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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.