1-53 association, or certificate of incorporation; and
1-54 (iii) [a copy of the] rules governing the
1-55 applicant's [its] activities as an advisory organization; and
1-56 (B) a statement of qualifications to act as an
1-57 advisory organization; and
1-58 (2) pay a $100 license fee.
1-59 (c) An insurer may not submit information to or receive
1-60 information from an advisory organization as described by Section 1
1-61 of this article unless the advisory organization holds a license
1-62 issued under this article.
1-63 (d) The commissioner shall issue a license to an applicant,
1-64 without regard to the state of domicile or residence of the
2-1 applicant or the location of the applicant's place of business if
2-2 the commissioner determines that the applicant is qualified.
2-3 (e) The commissioner shall grant or deny a license to an
2-4 applicant on or before the 60th day after the date the commissioner
2-5 receives the application.
2-6 (f) A license issued under this article remains in effect
2-7 until the commissioner suspends or revokes the license.
2-8 (g) Each advisory organization shall file with the
2-9 commissioner a list showing each subscriber company doing business
2-10 in this state and the products or information the subscriber
2-11 company purchases. The filing required by this subsection shall be
2-12 made at least quarterly.
2-13 (h) [(d)] On request by the commissioner, each advisory
2-14 organization shall report to the department a summary of the
2-15 actuarial assumptions, trend factors, economic factors, and other
2-16 criteria used in trending data for companies doing business in this
2-17 state.
2-18 SECTION 3. Section 4B, Article 5.73, Insurance Code, is
2-19 amended to read as follows:
2-20 Sec. 4B. The commissioner may review the rate filing of an
2-21 [Each] insurer that relies [relying] on the prospective loss costs
2-22 provided by an advisory organization and may require the insurer to
2-23 provide the insurer's actual data and loss experience in addition
2-24 to the information provided by the advisory organization [must
2-25 justify, by expert evidence, its need for that information on the
2-26 grounds of insufficiency of that insurer's data and experience.
2-27 Such justification may be made by affidavit by a qualified actuary
2-28 or after notice and opportunity for a hearing. An insurer unable
2-29 to demonstrate its need for prospective loss costs provided by an
2-30 advisory organization may not file or use that information].
2-31 SECTION 4. (a) This Act takes effect September 1, 1999.
2-32 (b) An advisory organization that is in existence and
2-33 operating as an advisory organization on the effective date of this
2-34 Act may provide information as described by Section 1, Article
2-35 5.73, Insurance Code, as amended by this Act, pending issuance or
2-36 denial of a license under Section 4A, Article 5.73, Insurance Code,
2-37 as amended by this Act.
2-38 SECTION 5. The importance of this legislation and the
2-39 crowded condition of the calendars in both houses create an
2-40 emergency and an imperative public necessity that the
2-41 constitutional rule requiring bills to be read on three several
2-42 days in each house be suspended, and this rule is hereby suspended.
2-43 * * * * *