79R1832 AJA-D
By: West S.B. No. 249
A BILL TO BE ENTITLED
AN ACT
relating to rates for professional liability insurance for
physicians and health care providers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 3, Article 5.15-1, Insurance Code, is
amended to read as follows:
Sec. 3. Rates shall be made in accordance with the following
provisions:
(a) Consideration shall be given to past and prospective
loss and expense experience for all professional liability
insurance for physicians and health care providers written in this
state, unless the department [State Board of Insurance] shall find
that the group or risk to be insured is not of sufficient size to be
deemed credible, in which event, past and prospective loss and
expense experience for all professional liability insurance for
physicians and health care providers written outside this state
shall also be considered, to a reasonable margin for underwriting
profit and contingencies, to investment income, to dividends or
savings allowed or returned by insurers to their policyholders or
members.
(b) The department [State Board of Insurance] shall
consider the impact of risk management courses taken by physicians
and health care providers in this state in approving rates under
this article.
(c) For the establishment of rates, risks may be grouped by
classifications, by rating schedules, or by any other reasonable
methods. Classification rates may be modified to produce rates for
individual risks in accordance with rating plans which establish
standards for measuring variations in hazards or expense
provisions, or both. Those standards may measure any difference
among risks that can be demonstrated to have a probable effect upon
losses or expenses.
(d) Rates shall be reasonable and shall not be excessive or
inadequate, as defined in this subsection, nor shall they be
unfairly discriminatory. No rate shall be held to be excessive
unless the rate is unreasonably high for the insurance coverage
provided [and a reasonable degree of competition does not exist in
the area with respect to the classification to which the rate is
applicable]. No rate shall be held to be inadequate unless the rate
is unreasonably low for the insurance coverage provided and is
insufficient to sustain projected losses and expenses; or unless
the rate is unreasonably low for the insurance coverage provided
and the use of the rate has or, if continued, will have the effect of
destroying competition or creating a monopoly.
SECTION 2. This Act applies only to the rate used for an
insurance policy that is delivered, issued for delivery, or renewed
on or after January 1, 2006. The rate used for a policy that is
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
this purpose.
SECTION 3. This Act takes effect September 1, 2005.