By: Fraser, et al. S.B. No. 310
A BILL TO BE ENTITLED
AN ACT
relating to rate information to be filed by certain insurers of
residential property; 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 P to read as follows:
SUBCHAPTER P. FILING OF RESIDENTIAL PROPERTY INSURANCE
RATES FOR REPORT TO LEGISLATURE
Art. 5.141. FILING OF RATE INFORMATION; REPORT
Sec. 1. PURPOSE. The purpose of this article is to require
on a one-time basis that insurers writing residential property
insurance in this state, immediately after the effective date of
this article, 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 commissioner
of insurance for the purpose of the preparation of a summary report
for submission to the 78th 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 residential property
insurance in Texas.
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 company, or
other entity writing residential property insurance in the state.
The term includes an affiliate as described by Section 823.003(a)
of this code if that affiliate is writing residential property
insurance in the state.
(2) "Residential property insurance" means insurance
against loss to residential real property at a fixed location or
tangible personal property provided in a homeowners policy, which
includes a tenant policy, a condominium owners policy, or a
residential fire and allied lines policy.
(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 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.
Sec. 3. RATE INFORMATION. (a) Insurers must file
residential property insurance rates 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 six-month period following the effective date of this article
based upon information reasonably known to the insurer at the time
of filing.
(c) As determined by the commissioner under Subsection (e)
of this section, the insurer shall file:
(1) all residential property insurance rates,
supplementary rating information, reasonable and pertinent
supporting information for risks written in the state, and all
applicable rating manuals;
(2) any statistics or other information to support the
rates to be used by the insurer, including underwriting guidelines;
(3) the policy fees, service fees, and other fees that
are charged under Article 21.35A or 21.35B of this code; and
(4) information on the credit scoring formulas and
methodologies possessed and used by the insurer to determine
residential property insurance premiums or underwriting and any
other information required by the commissioner relating to the
insurer's use of credit scoring to determine premiums or
underwriting for residential property insurance.
(d) The commissioner shall determine which insurers are
required to file the rating information under this section.
(e) The commissioner shall determine the type of
information to be included in the filing and 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 one filing of rates as
provided by this section to be made not later than the 30th day
after the effective date 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. 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.
(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:
(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 residential
property insurance in Texas.
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 2. 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.