79R9554 T
By: Haggerty H.B. No. 2437
A BILL TO BE ENTITLED
AN ACT
relating to nonstandard personal automobile insurers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 13, Article 5.13-2, Insurance Code, is
amended to read as follows:
SECTION 13.
(a) This section governs rate regulation of personal
automobile insurance issued by a county mutual insurance and other
nonstandard insurers as described by this section.
(b) Using standard and generally accepted actuarial
techniques, the Commissioner shallmay annually compute and publish
a statewide standard rate index that accurately reflects the
average statewide rates for classifications for each of the
following coverages for personal automobile insurance policies;
(1) bodily injury liability;
(2) property damage liability;
(3) personal injury protection;
(4) medical payments;
(5) uninsured and underinsured motorists;
(6) physical damage-collision; and
(7) physical damage-other than collision.
(c) The commissioner shall compute the rate index using the
benchmark rate in effect for personal automobile insurance under
Article 5.101 of this code on the effective date of S.B. No. 14,
Acts of the 78th Legislature, Regular Session, 2003, and adjusted
annually thereafter by the commissioner to reflect average changes
in claims costs in the personal automobile insurance market in this
state. After the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, and before the first annual
adjustment by the commissioner, the commissioner may adjust the
computation of the rate index under this section as the
commissioner determines necessary.
(d) The commissioner may compute and establish standard
rate indexes other than the rate index required under Subsection
(b) of this section for any of the personal automobile insurance
coverages listed under that subsection as necessary to implement
this section.
(e) For purposes of this section, "nonstandard rates" means
rates that are 30 percent or more above the standard rate index as
determined by the commissioner under this section, as determined
before all applicable discounts are applied to the rates and after
any policy fees are applied to the rates
(f) A county mutual insurance company or nonstandard
insurer that issues personal automobile insurance policies only at
nonstandard rates or issues personal automobile liability
coverages only below 101% of minimum limits as required by the
financial responsibility laws of this state for liability insurance
is subject toexempt from the filing requirements as determined by
the commissioner by rule if the insurer and the insurer's
affiliated companies or group have a market share of less than 3.5
percent of the total Texas personal automobile insurance market.
In setting rates, an insurance company subject to this subsection
must comply with the rating standards established by this article.
Not later than the first day on which any change in the rates
becomes effective, the company shall for informational purposes
file the rates and any additional information required by the
department. The commissioner by rule shall determine the
information required in the filing under this subsection. Except
as provided by Subsection (h) of this section, a nonstandard
insurer described in this Section is exempt from the rate filing and
approval requirements of Article 5.13-2 of this code. The
commissioner may inspect the books and records of a company at any
time to ensure compliance with the rating standards. An insurance
company described by this subsection is subject to Article 5.144 of
this code. A county mutual insurance company that not described by
this section is subject to Article 21.81 of this code and is
required to comply with the filing requirements of this article and
any other provision of this code applicable to a county mutual
insurance company.
(g) The commissioner by rule may designate other types of
insurers that historically and as of the effective date of S.B. No.
14, Acts of the 78th Legislature, Regular Session, 2003, haveA
nonstandard insurer shall mean a licensed insurer, county mutual,
Lloyds or reciprocal that serves served exclusively or is serving
exclusively the high-risk, nonstandard personal automobile market
at nonstandard rates or writes personal automobile liability
coverages only at limits no greater than 101% of the minimum limits
as required by financial responsibility laws of this state. A
nonstandard insurer may offer and provide physical damage coverages
and other personal automobile coverages to insureds. A nonstandard
insurer and the insurer's affiliated companies or group must have a
market share of less than 3.5% in order to qualify for exemption
under this Section. A nonstandard insurer must meet capitalization
and solvency requirements set by the commissioner. AnA
nonstandard insurer shall file information with designated by the
commissioner to show qualification as a nonstandard insurer under
this subsection and shall be is governed by this section and shall
file a schedule of rates with the department.
(h). A nonstandard insurer described in subsection (f) that
proposes to increase its overall premium rates charged
policyholders for a personal automobile insurance product by 10
percent or more than the amount the insurer charged policyholders
for the same or an equivalent personal automobile insurance product
during the preceding calendar year must file the insurer's proposed
rates in accordance with Article 5.13-2 of this code, as
applicable, and obtain approval of the proposed rates as provided
by the applicable article.
(i). A county mutual, Lloyds, or reciprocal insurer shall be
subject to the statistical data reporting requirements adopted
pursuant to Subchapter E, Chapter 38 of this Code. A county mutual
that writes through one or more managing general agents shall be
considered a separate insurance program for each managing general
agency. Statistics and rates for each managing general agency
shall be reported and determined separately for each managing
general agency. A nonstandard insurer may write both nonstandard
and standard risks, however, standard risks written through a
nonstandard insurer shall be subject to the rate filing and other
requirements of this Article and shall not be subject to the
exemption for nonstandard risks in section (f) of this Article. A
county mutual that issues policies through separate programs that
are written through one or more managing general agencies shall
determine whether the business is standard or nonstandard for each
program and managing general agency. The provisions of this
Article and Subchapters A and B, Chapter 544 of this Code shall
apply to each managing general agency program as if it were a
separate insurer.
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, 2005.