81R522 KCR-D

By: Alvarado H.B. No. 992

A BILL TO BE ENTITLED

AN ACT

relating to the classifications used in rating personal automobile insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2251.002, Insurance Code, is amended by adding Subdivisions (2-a) and (2-b) to read as follows:

(2-a) "Non-preferred classification" means a classification, other than a preferred classification, used in rating personal automobile insurance in this state.

(2-b) "Preferred classification" means any of the following classifications used in rating personal automobile insurance in this state:

(A) the number of miles driven annually by the insured;

(B) the insured's driving record; and

(C) the insured's number of years of driving experience.

SECTION 2. The heading to Subchapter B, Chapter 2251, Insurance Code, is amended to read as follows:

SUBCHAPTER B. RATE STANDARDS; RATE CLASSIFICATIONS

SECTION 3. Subchapter B, Chapter 2251, Insurance Code, is amended by adding Section 2251.053 to read as follows:

Sec. 2251.053. RATE STANDARDS FOR PERSONAL AUTOMOBILE INSURANCE. (a) Notwithstanding Section 2251.052, in setting rates for personal automobile insurance in this state, an insurer:

(1) must assign the greatest aggregate weight to preferred classifications;

(2) may not assign non-preferred classifications a greater aggregate weight than the aggregate weight assigned to preferred classifications; and

(3) may not use a non-preferred classification until the classification has been filed with the department and approved by the commissioner in accordance with Subchapter G.

(b) A rate set in accordance with this section:

(1) may not be excessive, inadequate, unreasonable, or unfairly discriminatory for the risks to which the rate applies; and

(2) must be based on actuarially sound principles.

SECTION 4. Chapter 2251, Insurance Code, is amended by adding Subchapter G to read as follows:

SUBCHAPTER G. PRIOR APPROVAL OF CERTAIN RATING CLASSIFICATIONS

USED IN RATING PERSONAL AUTOMOBILE INSURANCE

Sec. 2251.301. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to classifications used in rating personal automobile insurance in this state.

Sec. 2251.302. APPROVAL OF NON-PREFERRED CLASSIFICATION REQUIRED. An insurer may not use a non-preferred classification until the classification has been filed with the department and approved by the commissioner in accordance with this subchapter.

Sec. 2251.303. COMMISSIONER ACTION. (a) Not later than the 30th day after the date a non-preferred classification is filed with the department under this subchapter, the commissioner shall:

(1) approve the classification if the commissioner determines that the classification and rates resulting from the use of the classification comply with the requirements of this chapter; or

(2) disapprove the classification if the commissioner determines that the classification or the rates resulting from the use of the classification do not comply with the requirements of this chapter.

(b) Except as provided by Subsection (c), if a non-preferred classification has not been approved or disapproved by the commissioner before the expiration of the 30-day period described by Subsection (a), the classification is considered approved and the insurer may use the non-preferred classification.

(c) For good cause, the commissioner may, on the expiration of the 30-day period described by Subsection (a), extend the period for approval or disapproval of a non-preferred classification for one additional 30-day period. The commissioner and the insurer may not by agreement extend the 30-day period described by Subsection (a).

Sec. 2251.304. ADDITIONAL INFORMATION. (a) If the department determines that the information filed by an insurer under this chapter is incomplete or otherwise deficient, the department may request additional information from the insurer. If the department requests additional information from the insurer during the 30-day period provided by Section 2251.303(a) or under a second 30-day period provided under Section 2251.303(c), the time between the date the department submits the request to the insurer and the date the department receives the information requested is not included in the computation of the first 30-day period or the second 30-day period, as applicable.

(b) For purposes of this section, the date of the department's submission of a request for additional information is:

(1) the date of the department's electronic mailing or telephone call relating to the request for additional information; or

(2) the postmarked date on the department's letter relating to the request for additional information.

Sec. 2251.305. CLASSIFICATION DISAPPROVAL; HEARING. (a) If the commissioner disapproves under Section 2251.303(a)(2) a classification filed with the department, the commissioner shall issue an order disapproving the filed classification in the manner prescribed for a disapproved filing under Section 2251.103(b).

(b) An insurer whose non-preferred classification is disapproved is entitled to a hearing in the manner prescribed for a disapproved filing under Section 2251.103(c).

Sec. 2251.306. CLASSIFICATIONS PROVIDED TO PUBLIC. The department shall periodically update insurer profiles maintained on the department's Internet website to provide information to policyholders and potential policyholders stating:

(1) whether or not an insurer uses non-preferred classifications; and

(2) if an insurer uses non-preferred classifications:

(A) the names and content of any non-preferred classifications used; and

(B) the aggregate weight assigned to any non-preferred classifications used.

SECTION 5. The change in law made by this Act applies only to a personal automobile insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2010. An insurance policy that is delivered, issued for delivery, or renewed before January 1, 2010, is covered by the law in effect at the time the policy was delivered, issued for delivery, or renewed, and that law is continued in effect for that purpose.

SECTION 6. This Act takes effect September 1, 2009.