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.