By: Jackson, Lucio, Fraser S.B. No. 14
A BILL TO BE ENTITLED
AN ACT
relating to disapproval by the commissioner of insurance of certain
property and casualty insurance rates; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 7, Article 5.13-2, Insurance Code, is
amended by adding Subsections (d) and (e) to read as follows:
(d) A new rate filing that is made by an insurer whose rate
is disapproved under Subsection (c) of this section and that is made
on or after the date of the written notice required under Subsection
(c) of this section is subject to prior approval by the commissioner
until the expiration of any appeal period related to a hearing
conducted under Subsection (c) of this section.
(e) In conjunction with a hearing required under Subsection
(c) of this section, the commissioner may:
(1) order restitution under Section 82.053 of this
code;
(2) impose any sanction authorized under Chapter 83 of
this code, including assessment of an administrative penalty as
provided by Chapter 84 of this code; or
(3) take any combination of the actions described by
Subdivisions (1) and (2) of this subsection.
SECTION 2. Article 5.144, Insurance Code, is amended by
amending Subsection (b) and by adding Subsection (b-1) to read as
follows:
(b) Except as provided by Subsection (d) of this article, if
the commissioner determines that an insurer has charged a rate for
personal automobile insurance or residential property insurance
that is excessive or unfairly discriminatory, as described by
Article 5.13-2 [or 5.101] of this code, the commissioner may order
the insurer to:
(1) issue a refund of the excessive or unfairly
discriminatory portion of the premium, plus interest on that
amount, directly to each affected policyholder if the amount of
that portion of the premium is at least 7.5 percent of the total
premium charged for the coverage; or
(2) if the amount of that portion of the premium is
less than 7.5 percent:
(A) provide each affected policyholder who
renews the policy a future premium discount in the amount of the
excessive or unfairly discriminatory portion of the premium, plus
interest on that amount; and
(B) provide each affected policyholder who does
not renew or whose coverage is otherwise terminated a refund in the
amount described by Subdivision (1) of this subsection.
(b-1) The rate for interest assessed under Subsection (b) of
this article is the prime rate for the calendar year in which the
order is issued plus six percent. For purposes of this subsection,
the prime rate is the prime rate as published by The Wall Street
Journal for the first day of that calendar year that is not a
Saturday, Sunday, or legal holiday. The interest accrues beginning
on the date on which the insurer first charged the excessive or
unfairly discriminatory rate, as determined by the commissioner,
and continues to accrue until the refund is paid.
SECTION 3. The change in law made by this Act applies only
to a rate used for an insurance policy delivered, issued for
delivery, or renewed on or after January 1, 2006. A rate used for a
policy delivered, issued for delivery, or renewed before January 1,
2006, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 4. This Act takes effect September 1, 2005.