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78R7169 AJA-F
By: Capelo H.B. No. 3163
A BILL TO BE ENTITLED
AN ACT
relating to rates for professional liability insurance for
physicians and health care providers; providing an administrative
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. RATE FILING AND REPORT
SECTION 1.01. Chapter 5, Insurance Code, is amended by
adding Subchapter R to read as follows:
SUBCHAPTER R. ANNUAL FILING OF RATES FOR PROFESSIONAL LIABILITY
INSURANCE FOR PHYSICIANS AND HEALTH CARE PROVIDERS;
REPORT TO LEGISLATURE
Art. 5.161. FILING OF RATE INFORMATION; REPORT
Sec. 1. PURPOSE. The purpose of this article is to require
insurers writing professional liability insurance for physicians
and health care providers in this state to annually file with the
commissioner of insurance rates and supporting data, including
current rates and estimated rates to be charged in the year
following the filing date for the purpose of the preparation of a
summary report for submission to each legislature. The report
shall contain a review of the rates, presented in a manner that
protects the identity of individual insurers:
(1) to inform the legislature as to whether the rates
are just, adequate, and reasonable and not excessive or unfairly
discriminatory; and
(2) to assist in the determination of the most
effective and efficient regulatory system for professional
liability insurance for physicians and health care providers in
Texas.
Sec. 2. DEFINITIONS. In this article:
(1) "Insurer" means an insurance company, reciprocal
or interinsurance exchange, mutual company, capital stock company,
association, Lloyd's plan, joint underwriting association
established under Article 21.49-3 of this code, self-insurance
trust established under Article 21.49-4 of this code, or other
entity writing professional liability insurance for physicians and
health care providers in the state. The term includes an affiliate
as described by Section 823.003(a) of this code if that affiliate is
writing professional liability insurance for physicians and health
care providers in the state.
(2) "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 the insurer to
determine the applicable premium for an insured. The term includes
factors and relativities, such as increased limits factors,
classification relativities, deductible relativities, premium
discount, and other similar factors and rating plans such as
experience, schedule, and retrospective rating.
(3) "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 rates for
professional liability insurance for physicians and health care
providers and supporting information with the commissioner 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 must provide both current rates and estimated rates for
the year following the required filing date of this article based on
information reasonably known to the insurer at the time of filing.
(c) The insurer shall file, in a format specified by the
commissioner, including an electronic format:
(1) all rates for professional liability insurance for
physicians and health care providers, supplementary rating
information, underwriting guidelines, reasonable and pertinent
supporting information for risks written in the state, and all
applicable rating manuals;
(2) actuarial support, including all statistics,
data, or other information to support the rates, supplementary
rating information, and underwriting guidelines used by the
insurer;
(3) the policy fees, service fees, and other fees that
are charged under Article 21.35B of this code;
(4) 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 filing date, possessed and used by the insurer to
determine premiums or underwriting for professional liability
insurance for physicians and health care providers, as this
information relates to the rates described by Section 1 of this
article;
(5) information on the insurer's costs of reinsurance
possessed and used by the insurer to determine premiums or
underwriting for professional liability insurance for physicians
and health care providers, as this information relates to the rates
described by Section 1 of this article;
(6) a complete explanation, and an electronic copy, of
all computer models used by the insurer not protected by a contract
with a third party; and
(7) a complete explanation of any changes to
underwriting guidelines, rates, and supplementary rating
information since the last filing under this article.
(d) Each insurer that has a share of the market for
professional liability insurance for physicians and health care
providers 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 that market in
this state of less than five percent are required to file the rating
information under this section.
(e) The commissioner shall determine the date on which the
filing is due.
(f) The commissioner may require additional information as
provided by Section 4 of this article.
(g) The commissioner shall issue an order specifying the
information that insurers must file to comply with this article and
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
for purposes of the clarification or completeness of 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, relating to information for legislative
purposes. Information disclosed pursuant to 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) Not later than the 30th day of each
regular legislative session, 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 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 year following the date of the report, presented in
a manner that protects the identity of individual insurers:
(1) to inform the legislature as to whether the rates
are just, adequate, and reasonable and not excessive or unfairly
discriminatory; and
(2) to assist the legislature in the determination of
the most effective and efficient regulatory system for professional
liability insurance for physicians and health care providers 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 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.
SECTION 1.02. (a) In addition to information required
under Section 3(c), Article 5.161, Insurance Code, as added by this
Act, the first filing under that article by an insurer that was
writing professional liability insurance for physicians and health
care providers on or before January 1, 2000, must include a complete
explanation of any changes to underwriting guidelines, rates, and
supplementary rating information since that date.
(b) The commissioner shall require the first filings under
Article 5.161, Insurance Code, as added by this Act, to be made not
later than the 30th day after the effective date of this Act and
shall submit the first report to the legislature under that article
not later than the 45th day after the effective date of this Act.
ARTICLE 2. RATE ROLLBACK
SECTION 2.01. (a) Except as provided by Subsection (b) of
this section, this section applies only to an insurer writing
professional liability insurance for physicians and health care
providers in this state on the effective date of this Act or a
person classified as an affiliate of one of those insurers under
Section 823.003, Insurance Code.
(b) A person that is classified as an affiliate of an
insurer under Section 823.003, Insurance Code, and that begins
writing professional liability insurance for physicians and health
care providers on or after the effective date of this Act and before
September 1, 2005, may not charge an amount for professional
liability insurance for physicians and health care providers issued
or renewed before September 1, 2005, that exceeds the amount that
the company described by Subsection (a) of this section with which
the person is affiliated may charge for the insurance under this
section.
(c) Except as provided by Subsection (e) of this section, an
insurer may not charge an insured an amount for professional
liability insurance for physicians and health care providers issued
or renewed on or after the effective date of this Act and before
September 1, 2005, that exceeds 88 percent of the amount the insurer
charged that insured for the same coverage immediately before that
date or, if the insurer did not insure that insured immediately
before that date, the amount that the insurer would have charged the
insured at that time.
(d) An insurer that issues or renews a policy of
professional liability insurance for health care providers on or
after the effective date of this Act and before September 1, 2003,
and charges and receives a premium for the policy that exceeds the
amount allowed under Subsection (c) of this section is not subject
to a penalty under the Insurance Code or any other law of this state
if, on or before November 1, 2003, the insurer refunds to the
insured the difference between the amount paid and the amount
allowed under Subsection (c).
(e) The commissioner may, after notice and a hearing, allow
an insurer to charge a premium for professional liability insurance
for physicians and health care providers that exceeds the amount
allowed under Subsection (c) of this section if the commissioner
determines, based on clear and convincing evidence, that:
(1) if the insurer were to implement a rate allowed
under Subsection (c) of this section, the insurer would be
financially unable to continue writing professional liability
insurance for physicians or health care providers in this state; or
(2) implementation of a rate allowed by Subsection (c)
of this section would likely result in placing the insurer in a
hazardous financial condition described by Section 2, Article 1.32,
Insurance Code.
ARTICLE 3. EFFECTIVE DATE
SECTION 3.01. 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.