77R11414 E
By Brimer, Eiland, Wise H.B. No. 1195
Substitute the following for H.B. No. 1195:
By Eiland C.S.H.B. No. 1195
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to rates, forms, and maintenance taxes for commercial
1-3 automobile insurance.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. AMENDMENTS EFFECTIVE UNTIL SEPTEMBER 1, 2005
1-6 SECTION 1.01. Sections 1 and 2, Article 5.13-2, Insurance
1-7 Code, are amended to read as follows:
1-8 Sec. 1. PURPOSE. (a) This article governs the regulation
1-9 of general liability, commercial automobile, commercial property,
1-10 [which shall include farm and ranch owners and farm and ranch
1-11 policies,] all commercial casualty, and medical professional
1-12 liability insurance rates and forms. It does not govern personal
1-13 automobile insurance or[,] fidelity, surety, or guaranty bonds.
1-14 (b) The purposes of this article are to:
1-15 (1) promote the public welfare by regulating insurance
1-16 rates to prohibit excessive, inadequate, or unfairly discriminatory
1-17 rates;
1-18 (2) promote availability of insurance;
1-19 (3) promote price competition among insurers to
1-20 provide rates and premiums that are responsive to competitive
1-21 market conditions;
1-22 (4) prohibit price-fixing agreements and other
1-23 anticompetitive behavior by insurers;
1-24 (5) regulate the insurance forms used for lines of
2-1 insurance subject to this article to ensure that they are not
2-2 unjust, unfair, inequitable, misleading, or deceptive; and
2-3 (6) provide regulatory procedures for the maintenance
2-4 of appropriate information reporting systems.
2-5 Sec. 2. SCOPE. This article applies to all lines of general
2-6 liability, commercial automobile, commercial property, all
2-7 commercial casualty, and medical professional liability insurance
2-8 written under policies or contracts of insurance issued by a
2-9 licensed insurer, other than a fidelity, surety, or guaranty bond
2-10 [or an automobile insurance policy].
2-11 SECTION 1.02. Section 5, Article 5.13-2, Insurance Code, is
2-12 amended by amending Subsection (a) and adding Subsections (f) and
2-13 (g) to read as follows:
2-14 (a) Except as provided by Subsection (f) of this section,
2-15 each [Each] insurer shall file with the commissioner all rates,
2-16 supplementary rating information, and reasonable and pertinent
2-17 supporting information for risks written in this state.
2-18 (f) Subsections (a), (b), (c), (d), (e), and (g) of this
2-19 section do not apply to an insurance policy sold to a large
2-20 commercial automobile risk. In this subsection, "large commercial
2-21 automobile risk" means:
2-22 (1) an insured that has total insured property values
2-23 of $5 million or more;
2-24 (2) an insured that has total annual gross revenues of
2-25 $10 million or more; or
2-26 (3) an insured that has a total premium of $25,000 or
2-27 more for property insurance, $25,000 or more for general liability
3-1 insurance, $25,000 or more for commercial automobile insurance, or
3-2 $50,000 or more for multiperil insurance.
3-3 (g) A commercial automobile insurance rate may not be used
3-4 without the prior approval of the commissioner. A filing made by
3-5 an insurer subject to the approval of the commissioner under this
3-6 subsection is considered approved unless the commissioner
3-7 disapproves the filing not later than the 60th day after the date
3-8 of filing, or if the commissioner requests additional information
3-9 regarding the filing, not later than the 60th day after the date
3-10 the commissioner receives the response to the request for
3-11 additional information. This subsection expires September 1, 2003.
3-12 SECTION 1.03. Section 8, Article 5.13-2, Insurance Code, is
3-13 amended by amending Subsection (f) and adding Subsections (g), (h),
3-14 and (i) to read as follows:
3-15 (f) Policy forms for use with large risks are exempt from
3-16 the requirements of Subsections (a), (b), and (e) of this section.
3-17 (g) For purposes of this section [subsection], "large risk"
3-18 means:
3-19 (1) an insured that has total insured property values
3-20 of $5 million or more;
3-21 (2) an insured that has total annual gross revenues of
3-22 $10 million or more; or
3-23 (3) an insured that has a total premium of $25,000 or
3-24 more for property insurance, $25,000 or more for general liability
3-25 insurance, $25,000 or more for commercial automobile insurance, or
3-26 $50,000 or more for multiperil insurance.
3-27 (h) A commercial automobile insurance policy form used for a
4-1 large risk must contain language similar to the following: "This
4-2 policy is exempt from the rate filing and policy form approval
4-3 requirements of Article 5.13-2, Insurance Code."
4-4 (i) A commercial automobile insurance policy delivered or
4-5 issued for delivery in this state must be accompanied by an outline
4-6 that summarizes the coverage and other relevant information
4-7 provided by the policy. The commissioner shall prescribe the
4-8 content and format of the outline, including the style,
4-9 arrangement, overall appearance, size, color, prominence of type,
4-10 and arrangement of text and captions. The outline must include:
4-11 (1) a description of the principal coverages provided
4-12 in the policy;
4-13 (2) a statement of any exceptions or limits contained
4-14 in the policy;
4-15 (3) a statement of the renewal provision, including
4-16 any reservation by the insurer of a right to change premiums;
4-17 (4) a statement that the outline is a summary of the
4-18 policy issued or applied for and that the policy should be
4-19 consulted to determine governing contractual provisions;
4-20 (5) a statement that it is not the policy for which
4-21 the application was made, if the policy is issued on a basis other
4-22 than that applied for; and
4-23 (6) any other statements, descriptions, or other
4-24 information that the commissioner determines is reasonably
4-25 necessary to carry out the purposes of this article.
4-26 SECTION 1.04. Article 5.13-2, Insurance Code, is amended by
4-27 adding Section 11 to read as follows:
5-1 Sec. 11. RULES. The commissioner may adopt rules necessary
5-2 to implement this article.
5-3 SECTION 1.05. Article 5.01(f), Insurance Code, is amended to
5-4 read as follows:
5-5 (f) Notwithstanding Subsections (a) through (d) of this
5-6 article, [on and after March 1, 1992,] rates for motor vehicle
5-7 insurance in this state are determined as provided by Article
5-8 5.13-2 of this code or by the flexible rating program adopted under
5-9 Subchapter M of this chapter, as applicable.
5-10 SECTION 1.06. Article 5.01-2(b), Insurance Code, is amended
5-11 to read as follows:
5-12 (b) Rates [On and after March 1, 1992, rates] for motor
5-13 vehicle insurance written by a Lloyd's plan insurer or a reciprocal
5-14 or interinsurance exchange are determined as provided by Article
5-15 5.13-2 of this code or by the flexible rating program adopted under
5-16 Subchapter M of this chapter, as applicable.
5-17 SECTION 1.07. Article 5.03(g), Insurance Code, is amended to
5-18 read as follows:
5-19 (g) Notwithstanding Subsections [Sections] (a) through (e)
5-20 of this article, [on and after March 1, 1992,] rates for motor
5-21 vehicles are determined as provided by Article 5.13-2 of this code
5-22 or by the flexible rating program adopted under Subchapter M of
5-23 this chapter, as applicable.
5-24 SECTION 1.08. Article 5.04(c), Insurance Code, is amended to
5-25 read as follows:
5-26 (c) Notwithstanding Subsections (a) and (b) of this article,
5-27 [on and after March 1, 1992,] rates for motor vehicles are
6-1 determined as provided by Article 5.13-2 of this code or by the
6-2 flexible rating program adopted under Subchapter M of this chapter,
6-3 as applicable.
6-4 SECTION 1.09. Article 5.06, Insurance Code, is amended by
6-5 adding Subsection (11) to read as follows:
6-6 (11) This article does not apply to forms used by insurers
6-7 for commercial automobile insurance.
6-8 SECTION 1.10. Article 5.09(c), Insurance Code, is amended to
6-9 read as follows:
6-10 (c) Notwithstanding Subsection (a) of this article, [on and
6-11 after March 1, 1992,] rates for motor vehicles are determined as
6-12 provided by Article 5.13-2 of this code or by the flexible rating
6-13 program adopted under Subchapter M of this chapter, as applicable.
6-14 SECTION 1.11. Article 5.11(c), Insurance Code, is amended to
6-15 read as follows:
6-16 (c) Notwithstanding Subsections (a) and (b) of this article,
6-17 [on and after March 1, 1992,] rates for motor vehicles are
6-18 determined as provided by Article 5.13-2 of this code or by the
6-19 flexible rating program adopted under Subchapter M of this chapter,
6-20 as applicable.
6-21 SECTION 1.12. Article 5.12(a), Insurance Code, is amended to
6-22 read as follows:
6-23 (a) The State of Texas by and through the commissioner shall
6-24 annually determine the rate of assessment of a maintenance tax to
6-25 be paid on an annual or semiannual basis, as determined by the
6-26 comptroller. The rate of assessment may not exceed one-fifth of
6-27 one percent of the correctly reported gross motor vehicle insurance
7-1 premiums of all authorized insurers writing motor vehicle
7-2 insurance, other than commercial automobile insurance, in this
7-3 state. The comptroller shall collect the maintenance tax.
7-4 SECTION 1.13. Article 5.14(b), Insurance Code, is amended to
7-5 read as follows:
7-6 (b) Notwithstanding Subsection (a) of this article, [on and
7-7 after October 1, 1991,] rates and forms for general liability,
7-8 commercial automobile, and commercial property insurance coverage
7-9 subject to this subchapter are determined as provided by Article
7-10 5.13-2 of this code.
7-11 SECTION 1.14. Article 5.15(h), Insurance Code, is amended to
7-12 read as follows:
7-13 (h) Notwithstanding Subsections (a)-(g) of this article,
7-14 rates for general liability, commercial automobile, commercial
7-15 property, and all commercial casualty insurance coverage under
7-16 this article are determined, and hearings related to those rates
7-17 are conducted, as provided by Article 5.13-2 of this code.
7-18 SECTION 1.15. Article 5.24(a), Insurance Code, is amended to
7-19 read as follows:
7-20 (a) The State of Texas by and through the commissioner shall
7-21 annually determine the rate of assessment of a maintenance tax to
7-22 be paid on an annual or semiannual basis, as determined by the
7-23 comptroller. The rate of assessment may not exceed two-fifths of
7-24 one percent of the correctly reported gross premiums of all classes
7-25 of insurance covered by this subchapter, other than commercial
7-26 automobile insurance, of all authorized insurers writing those
7-27 classes of insurance in this state. The rate of assessment may
8-1 not exceed one-fifth of one percent of the correctly reported gross
8-2 premiums of all insurers writing commercial automobile insurance in
8-3 this state. The comptroller shall collect the maintenance tax.
8-4 SECTION 1.16. Article 5.96(a-1), Insurance Code, is amended
8-5 to read as follows:
8-6 (a-1) This article does not apply to commercial automobile
8-7 insurance. Except as provided by Section 5(d), Article 5.101, of
8-8 this code, this article does not apply to the setting of benchmark
8-9 rates for motor vehicle insurance and fire and allied lines
8-10 insurance under Subchapter M of this chapter.
8-11 SECTION 1.17. Section 1, Article 5.101, Insurance Code, is
8-12 amended to read as follows:
8-13 Sec. 1. PURPOSE. (a) The program on flexible rating is
8-14 designed to help stabilize the rates charged for insurance in lines
8-15 of property and casualty insurance covered by Subchapters A and C
8-16 of this chapter.
8-17 (b) This article does not apply to:
8-18 (1) ocean marine insurance;
8-19 (2) inland marine insurance;
8-20 (3) fidelity, surety and guaranty bond insurance;
8-21 (4) errors and omissions insurance;
8-22 (5) directors' and officers' liability insurance;
8-23 (6) general liability insurance;
8-24 (7) commercial property insurance or commercial
8-25 automobile insurance;
8-26 (8) workers' compensation insurance;
8-27 (9) professional liability insurance for physicians
9-1 and health care providers as defined in Article 5.15-1 of this
9-2 code; or
9-3 (10) attorney's professional liability insurance.
9-4 SECTION 1.18. (a) The commissioner of insurance shall
9-5 assemble information, conduct hearings, and take any other measures
9-6 necessary to assess changes in the insurance marketplace resulting
9-7 from the implementation of this article in relation to commercial
9-8 automobile insurance.
9-9 (b) Not later than January 1 of each odd-numbered year, the
9-10 commissioner shall report on the assessment made under Subsection
9-11 (a) of this section and include recommendations to the
9-12 legislature. The commissioner shall provide the report to:
9-13 (1) the presiding officer of each house of the
9-14 legislature; and
9-15 (2) the presiding officer of each committee in the
9-16 legislature that has primary jurisdiction over the Texas Department
9-17 of Insurance.
9-18 SECTION 1.19. Section 5.01B, Insurance Code, is repealed.
9-19 SECTION 1.20. (a) This article takes effect September 1,
9-20 2001, and applies only to an insurance policy that is delivered,
9-21 issued for delivery, or renewed on or after January 1, 2002. A
9-22 policy that is delivered, issued for delivery, or renewed before
9-23 January 1, 2002, is governed by the law as it existed immediately
9-24 before the effective date of this article, and that law is
9-25 continued in effect for this purpose.
9-26 (b) This article expires September 1, 2005.
9-27 ARTICLE 2. REENACTMENT OF LAW EFFECTIVE ON SEPTEMBER 1, 2005
10-1 SECTION 2.01. Sections 1 and 2, Article 5.13-2, Insurance
10-2 Code, are reenacted to read as follows:
10-3 Sec. 1. PURPOSE. This article governs the regulation of
10-4 general liability, commercial property, which shall include farm
10-5 and ranch owners and farm and ranch policies, all commercial
10-6 casualty, and medical professional liability insurance rates and
10-7 forms. It does not govern automobile, fidelity, surety, or
10-8 guaranty bonds. The purposes of this article are to:
10-9 (1) promote the public welfare by regulating insurance
10-10 rates to prohibit excessive, inadequate, or unfairly discriminatory
10-11 rates;
10-12 (2) promote availability of insurance;
10-13 (3) promote price competition among insurers to
10-14 provide rates and premiums that are responsive to competitive
10-15 market conditions;
10-16 (4) prohibit price-fixing agreements and other
10-17 anticompetitive behavior by insurers;
10-18 (5) regulate the insurance forms used for lines of
10-19 insurance subject to this article to ensure that they are not
10-20 unjust, unfair, inequitable, misleading, or deceptive; and
10-21 (6) provide regulatory procedures for the maintenance
10-22 of appropriate information reporting systems.
10-23 Sec. 2. SCOPE. This article applies to all lines of general
10-24 liability, commercial property, all commercial casualty, and
10-25 medical professional liability insurance written under policies or
10-26 contracts of insurance issued by a licensed insurer, other than a
10-27 fidelity, surety, or guaranty bond or an automobile insurance
11-1 policy.
11-2 SECTION 2.02. Section 5(a), Article 5.13-2, Insurance Code,
11-3 is reenacted to read as follows:
11-4 (a) Each insurer shall file with the commissioner all rates,
11-5 supplementary rating information, and reasonable and pertinent
11-6 supporting information for risks written in this state.
11-7 SECTION 2.03. Section 8(f), Article 5.13-2, Insurance Code,
11-8 is reenacted to read as follows:
11-9 (f) Policy forms for use with large risks are exempt from
11-10 the requirements of Subsections (a), (b), and (e) of this section.
11-11 For purposes of this subsection, "large risk" means:
11-12 (1) an insured that has total insured property values
11-13 of $5 million or more;
11-14 (2) an insured that has total annual gross revenues of
11-15 $10 million or more; or
11-16 (3) an insured that has a total premium of $25,000 or
11-17 more for property insurance, $25,000 or more for general liability
11-18 insurance, or $50,000 or more for multiperil insurance.
11-19 SECTION 2.04. Article 5.01(f), Insurance Code, is reenacted
11-20 to read as follows:
11-21 (f) Notwithstanding Subsections (a) through (d) of this
11-22 article, on and after March 1, 1992, rates for motor vehicle
11-23 insurance in this state are determined as provided by the flexible
11-24 rating program adopted under Subchapter M of this chapter.
11-25 SECTION 2.05. Article 5.01-2(b), Insurance Code, is reenacted
11-26 to read as follows:
11-27 (b) On and after March 1, 1992, rates for motor vehicle
12-1 insurance written by a Lloyd's plan insurer or a reciprocal or
12-2 interinsurance exchange are determined as provided by the flexible
12-3 rating program adopted under Subchapter M of this chapter.
12-4 SECTION 2.06. Article 5.03(g), Insurance Code, is reenacted
12-5 to read as follows:
12-6 (g) Notwithstanding Sections (a) through (e) of this
12-7 article, on and after March 1, 1992, rates for motor vehicles are
12-8 determined as provided by Subchapter M of this chapter.
12-9 SECTION 2.07. Article 5.04(c), Insurance Code, is reenacted
12-10 to read as follows:
12-11 (c) Notwithstanding Subsections (a) and (b) of this
12-12 article, on and after March 1, 1992, rates for motor vehicles are
12-13 determined as provided by Subchapter M of this chapter.
12-14 SECTION 2.08. Article 5.09(c), Insurance Code, is reenacted
12-15 to read as follows:
12-16 (c) Notwithstanding Subsection (a) of this article, on and
12-17 after March 1, 1992, rates for motor vehicles are determined as
12-18 provided by Subchapter M of this chapter.
12-19 SECTION 2.09. Article 5.11(c), Insurance Code, is reenacted
12-20 to read as follows:
12-21 (c) Notwithstanding Subsections (a) and (b) of this
12-22 article, on and after March 1, 1992, rates for motor vehicles are
12-23 determined as provided by Subchapter M of this chapter.
12-24 SECTION 2.10. Article 5.12(a), Insurance Code, is reenacted
12-25 to read as follows:
12-26 (a) The State of Texas by and through the commissioner shall
12-27 annually determine the rate of assessment of a maintenance tax to
13-1 be paid on an annual or semiannual basis, as determined by the
13-2 comptroller. The rate of assessment may not exceed one-fifth of
13-3 one percent of the correctly reported gross motor vehicle insurance
13-4 premiums of all authorized insurers writing motor vehicle insurance
13-5 in this state. The comptroller shall collect the maintenance tax.
13-6 SECTION 2.11. Article 5.14(b), Insurance Code, is reenacted
13-7 to read as follows:
13-8 (b) Notwithstanding Subsection (a) of this article, on and
13-9 after October 1, 1991, rates and forms for general liability and
13-10 commercial property insurance coverage subject to this subchapter
13-11 are determined as provided by Article 5.13-2 of this code.
13-12 SECTION 2.12. Article 5.15(h), Insurance Code, is reenacted
13-13 to read as follows:
13-14 (h) Notwithstanding Subsections (a)-(g) of this article,
13-15 rates for general liability, commercial property, and all
13-16 commercial casualty insurance coverage under this article are
13-17 determined, and hearings related to those rates are conducted, as
13-18 provided by Article 5.13-2 of this code.
13-19 SECTION 2.13. Article 5.24(a), Insurance Code, is reenacted
13-20 to read as follows:
13-21 (a) The State of Texas by and through the commissioner shall
13-22 annually determine the rate of assessment of a maintenance tax to
13-23 be paid on an annual or semiannual basis, as determined by the
13-24 comptroller. The rate of assessment may not exceed two-fifths of
13-25 one percent of the correctly reported gross premiums of all classes
13-26 of insurance covered by this subchapter of all authorized insurers
13-27 writing those classes of insurance in this state. The comptroller
14-1 shall collect the maintenance tax.
14-2 SECTION 2.14. Article 5.96(a-1), Insurance Code, is reenacted
14-3 to read as follows:
14-4 (a-1) Except as provided by Section 5(d), Article 5.101, of
14-5 this code, this article does not apply to the setting of benchmark
14-6 rates for motor vehicle insurance and fire and allied lines
14-7 insurance under Subchapter M of this chapter.
14-8 SECTION 2.15. Section 1, Article 5.101, Insurance Code, is
14-9 reenacted to read as follows:
14-10 Sec. 1. PURPOSE. The program on flexible rating is designed
14-11 to help stabilize the rates charged for insurance in lines of
14-12 property and casualty insurance covered by Subchapters A and C of
14-13 this chapter. This article does not apply to:
14-14 (1) ocean marine insurance;
14-15 (2) inland marine insurance;
14-16 (3) fidelity, surety and guaranty bond insurance;
14-17 (4) errors and omissions insurance;
14-18 (5) directors' and officers' liability insurance;
14-19 (6) general liability insurance;
14-20 (7) commercial property insurance;
14-21 (8) workers' compensation insurance;
14-22 (9) professional liability insurance for physicians
14-23 and health care providers as defined in Article 5.15-1 of this
14-24 code; or
14-25 (10) attorney's professional liability insurance.
14-26 SECTION 2.16. Section 5.01B, Insurance Code, is reenacted and
14-27 amended to read as follows:
15-1 Art. 5.01B. PUBLIC INFORMATION. (a) Information filed or
15-2 otherwise provided by an insurer to the department [State Board of
15-3 Insurance] for the purpose of determining, fixing, prescribing,
15-4 promulgating, altering, or amending commercial automobile liability
15-5 insurance rates under Article 5.01 of this code, obtaining a rate
15-6 deviation under Article 5.03 of this code, or reporting losses
15-7 under Article 5.04-1 of this code is public information unless it
15-8 is exempt under Chapter 551, Government Code [Section 3(a), Chapter
15-9 424, Acts of the 63rd Legislature, Regular Session, 1973 (Article
15-10 6252-17a, Vernon's Texas Civil Statutes)], or Section (b) of this
15-11 article.
15-12 (b) Information provided with an application under Section
15-13 (d), Article 5.03, of this code is exempt from the disclosure
15-14 requirements of this article.
15-15 SECTION 2.17. Rates for commercial automobile insurance may
15-16 not be increased for a period of two years after the effective date
15-17 of this Act.
15-18 SECTION 2.18. This article takes effect September 1, 2005,
15-19 and applies only to an insurance policy that is delivered, issued
15-20 for delivery, or renewed on or after January 1, 2006.
15-21 Notwithstanding Section 1.20(b) of this Act, a policy that is
15-22 delivered, issued for delivery, or renewed before January 1, 2006,
15-23 is governed by the law as it existed immediately before September
15-24 1, 2005, and that law is continued in effect for that purpose.