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78R9195 DLF-D

By:  Smithee                                                      H.B. No. 8  



A BILL TO BE ENTITLED

AN ACT

relating to regulation of certain types of insurance and the 
conduct of certain insurers.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        

ARTICLE 1.  PRIOR APPROVAL OF RATES FOR RESIDENTIAL PROPERTY

INSURANCE AND PERSONAL AUTOMOBILE INSURANCE
	SECTION 1.01.  Notwithstanding Article 5.101, Insurance 
Code, or any other law, the commissioner of insurance by rule shall 
adopt a regulatory system requiring prior approval of rates for 
residential property insurance and personal automobile insurance.  
The prior approval system must ensure that rates for residential 
property insurance and personal automobile insurance are not 
excessive, inadequate, unreasonable, or unfairly discriminatory.  
The commissioner may require that an insurer file any information 
necessary to implement the rate system adopted under this section.  
The system adopted under this section applies to each insurer 
authorized to write residential property insurance or personal 
automobile insurance in this state, including a Lloyd's plan, 
county mutual insurance company, farm mutual insurance company, or 
reciprocal or interinsurance exchange.
	SECTION 1.02.  The commissioner of insurance may consider 
the effect of legislation enacted by the 78th Legislature, Regular 
Session, 2003, rates and other information filed with the 
commissioner as a result of that legislation, and any other 
information available to the commissioner and may, on the basis of 
that information, order each insurer, including a Lloyd's plan, 
county mutual insurance company, farm mutual insurance company, or 
reciprocal or interinsurance exchange, to reduce rates for 
residential property insurance or personal automobile insurance in 
this state in accordance with the commissioner's order.

ARTICLE 2.  POLICY FORMS FOR RESIDENTIAL PROPERTY

INSURANCE AND PERSONAL AUTOMOBILE INSURANCE
	SECTION 2.01.  Notwithstanding Article 5.35, Insurance 
Code, or any other law, the commissioner of insurance by rule shall 
adopt a system for adoption or approval of policy forms and 
endorsements for residential property insurance.  The system may 
include filing requirements and may impose specific requirements 
for coverage provided under the policy forms and endorsements.
	SECTION 2.02.  Notwithstanding Article 5.06, Insurance 
Code, or any other law, the commissioner of insurance by rule shall 
adopt a system for adoption or approval of policy forms and 
endorsements for personal automobile insurance.  The system may 
include filing requirements and may impose specific requirements 
for coverage provided under the policy forms and endorsements.

ARTICLE 3.  COMMERCIAL AUTOMOBILE INSURANCE
	SECTION 3.01.  The heading to Article 5.13-2, Insurance 
Code, is amended to read as follows:
	Art. 5.13-2.  RATES FOR GENERAL LIABILITY, COMMERCIAL 
AUTOMOBILE, AND COMMERCIAL PROPERTY INSURANCE COVERAGE
	SECTION 3.02.  Sections 1 and 2, Article 5.13-2, Insurance 
Code, are amended to read as follows:
	Sec. 1.  PURPOSE.  This article governs the regulation of 
general liability, commercial automobile, commercial property, 
which shall include farm and ranch owners and farm and ranch 
policies, all commercial casualty, and medical professional 
liability insurance rates and forms.  It does not govern 
[automobile,] fidelity, surety, or guaranty bonds.  The purposes of 
this article are to:
		(1)  promote the public welfare by regulating insurance 
rates to prohibit excessive, inadequate, or unfairly 
discriminatory rates;
		(2)  promote availability of insurance;                                       
		(3)  promote price competition among insurers to 
provide rates and premiums that are responsive to competitive 
market conditions;
		(4)  prohibit price-fixing agreements and other 
anticompetitive behavior by insurers;
		(5)  regulate the insurance forms used for lines of 
insurance subject to this article to ensure that they are not 
unjust, unfair, inequitable, misleading, or deceptive; and
		(6)  provide regulatory procedures for the maintenance 
of appropriate information reporting systems.
	Sec. 2.  SCOPE.  Notwithstanding any other law, this [This] 
article applies to all lines of general liability, commercial 
automobile, commercial property, all commercial casualty, and 
medical professional liability insurance written under policies or 
contracts of insurance issued by a licensed insurer, other than a 
fidelity, surety, or guaranty bond or an automobile insurance 
policy.
	SECTION 3.03.  Section 3(2), Article 5.13-2, Insurance Code, 
is amended to read as follows:
		(2)  "Insurer" means an insurer to which Article 5.13 
of this code applies, but does not include the Texas Windstorm 
Insurance Association.  However, the provisions of Sections 4, 5, 
6, and 7 of this article shall not apply to Lloyd's plans or 
reciprocals with respect to commercial property insurance.  The 
provisions of this article shall apply to county mutual insurance 
companies with respect to commercial automobile insurance.

ARTICLE 4.  UNDERWRITING GUIDELINES
	SECTION 4.01.  The commissioner of insurance may require 
that each insurer authorized to write residential property 
insurance or motor vehicle insurance in this state, including a 
Lloyd's plan, county mutual insurance company, farm mutual 
insurance company, or reciprocal or interinsurance exchange, file 
the insurer's underwriting guidelines for the approval, 
consideration, or information of the commissioner.  The 
commissioner may prohibit or limit the use of an underwriting 
guideline that the commissioner determines is unreasonable or 
unfairly discriminatory.

ARTICLE 5.  CERTAIN INSURANCE PLANS AND ASSOCIATIONS
	SECTION 5.01.  The Texas Windstorm Insurance Association, 
the  FAIR Plan Association, and the Texas Automobile Insurance Plan 
Association shall each study the coverages provided by or through 
that association, the rates for those coverages, and the operations 
of the association.  Not later than the 120th day after the 
effective date of this Act, each association shall report to the 
commissioner of insurance any changes necessary to ensure that the 
coverages provided by or through the association are adequate and 
appropriate, that the rates are not excessive, inadequate, 
unreasonable, or unfairly discriminatory, and that the association 
operates in an appropriate manner.

ARTICLE 6.  CERTAIN INSURERS
	SECTION 6.01.  Notwithstanding any other law, a Lloyd's 
plan, reciprocal or interinsurance exchange, farm mutual insurance 
company, and county mutual insurance company are subject to each 
law of this state governing rates, policy forms, or endorsements 
for residential property insurance or motor vehicle insurance or 
the operations of insurers that issue that insurance.  The 
commissioner of insurance may adopt rules as necessary to implement 
this section.

ARTICLE 7.  WITHDRAWAL REQUIREMENTS
	SECTION 7.01.  Section 827.001, Insurance Code, as effective 
June 1, 2003, is amended to read as follows:
	Sec. 827.001.  DEFINITIONS [DEFINITION].  In this chapter:
		(1)  "Insurer" means an insurance company or other 
legal entity authorized to engage in the business of  insurance in 
this state, including a reciprocal or interinsurance exchange, a 
Lloyd's plan, a county mutual insurance company, and a farm mutual 
insurance company.
		(2)  "Rating [, "rating] territory" means a rating 
territory established by the department.

ARTICLE 8.  EFFECTIVE DATE
	SECTION 8.01.  This Act takes effect September 1, 2003.