78R5914 KCR-D
By: Coleman H.B. No. 2282
A BILL TO BE ENTITLED
AN ACT
relating to requiring certain insurers of motor vehicles to file
rate information; providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 5, Insurance Code, is amended by adding
Subchapter R to read as follows:
SUBCHAPTER R. FILING OF MOTOR VEHICLE INSURANCE
RATES FOR REPORT TO LEGISLATURE
Art. 5.161. FILING OF RATE INFORMATION; REPORT
Sec. 1. PURPOSE. The purpose of this article is to require
a one-time rate filing by insurers writing motor vehicle insurance
in this state. Immediately after the effective date of this article
and on request of the commissioner of insurance, insurers writing
motor vehicle insurance in this state shall file rates and
supporting data, including current rates and estimated rates to be
charged in the six-month period following the effective date of
this article, with the department for the purpose of the
commissioner's preparation of a summary report for submission to
the 78th Legislature. The report shall contain a review of the
rates filed, presented in a manner that protects the identity of
individual insurers and must:
(1) inform the legislature as to whether the rates are
just, adequate, and reasonable and not excessive or unfairly
discriminatory; and
(2) assist the legislature in determining the most
effective and efficient regulatory system for motor vehicle
insurance in this state.
Sec. 2. DEFINITIONS. In this article:
(1) "Insurer" means an insurance company, reciprocal
or interinsurance exchange, mutual, capital stock company, county
mutual insurance company, association, Lloyd's plan, or other
entity authorized to write motor vehicle insurance in this state.
The term includes an affiliate as described by Section 823.003(a)
of this code if that affiliate is writing motor vehicle insurance in
this state.
(2) "Motor vehicle" means any private passenger motor
vehicle that is registered in this state and has a gross weight of
25,000 pounds or less.
(3) "Supplementary rating information" means any
manual, rating schedule, plan of rules, rating rules,
classification systems, territory codes and descriptions, rating
plans, and other similar information used by an insurer to
determine the premium for an insured. The term includes factors and
relativities, including increased limits factors, classification
relativities, deductible relativities, premium discounts, and
other similar factors and rating plans such as experience,
schedule, and retrospective rating.
(4) "Security" or "securities" has the meaning
assigned by Section 4, The Securities Act (Article 581-4, Vernon's
Texas Civil Statutes).
Sec. 3. RATE INFORMATION. (a) Insurers must file motor
vehicle insurance rates and supporting information with the
department in accordance with the requirements determined by the
commissioner under this article.
(b) Filings made by each insurer must be sufficient to
respond to the commissioner's request for information under this
article and, based on information reasonably known to the insurer
at the time of filing, must provide:
(1) current rates; and
(2) estimated rates for the six-month period following
the effective date of this article.
(c) The insurer shall file, in a format specified by the
commissioner:
(1) all motor vehicle insurance rates, supplementary
rating information, underwriting guidelines, reasonable and
pertinent supporting information for risks written in this state,
and all applicable rating manuals;
(2) actuarial support, including all statistics,
data, or other information to support the rates, supplementary
rating information, use of credit scoring, and underwriting
guidelines used by the insurer;
(3) the policy fees, service fees, and other fees
charged under Article 21.35A or 21.35B of this code;
(4) information concerning the credit scoring
formulas and methodologies used by the insurer to determine motor
vehicle insurance premiums or underwriting and any other
information requested by the commissioner relating to the insurer's
use of credit scoring to determine premiums or underwriting for
motor vehicle insurance;
(5) information on the insurer's losses from
investments in securities, whether publicly or privately traded,
including investments in the securities of companies required by
any oversight agency to restate earnings within the 24 months
preceding the effective date of this article, used by the insurer to
determine premiums or underwriting for motor vehicle insurance, as
this information relates to the rates described by Section 1 of this
article;
(6) information on the insurer's costs of reinsurance,
including costs incurred subsequent to September 11, 2001, used by
the insurer to determine premiums or underwriting for motor vehicle
insurance, as this information relates to the rates described by
Section 1 of this article;
(7) a complete explanation and an electronic copy of
all computer models used by the insurer, including credit scoring
and catastrophe models, not protected by a contract with a third
party; and
(8) a complete explanation of all changes to
underwriting guidelines, rates, and supplementary rating
information made since January 1, 2000.
(d) An insurer that has a share of the motor vehicle
insurance market in this state of five percent or more shall file
the rating information required under this section. The
commissioner shall determine which insurers that have a share of
the motor vehicle insurance market in this state of less than five
percent are required to file the rating information under this
article.
(e) The commissioner shall determine the date on which the
filing is due.
(f) The commissioner may require only one filing of rates
and supporting information by an insurer under this section and may
require additional information as provided by Section 4 of this
article. The commissioner shall require the filing of rates
provided by this article to be made not later than the 30th day
after the effective date of this article.
(g) The commissioner shall issue an order specifying:
(1) the information that insurers must file to comply
with this article; and
(2) the date on which the filing is due.
(h) The commissioner is not required to hold a hearing
before issuing the order required under Subsection (g) of this
section.
(i) The commissioner shall notify an affected insurer of the
order requiring the rate filing information under this section on
the day the order is issued.
Sec. 4. ADDITIONAL INFORMATION. After the initial rate
submission under Section 3 of this article, the commissioner may
require an insurer to provide additional reasonable information
necessary to clarify or complete the initial rate submission.
Sec. 5. USE OF FILED RATE INFORMATION. (a) Information
filed by an insurer with the department under this article that is
confidential under a law that applied to the insurer before the
effective date of this article remains confidential and is not
subject to disclosure under Chapter 552, Government Code, except
that the information may be disclosed as provided by Section
552.008, Government Code. Information disclosed under Section
552.008, Government Code, shall be provided in a commonly used
electronic format, including in spreadsheet or comma-delimited
format, if so requested. The information may not be released to the
public except in summary form in the report required under Section 6
of this article.
(b) Subsection (a) of this section does not preclude the use
of information filed under this article as evidence in prosecuting
a violation of this code. Confidential information described by
Subsection (a) of this section that is used in prosecuting a
violation is subject to a protective order until all appeals of the
case have been exhausted. If an insurer is found, after the
exhaustion of all appeals, to have violated this code, a copy of the
confidential information used as evidence of the violation is no
longer presumed to be confidential.
Sec. 6. REPORT. (a) The commissioner shall submit a report
to the governor, the lieutenant governor, the speaker of the house
of representatives, and the members of the legislature on the
information collected from the filings required under this article.
The report shall be submitted not later than the 30th day after the
effective date of this article. The report may be created based on
a sample of the information provided under Section 3 of this
article.
(b) The report required under this section shall provide a
summary review of the rates currently charged and estimated to be
charged over the six months following the effective date of this
article, presented in a manner that protects the identity of
individual insurers, and must:
(1) inform the legislature as to whether the rates are
just, adequate, and reasonable and not excessive or unfairly
discriminatory; and
(2) assist the legislature in determining the most
effective and efficient regulatory system for motor vehicle
insurance in this state.
Sec. 7. NOTIFICATION; NONCOMPLIANCE. The commissioner
shall notify the governor, the lieutenant governor, the speaker of
the house of representatives, and the members of the legislature of
the names of the insurers whom the commissioner requested to make
the rate filings under this article and the names of the insurers
who did not respond in whole or in part to the commissioner's
request. This notification shall be made by a separate letter on
the fourth day following the date on which the commissioner
determines the filing is due under Section 3(g) of this article.
Sec. 8. APPLICATION OF CERTAIN LAW. Chapter 40 of this code
does not apply to an action of the commissioner under Section 3(g)
of this article.
Sec. 9. FAILURE TO COMPLY. An insurer that fails to comply
with any request for information issued by the commissioner under
this article is subject, after notice and opportunity for hearing,
to sanctions as provided by Chapters 82 and 84 of this code.
Sec. 10. EXPIRATION. This article expires December 31,
2003.
SECTION 2. The expiration of Article 5.161, Insurance Code,
as added by this Act, does not affect an action or proceeding
against an insurer subject to that law for a failure to comply with
that law before its expiration, regardless of when the action or
proceeding was commenced, and that law is continued in effect for
that purpose.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.