By Thompson H.B. No. 2159
77R7620 AJA-F
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 8B to read as follows:
1-7 Sec. 8B. MINIMUM RESERVES FOR CERTAIN POLICIES.
1-8 Notwithstanding any other law, the minimum reserve requirements
1-9 applicable to a policy issued under Article 3.53 of this code are
1-10 met if, in aggregate, the reserves are maintained at 75 percent of
1-11 the 1980 Commissioner's Standard Ordinary Mortality Table, with
1-12 interest not to exceed 5.5 percent.
1-13 SECTION 2. Subsection A, Section 8, Article 3.53, Insurance
1-14 Code, is amended to read as follows:
1-15 A. (1) Any insurer may revise its schedules of premium rates
1-16 for various classes of business from time to time, and shall file
1-17 such revised schedules and classes of business with the
1-18 commissioner [Commissioner]. No insurer shall issue any credit
1-19 life insurance policy or credit accident and health insurance
1-20 policy for which the premium rate exceeds that determined by the
1-21 schedules and classes of business of such insurer as then on file
1-22 with the commissioner [Commissioner].
1-23 (2) The commissioner [State Board of Insurance] may,
1-24 after notice and hearing, by rule adopt [and promulgate] a
2-1 presumptive premium rate for various classes of business and terms
2-2 of coverage [which shall be presumed, subject to a rebuttal of such
2-3 presumption, to be just, reasonable, adequate, and not excessive].
2-4 An insurer that does not adopt a different rate under Subdivision
2-5 (5) of this subsection shall adopt the presumptive rate adopted by
2-6 the commissioner. Any hearing conducted pursuant to this section
2-7 shall be held in accordance with the rulemaking [contested case]
2-8 provisions of Chapter 2001, Government Code [the Administrative
2-9 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
2-10 Civil Statutes)].
2-11 (3) In determining the presumptive premium rate, the
2-12 commissioner [board] shall consider reasonable acquisition costs,
2-13 loss ratios, and administrative expenses, reserves, loss settlement
2-14 expenses, the type or class of business, the duration of various
2-15 credit transactions, reasonable and adequate profits to the
2-16 insurers, and other relevant data. The commissioner [board] may
2-17 not set a presumptive premium rate that is unjust, unreasonable,
2-18 inadequate, confiscatory, or excessive to the insurers, the
2-19 insureds, or agents. The commissioner [board] may not fix or limit
2-20 the amount of compensation actually paid by a company to an agent.
2-21 The commissioner [board] may request information from any insurer
2-22 or agent with respect to compensation paid for the sale of credit
2-23 insurance, expenses, losses, profits, and any other relevant data
2-24 relating to the presumptive premium rate and it is the duty of each
2-25 insurer or agent to provide such information to the commissioner
2-26 [board] in a timely manner.
2-27 (4) Any person aggrieved by the action of the
3-1 commissioner [board] in the setting of a presumptive rate or any
3-2 other action taken with regard to the setting of such presumptive
3-3 rate may not later than the 30th day after [within 30 days from]
3-4 the date the commissioner [board] took the action complained of
3-5 appeal in accordance with Article 1.04 of this code.
3-6 (5) Not later than the 30th day after the date a
3-7 presumptive rate adopted under this section takes effect, an
3-8 insurer shall file with the commissioner the insurer's proposed
3-9 rate for credit life and credit health and accident insurance.
3-10 Except as provided by Subdivision (7) of this subsection, an
3-11 insurer may not use a rate that is more than 30 percent higher or
3-12 more than 30 percent lower than the presumptive rate. Except as
3-13 provided by this section, a rate that complies with this
3-14 subdivision is valid and in compliance with the requirements of
3-15 this section and other applicable law.
3-16 (6) The commissioner may conduct a hearing to
3-17 determine whether a rate filed under Subdivision (5) of this
3-18 subsection complies with this section. If, after a hearing, the
3-19 commissioner finds that a rate does not meet the requirements of
3-20 this section, the commissioner shall enter an order suspending the
3-21 rate and stating the specific reasons the rate fails to comply with
3-22 this section. In an order filed under this subdivision suspending
3-23 a rate, the commissioner shall establish a date after which the
3-24 insurer is required to charge the presumptive rate. A suspension
3-25 under this subdivision is without prejudice to the right of an
3-26 insurer to refile a rate. This subdivision does not apply to a
3-27 rate filed under Subdivision (7) of this subsection.
4-1 (7) An insurer may file with the commissioner a
4-2 proposed rate for credit life and credit accident and health
4-3 insurance that is more than 30 percent higher than or more than 30
4-4 percent lower than the presumptive rate adopted by the commissioner
4-5 under this section. The commissioner may disapprove a rate filed
4-6 under this subdivision on the ground that the rate does not comply
4-7 with the terms of this section. A rate filed under this
4-8 subdivision is considered approved and the insurer may use the rate
4-9 if the rate is not disapproved by the commissioner before the 60th
4-10 day after the date the insurer filed the rate.
4-11 (8) A rate filed under this section is not excessive
4-12 unless the rate is unreasonably high for the coverage provided and
4-13 a reasonable degree of competition does not exist with respect to
4-14 the classification to which the rate is applicable. A rate filed
4-15 under this section is not inadequate unless either the rate is
4-16 insufficient to sustain projected losses and expenses, or the rate
4-17 substantially impairs, or is likely to impair substantially,
4-18 competition with respect to the sale of the product.
4-19 SECTION 3. Section 40.003(c), Insurance Code, is amended to
4-20 read as follows:
4-21 (c) This chapter does not apply to a proceeding conducted
4-22 under Article 1.04D or to a proceeding relating to:
4-23 (1) approving or reviewing rates or rating manuals
4-24 filed by an individual company, unless the rates or manuals are
4-25 contested;
4-26 (2) adopting a rule;
4-27 (3) adopting or approving a policy form or policy form
5-1 endorsement; [or]
5-2 (4) adopting or approving a plan of operation for an
5-3 organization subject to the jurisdiction of the department; or
5-4 (5) adopting a presumptive rate under Article 3.53.
5-5 SECTION 4. This Act takes effect immediately if it receives
5-6 a vote of two-thirds of all the members elected to each house, as
5-7 provided by Section 39, Article III, Texas Constitution. If this
5-8 Act does not receive the vote necessary for immediate effect, this
5-9 Act takes effect September 1, 2001.