By McClendon H.B. No. 45
77R1145 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a mile-based rating plan for motor vehicle insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter A, Chapter 5, Insurance Code, is
1-5 amended by adding Article 5.01-4 to read as follows:
1-6 Art. 5.01-4. TIME-BASED AND MILE-BASED RATING PLANS REQUIRED
1-7 Sec. 1. DEFINITIONS. In this article:
1-8 (1) "Insurer" means an insurance company,
1-9 interinsurance exchange, mutual, capital stock company, fraternal
1-10 benefit society, local mutual aid association, county mutual,
1-11 reciprocal, association, Lloyd's plan, or other entity writing
1-12 motor vehicle insurance in this state. The term includes a company
1-13 affiliated with an insurer.
1-14 (2) "Mile-based rating plan" means a rating plan for
1-15 which a unit of exposure is one mile traveled by the insured motor
1-16 vehicle.
1-17 (3) "Time-based rating plan" means a rating plan for
1-18 which a unit of exposure is a unit of time.
1-19 Sec. 2. ALTERNATIVE RATING PLAN REQUIRED. (a) An insurer
1-20 that, on or after January 1, 2004, delivers, issues for delivery,
1-21 or renews a policy of motor vehicle insurance in this state shall
1-22 offer each person who purchases motor vehicle insurance coverage
1-23 from that insurer a choice between a mile-based rating plan and a
1-24 time-based rating plan for coverage for losses caused by collision
2-1 or other driving-related accidents.
2-2 (b) The insurer may require a person purchasing coverage to
2-3 use the same rating plan for all vehicles covered under the
2-4 person's motor vehicle insurance policy.
2-5 Sec. 2A. PHASE-IN PERIOD. (a) An insurer that delivers,
2-6 issues for delivery, or renews a policy of motor vehicle insurance
2-7 in this state before January 1, 2004, may offer a choice of a
2-8 mile-based rating plan as described by Section 2 of this article to
2-9 persons who purchase motor vehicle insurance coverage from that
2-10 insurer.
2-11 (b) The insurer may implement the use of the mile-based
2-12 rating plan on a county-by-county basis. For each county selected
2-13 by the insurer for participation in the mile-based rating plan, the
2-14 insurer shall offer the choice of that plan to each of the
2-15 insurer's policyholders and applicants for insurance residing in
2-16 that county.
2-17 (c) This section expires January 1, 2004.
2-18 Sec. 3. FILING REQUIRED; EXEMPTION FROM RATE REGULATION. (a)
2-19 Each insurer that offers the mile-based rating plan under this
2-20 article shall annually file with the commissioner:
2-21 (1) a schedule of the insurer's premium rates for
2-22 motor vehicle insurance based on the mile-based rating plan and the
2-23 time-based rating plan used by that insurer; and
2-24 (2) a statement of any fee to be charged to
2-25 policyholders or applicants for insurance for participation in the
2-26 mile-based rating plan.
2-27 (b) Premium rates used by an insurer under the mile-based
3-1 rating plan adopted under this article are exempt from rate
3-2 regulation under this subchapter and the benchmark rates
3-3 established under Subchapter M of this chapter.
3-4 Sec. 4. APPLICABILITY OF CERTAIN LAWS. (a) In reporting
3-5 incurred losses and earned premiums as required under this
3-6 subchapter, Subchapter M of this chapter, or Chapter 17 of this
3-7 code, an insurer shall separately report experience based on use of
3-8 the mile-based rating plan and the time-based rating plan.
3-9 (b) The classifications used by an insurer for motor
3-10 vehicles insured under the mile-based rating plan are exempt from
3-11 the provisions of this subchapter other than this article and
3-12 Subchapter M of this chapter.
3-13 Sec. 5. RULES. The commissioner shall adopt rules as
3-14 necessary or appropriate to govern the use of a mile-based rating
3-15 plan under this article, including rules regarding:
3-16 (1) prepayment arrangements;
3-17 (2) proof of financial responsibility;
3-18 (3) auditing of the odometer of a vehicle for the
3-19 purpose of determining whether coverage is in force; and
3-20 (4) policy forms.
3-21 SECTION 2. Article 5.06, Insurance Code, is amended by
3-22 amending Sections (9) and (10) and adding Section (11) to read as
3-23 follows:
3-24 (9) An insurance policy or other document evidencing proof
3-25 of purchase of a personal automobile insurance policy written for a
3-26 term of less than 30 days if the policy premium is computed using a
3-27 time-based rating plan, or written for less than 1,000 miles if the
4-1 policy premium is computed using a mile-based rating plan, may not
4-2 be used to obtain an original or renewal driver's license, an
4-3 automobile registration or license plates, or a motor vehicle
4-4 inspection certificate and must contain a statement as follows:
4-5 "TEXAS LAW PROHIBITS USE OF THIS DOCUMENT TO OBTAIN A MOTOR
4-6 VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL DRIVER'S
4-7 LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES."
4-8 (10) Before accepting any premium or fee for a personal
4-9 automobile insurance policy or binder for a term of less than 30
4-10 days if the policy premium is computed using a time-based rating
4-11 plan, or written for less than 1,000 miles if the policy premium is
4-12 computed using a mile-based rating plan, an agent or insurer must
4-13 make the following written disclosure to the applicant or insured:
4-14 "TEXAS LAW PROHIBITS USE OF THIS POLICY OR BINDER TO OBTAIN A
4-15 MOTOR VEHICLE INSPECTION CERTIFICATE, AN ORIGINAL OR RENEWAL
4-16 DRIVER'S LICENSE, OR AN AUTOMOBILE REGISTRATION OR LICENSE PLATES."
4-17 (11) In this article, the terms "time-based rating plan" and
4-18 "mile-based rating plan" have the meanings assigned by Article
4-19 5.01-4 of this code.
4-20 SECTION 3. Section 1, Article 5.101, Insurance Code, is
4-21 amended to read as follows:
4-22 Sec. 1. PURPOSE; APPLICABILITY. (a) The program on flexible
4-23 rating is designed to help stabilize the rates charged for
4-24 insurance in lines of property and casualty insurance covered by
4-25 Subchapters A and C of this chapter.
4-26 (b) This article does not apply to:
4-27 (1) ocean marine insurance;
5-1 (2) inland marine insurance;
5-2 (3) fidelity, surety and guaranty bond insurance;
5-3 (4) errors and omissions insurance;
5-4 (5) directors' and officers' liability insurance;
5-5 (6) general liability insurance;
5-6 (7) commercial property insurance;
5-7 (8) workers' compensation insurance;
5-8 (9) professional liability insurance for physicians
5-9 and health care providers as defined in Article 5.15-1 of this
5-10 code; or
5-11 (10) attorney's professional liability insurance.
5-12 (c) Notwithstanding Subsection (a) of this section, this
5-13 article does not apply to premium rates for motor vehicle insurance
5-14 computed using a mile-based rating plan under Article 5.01-4 of
5-15 this code.
5-16 SECTION 4. (a) Article 5.01-4, Insurance Code, as added by
5-17 this Act, applies only to a motor vehicle insurance policy
5-18 delivered, issued for delivery, or renewed on or after January 1,
5-19 2002. A policy delivered, issued for delivery, or renewed before
5-20 January 1, 2002, is governed by the law as it existed immediately
5-21 before the effective date of this Act, and that law is continued in
5-22 effect for that purpose.
5-23 (b) The commissioner of insurance shall adopt all rules
5-24 necessary to implement Article 5.01-4, Insurance Code, as added by
5-25 this Act, not later than December 31, 2001.
5-26 SECTION 5. This Act takes effect September 1, 2001.