By Carona                                             S.B. No. 1229
         77R8286 T                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the credit life and accident and health insurance.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1. Subsection A(2), Section 8, Article 3.53,
 1-5     Insurance Code, is amended to read as follows:
 1-6           (2)  The Commissioner [State Board of Insurance] may, after
 1-7     notice and hearing, adopt by rule [and promulgate] a presumptive
 1-8     premium rate for various classes of business and terms of coverage
 1-9     [which shall be presumed, subject to a rebuttal of such
1-10     presumption, to be just, reasonable, adequate, and not excessive].
1-11     An insurer that does not adopt a different rate as provided by
1-12     Subdivision (5), shall adopt the presumptive rate promulgated by
1-13     the commissioner.  Any hearing conducted pursuant to this section
1-14     shall be held in accordance with the rule-making [contested case]
1-15     provisions of Chapter 2001, Government Code [the Administrative
1-16     Procedure and Texas Register Act (Article 6252 13a, Vernon's Texas
1-17     Civil Statutes)].
1-18           SECTION 2.  Subsection A, Section 8, Article 3.53, Insurance
1-19     Code, is amended by adding new subdivisions (5), (6), (7), and (8)
1-20     to read as follows:
1-21           (5)  Not later than 30 days after the effective date of a
1-22     presumptive rate adopted under Subsection A(2) of this Section, an
1-23     insurer shall file with the commissioner its proposed rate for
1-24     credit life and credit health and accident insurance.  An insurer
 2-1     may use a rate that is no higher than 30 percent higher than the
 2-2     presumptive rate adopted by the commissioner under this Section and
 2-3     no less than 30 percent less than the presumptive rate adopted by
 2-4     the commissioner under this Section.  Except as provided by this
 2-5     Section, a rate that is no higher than 30 percent higher than the
 2-6     presumptive rate, and no less than 30 percent less than the
 2-7     presumptive rate is valid and in compliance with the requirements
 2-8     of this Section and other applicable law.
 2-9           (6)  The commissioner may conduct a hearing to determine
2-10     whether or not a rate filed under Subdivision (5) complies with
2-11     this Article.  If, after a hearing, the commissioner finds that a
2-12     rate does not meet the requirements of this Article, the
2-13     commissioner shall enter an order suspending the filing and setting
2-14     forth specifically the reasons the rate filing fails to comply with
2-15     this Article.  In an order filed under this subdivision suspending
2-16     a rate, the commissioner shall establish a date after which the
2-17     insurer is required to charge the presumptive rate.  A suspension
2-18     under this subdivision is without prejudice to the right of an
2-19     insurer to refile a rate.  This Subdivision does not apply to a
2-20     filing covered by Subdivision (7).
2-21           (7)  Except as provided by this Subdivision, an insurer may
2-22     not use a premium rate for credit life or credit accident and
2-23     health insurance that is higher than 30 percent higher than the
2-24     presumptive rate adopted by the commissioner under this Article, or
2-25     less than 30 percent less than the presumptive rate adopted by the
2-26     commissioner under this Article.  An insurer may file with the
2-27     commissioner a proposed rate for credit life and credit accident
 3-1     and health insurance that is higher than 30 percent higher than the
 3-2     presumptive rate adopted by the commissioner or less than 30
 3-3     percent less than the presumptive rate adopted by the commissioner
 3-4     under this section.  The commissioner, in the sole discretion of
 3-5     the commissioner, may disapprove a rate filed pursuant to this
 3-6     Subdivision on the ground that the rate does not comply with the
 3-7     terms of this Section.  A rate filed under this Subdivision is
 3-8     approved if not disapproved by the commissioner not later than 60
 3-9     days after the rate was filed.
3-10           (8)  A rate filed under this Section is not excessive unless
3-11     it is unreasonably high for the coverage provided and a reasonable
3-12     degree of competition does not exist with respect to the
3-13     classification to which the rate is applicable.  A rate filed under
3-14     this Section is not inadequate unless either the rate is
3-15     insufficient to sustain projected losses and expenses, or the rate
3-16     substantially impairs, or is likely to impair substantially,
3-17     competition with respect to the sale of the product.
3-18           SECTION 3.  Section 40.003(c), Insurance Code, is amended to
3-19     read as follows:
3-20           (c)  This chapter does not apply to a proceeding conducted
3-21     under Article 1.04D or to a proceeding relating to:
3-22                 (1)  approving or reviewing rates or rating manuals
3-23     filed by an individual company, unless the rates or manuals are
3-24     contested;
3-25                 (2)  adopting a rule;
3-26                 (3)  adopting or approving a policy form or policy form
3-27     endorsement; [or]
 4-1                 (4)  adopting or approving a plan of operation for an
 4-2     organization subject to the jurisdiction of the department; or
 4-3                 (5)  adopting a presumptive rate under Article 3.53.
 4-4           SECTION 4. Subsection (a), Section 3, Article 3.28, Insurance
 4-5     Code, is amended to read as follows:
 4-6           (a)  For all ordinary policies of life insurance issued on
 4-7     the standard basis, excluding any disability and accidental death
 4-8     benefits in such policies, the Commissioners 1941 Standard Ordinary
 4-9     Mortality Table for such policies issued prior to the operative
4-10     date of Section 6 of the Standard Nonforfeiture Law for Life
4-11     Insurance, as amended, the Commissioners 1958 Standard Ordinary
4-12     Mortality Table for such policies issued on or after the operative
4-13     date of Section 6 of the Standard Nonforfeiture Law for Life
4-14     Insurance, as amended, and prior to the operative date of Section 8
4-15     of the Standard Nonforfeiture Law for Life Insurance, as amended,
4-16     provided that for any category of such policies issued on female
4-17     risks, all modified net premiums and present values referred to in
4-18     this Act may be calculated according to an age not more than three
4-19     years younger than the actual age of the insured for policies
4-20     issued prior to August 29, 1977, and not more than six years
4-21     younger than the actual age of the insured for policies issued on
4-22     and after August 29, 1977; and for such policies issued on or after
4-23     the operative date of Section 8 of the Standard Nonforfeiture Law
4-24     for Life Insurance, as amended, (i) the Commissioners 1980 Standard
4-25     Ordinary Mortality Table, or (ii) at the election of the company
4-26     for any one or more specified plans of life insurance, the
4-27     Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year
 5-1     Select Mortality Factors, or (iii) any ordinary mortality table
 5-2     adopted after 1980 by the National Association of Insurance
 5-3     Commissioners that is approved by regulation promulgated by the
 5-4     State Board of Insurance for use in determining the minimum
 5-5     standard valuation for such policies.  Notwithstanding a provision
 5-6     of law or rule of the Commissioner of Insurance, the minimum
 5-7     reserve requirements applicable to a policy issued under Article
 5-8     3.53, Insurance Code, are met if, in aggregate, the reserves are
 5-9     maintained at 75 percent of the 1980 CSO Mortality Table, with
5-10     interest not to exceed 5.5 percent.
5-11           SECTION 5.  This Act takes effect immediately if it receives
5-12     a vote of two-thirds of all the members elected to each house, as
5-13     provided by Section 39, Article III, Texas Constitution.  If this
5-14     Act does not receive the vote necessary for immediate effect, this
5-15     Act takes effect September 1, 2001.