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.