By Thompson, Moreno of Harris H.B. No. 2159
Substitute the following for H.B. No. 2159:
By Thompson C.S.H.B. No. 2159
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to premium rates and minimum reserves for credit life and
1-3 accident and health insurance.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 3.28, Insurance Code, is amended by adding
1-6 Section 3(h) to read as follows:
1-7 (h) Notwithstanding any other law, the minimum reserve
1-8 requirements applicable to a credit life policy issued under
1-9 Article 3.53 of this code are met if, in aggregate, the reserves
1-10 are maintained at 100 percent of the 1980 Commissioner's Standard
1-11 Ordinary Mortality Table, with interest not to exceed 5.5 percent,
1-12 but in no event shall the reserves be less than the unearned
1-13 premium reserve required for such policies. The Commissioner may
1-14 use another mortality table adopted after 1980 by the National
1-15 Association of Insurance Commissioners provided the Commissioner
1-16 approves such mortality table by rule.
1-17 SECTION 2. Subsection A, Section 8, Article 3.53, Insurance
1-18 Code, is amended to read as follows:
1-19 Sec. 8A. (1) Any insurer may revise its schedules of premium
1-20 rates for various classes of business from time to time, and shall
1-21 file such revised schedules and classes of business with the
1-22 commissioner [Commissioner]. No insurer shall issue any credit
1-23 life insurance policy or credit accident and health insurance
1-24 policy for which the premium rate exceeds that determined by the
2-1 schedules and classes of business of such insurer as then on file
2-2 with the commissioner [Commissioner].
2-3 (2) The commissioner [State Board of Insurance] may,
2-4 after notice and hearing, by rule adopt [and promulgate] a
2-5 presumptive premium rate for various classes of business and terms
2-6 of coverage [which shall be presumed, subject to a rebuttal of such
2-7 presumption, to be just, reasonable, adequate, and not excessive].
2-8 An insurer that does not adopt a different rate under Subdivision
2-9 (5) of this subsection shall adopt the presumptive rate adopted by
2-10 the commissioner. Except as provided in this Article, any hearing
2-11 conducted or order adopting a presumptive rate pursuant to this
2-12 section shall be held in accordance with the rulemaking [contested
2-13 case] provisions of Chapter 2001, Government Code [the
2-14 Administrative Procedure and Texas Register Act (Article 6252-13a,
2-15 Vernon's Texas Civil Statutes)]. The Commissioner shall set forth
2-16 in his order adopting a presumptive rate findings and conclusions
2-17 on all material issues presented at the hearing.
2-18 (3) In determining the presumptive premium rate, the
2-19 commissioner [board] shall consider reasonable acquisition costs,
2-20 loss ratios, and administrative expenses, reserves, loss settlement
2-21 expenses, the type or class of business, the duration of various
2-22 credit transactions, reasonable and adequate profits to the
2-23 insurers, and other relevant data. The commissioner [board] may
2-24 not set a presumptive premium rate that is unjust, unreasonable,
2-25 inadequate, confiscatory, or excessive to the insurers, the
2-26 insureds, or agents. The commissioner [board] may not fix or limit
2-27 the amount of compensation actually paid by a company to an agent.
3-1 The commissioner [board] may request information from any insurer
3-2 or agent with respect to compensation paid for the sale of credit
3-3 insurance, expenses, losses, profits, and any other relevant data
3-4 relating to the presumptive premium rate and it is the duty of each
3-5 insurer or agent to provide such information to the commissioner
3-6 [board] in a timely manner.
3-7 (4) Any person aggrieved by the action of the
3-8 commissioner [board] in the setting of a presumptive rate or any
3-9 other action taken with regard to the setting of such presumptive
3-10 rate, may not later than the 30th day after [within 30 days from]
3-11 the date the commissioner adopts a presumptive rate order, [board
3-12 took the action complained of appeal in accordance with Article
3-13 1.04 of this code] file a petition for judicial review in a
3-14 district court in Travis County. The scope of judicial review
3-15 shall be pursuant to Section 2001.174, Government Code.
3-16 (5) Not later than the 30th day after the date a
3-17 presumptive rate adopted under this section takes effect, an
3-18 insurer shall file with the commissioner the insurer's proposed
3-19 rate for credit life and credit health and accident insurance.
3-20 Except as provided by Subdivision (7) of this subsection, an
3-21 insurer may not use a rate that is more than 30 percent higher or
3-22 more than 30 percent lower than the presumptive rate. Except as
3-23 provided by this section, a rate that complies with this
3-24 subdivision is valid and in compliance with the requirements of
3-25 this section and other applicable law.
3-26 (6) The commissioner may conduct a hearing to
3-27 determine whether a rate filed under Subdivision (5) of this
4-1 subsection complies with this section. If, after a hearing, the
4-2 commissioner finds that a rate does not meet the requirements of
4-3 this section, the commissioner shall enter an order suspending the
4-4 rate and stating the specific reasons the rate fails to comply with
4-5 this section. In an order filed under this subdivision suspending
4-6 a rate, the commissioner shall establish a date after which the
4-7 insurer is required to charge the presumptive rate. A suspension
4-8 under this subdivision is without prejudice to the right of an
4-9 insurer to refile a rate. This subdivision does not apply to a
4-10 rate filed under Subdivision (7) of this subsection.
4-11 (7) An insurer may file with the commissioner a
4-12 proposed rate for credit life and credit accident and health
4-13 insurance that is more than 30 percent higher than or more than 30
4-14 percent lower than the presumptive rate adopted by the commissioner
4-15 under this section. The commissioner may disapprove a rate filed
4-16 under this subdivision on the ground that the rate does not comply
4-17 with the terms of this section. A rate filed under this
4-18 subdivision is considered approved and the insurer may use the rate
4-19 if the rate is not disapproved by the commissioner before the 60th
4-20 day after the date the insurer filed the rate.
4-21 (8) A rate filed under this section is not excessive
4-22 unless the rate is unreasonably high for the coverage provided and
4-23 a reasonable degree of competition does not exist with respect to
4-24 the classification to which the rate is applicable. A rate filed
4-25 under this section is not inadequate unless either the rate is
4-26 insufficient to sustain projected losses and expenses, or the rate
4-27 substantially impairs, or is likely to impair substantially,
5-1 competition with respect to the sale of the product.
5-2 (9) A hearing under Subdivision (6) or (7) shall be a
5-3 contested case hearing conducted under Chapter 2001, Government
5-4 Code. Judicial review of any action of the commissioner under
5-5 Subdivision (6) or (7) shall be governed by Chapter 36, Subchapter
5-6 D, of this Code.
5-7 SECTION 3. Section 40.003(c), Insurance Code, is amended to
5-8 read as follows:
5-9 (c) This chapter does not apply to a proceeding conducted
5-10 under Article 1.04D or to a proceeding relating to:
5-11 (1) approving or reviewing rates or rating manuals
5-12 filed by an individual company, unless the rates or manuals are
5-13 contested;
5-14 (2) adopting a rule;
5-15 (3) adopting or approving a policy form or policy form
5-16 endorsement; [or]
5-17 (4) adopting or approving a plan of operation for an
5-18 organization subject to the jurisdiction of the department; or
5-19 (5) adopting a presumptive rate under Article 3.53.
5-20 SECTION 4. This Act takes effect immediately if it receives
5-21 a vote of two-thirds of all the members elected to each house, as
5-22 provided by Section 39, Article III, Texas Constitution. If this
5-23 Act does not receive the vote necessary for immediate effect, this
5-24 Act takes effect September 1, 2001.