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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of property and casualty insurance rates. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 706.004, Insurance Code, as effective |
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April 1, 2009, is amended to read as follows: |
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Sec. 706.004. RATES AND FORMS. Notwithstanding any other |
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law, rates and forms for insurance coverage issued under this |
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chapter are governed by: |
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(1) Subchapters A-D [A-E], Chapter 2251; |
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(2) Subchapter A, Chapter 2301; and |
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(3) Article 5.13-2. |
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SECTION 2. Section 912.002(c), Insurance Code, as effective |
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April 1, 2009, is amended to read as follows: |
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(c) Rate regulation for a residential fire and allied lines |
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insurance policy written by a county mutual insurance company is |
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subject to Chapters 2251 and [Chapter] 2253. Rate [On and after
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December 1, 2004, rate] regulation for a personal automobile |
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insurance policy and a residential fire and allied lines insurance |
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policy written by a county mutual insurance company is subject to |
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Article 5.13-2 and Chapter 2251. A county mutual insurance company |
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is subject to Chapter 2253. The commissioner may adopt rules as |
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necessary to implement this subsection. |
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SECTION 3. Section 1806.052, Insurance Code, is amended to |
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read as follows: |
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Sec. 1806.052. CONSTRUCTION OF SUBCHAPTER. This subchapter |
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may not be construed to prohibit the modification of rates by a |
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rating plan that complies [is filed in accordance] with the |
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requirements of Chapter 2251 or Article 5.13-2, as applicable, |
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[that has not been disapproved by the commissioner,] and that is |
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designed to encourage the prevention of accidents, and to account |
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for all relevant factors inside and outside this state, including |
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the peculiar hazards and experience of past and prospective |
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individual risks. |
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SECTION 4. Section 2151.001(2), Insurance Code, is amended |
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to read as follows: |
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(2) "Authorized insurer" means an insurer authorized |
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by the department to write automobile liability coverage under this |
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title. The [Except as provided by Section 2251.204, the] term does |
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not include a county mutual insurance company organized under |
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Chapter 912. |
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SECTION 5. Section 2251.003(c), Insurance Code, is amended |
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to read as follows: |
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(c) Sections 2251.008, 2251.052, 2251.101, 2251.102, |
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[2251.103,] 2251.104, 2251.105, [and] 2251.107, and 2251.151(a) do |
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not apply to a Lloyd's plan or a reciprocal or interinsurance |
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exchange with respect to commercial property insurance, inland |
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marine insurance, rain insurance, or hail insurance on farm crops. |
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SECTION 6. Section 2251.101(a), Insurance Code, is amended |
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to read as follows: |
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(a) For [Except as provided by Subchapter D, for] risks |
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written in this state, each insurer shall file with the |
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commissioner all rates, applicable rating manuals, supplementary |
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rating information, and additional information as required by the |
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commissioner. |
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SECTION 7. The heading of Subchapter D, Chapter 2251, |
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Insurance Code, is amended to read as follows: |
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SUBCHAPTER D. PRIOR APPROVAL OF RATES [UNDER CERTAIN
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CIRCUMSTANCES] |
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SECTION 8. Section 2251.151, Insurance Code, is amended to |
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read as follows: |
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Sec. 2251.151. FILING OF [REQUIREMENT TO FILE] RATES FOR |
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PRIOR APPROVAL [UNDER CERTAIN CIRCUMSTANCES]. (a) An insurer may |
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not use a rate until the rate has been filed with the department in |
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accordance with Subchapter C and approved by the commissioner in |
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accordance with this subchapter. |
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(b) For rates that are exempt from Subsection (a) under |
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Section 2251.003(c), the [The] commissioner by order may require an |
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insurer to file with the department for the commissioner's approval |
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all rates, supplementary rating information, and any supporting |
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information in accordance with this subchapter if the commissioner |
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determines that: |
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(1) the insurer's rates require supervision because of |
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the insurer's financial condition or rating practices; or |
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(2) a statewide insurance emergency exists. |
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(c) [(a-1)] If an insurer subject to an order under |
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Subsection (b) files a petition under Subchapter D, Chapter 36, for |
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judicial review of an order disapproving a rate under this chapter, |
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the insurer must use the rates in effect for the insurer at the time |
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the petition is filed and may not file and use any higher rate for |
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the same line of insurance subject to this chapter before the matter |
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subject to judicial review is finally resolved unless the insurer, |
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in accordance with this subchapter, files the new rate with the |
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department, along with any applicable supplementary rating |
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information and supporting information, and obtains the |
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commissioner's approval of the rate. |
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(d) [(b)] From the date a [of the filing of the] rate is |
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filed with the department under this section to the effective date |
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of the new rate, the insurer's previously filed rate that is in |
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effect on the date of the filing remains in effect. |
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(e) [(c)] The commissioner may require an insurer to file |
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the insurer's rates under Subsection (b) [this section] until the |
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commissioner determines that the conditions described by that |
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subsection [Subsection (a)] no longer exist. |
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(f) [(d)] For purposes of this section, a rate is filed with |
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the department on the date the department receives the rate filing. |
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(g) [(e)] If the commissioner requires an insurer to file |
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the insurer's rates under Subsection (b) [this section], the |
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commissioner shall issue an order specifying the commissioner's |
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reasons for requiring the rate filing. An affected insurer is |
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entitled to a hearing on written request made to the commissioner |
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not later than the 30th day after the date the order is issued. |
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SECTION 9. Section 2251.152, Insurance Code, is amended to |
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read as follows: |
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Sec. 2251.152. [RATE APPROVAL REQUIRED;] EXCEPTION TO |
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CERTAIN RATE APPROVAL REQUIREMENTS. (a) After [An insurer subject
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to this subchapter may not use a rate until the rate has been filed
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with the department and approved by the commissioner in accordance
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with this subchapter.
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[(b) Notwithstanding Subsection (a), after] a rate filing |
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required of an insurer under Section 2251.151(b) is approved under |
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this subchapter, the [an] insurer, without prior approval of the |
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commissioner, may use any rate subsequently filed by the insurer if |
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the subsequently filed rate does not exceed the lesser of: |
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(1) 107.5 percent of the rate approved by the |
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commissioner; or |
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(2) 110 percent of any rate used by the insurer in the |
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previous 12-month period. |
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(b) [(c)] Filed rates under Subsection (a) [(b)] take |
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effect on the date specified by the insurer. |
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SECTION 10. Section 2251.153(a), Insurance Code, is amended |
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to read as follows: |
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(a) Not later than the 30th day after the date a rate is |
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filed with the department under this subchapter, the commissioner |
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shall: |
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(1) approve the rate if the commissioner determines |
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that the rate complies with the requirements of this chapter and any |
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other provision of this code governing the setting of the rate by |
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the insurer; or |
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(2) disapprove the rate if the commissioner determines |
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that the rate does not comply with the requirements of this chapter |
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or any other provision of this code governing the setting of the |
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rate by the insurer. |
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SECTION 11. Section 2251.156, Insurance Code, is amended to |
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read as follows: |
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Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER; |
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HEARING. (a) If the commissioner disapproves a rate filing under |
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this chapter [Section 2251.153(a)(2)], the commissioner shall |
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issue an order specifying in what respects the filing fails to meet |
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the requirements of this chapter or another provision of this code |
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applicable to the setting of the rate by the insurer [disapproving
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the filing in accordance with Section 2251.103(b)]. |
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(b) An insurer whose rate filing is disapproved is entitled |
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to a hearing on written request made to the commissioner not later |
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than the 30th day after the date the order disapproving the rate |
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filing takes effect [in accordance with Section 2251.103(c)]. |
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SECTION 12. Section 2251.104, Insurance Code, is |
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transferred to Subchapter D, Chapter 2251, Insurance Code, and |
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redesignated as Section 2251.157 to read as follows: |
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Sec. 2251.157 [2251.104]. DISAPPROVAL OF RATE IN EFFECT; |
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HEARING. (a) The commissioner may disapprove a rate that is in |
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effect only after a hearing. The commissioner shall provide the |
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filer at least 20 days' written notice. |
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(b) The commissioner must issue an order disapproving a rate |
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under Subsection (a) not later than the 15th day after the close of |
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the hearing. The order must: |
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(1) specify in what respects the rate fails to meet the |
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requirements of this chapter; and |
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(2) state the date on which further use of the rate is |
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prohibited, which may not be earlier than the 45th day after the |
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close of the hearing under this section. |
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SECTION 13. The following provisions of the Insurance Code |
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are repealed: |
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(1) Section 2251.103; |
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(2) Subchapter E, Chapter 2251; and |
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(3) Chapter 2254. |
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SECTION 14. The commissioner of insurance shall adopt all |
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rules necessary to implement this Act on or before December 1, 2009. |
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SECTION 15. The change in law made by this Act applies to |
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insurance policies delivered, issued for delivery, or renewed on or |
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after January 1, 2010, and to rates for those policies. An |
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insurance policy delivered, issued for delivery, or renewed before |
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January 1, 2010, and rates for the policy are governed by the law as |
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it existed immediately before the effective date of this Act, and |
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that law is continued in effect for that purpose. |
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SECTION 16. This Act takes effect September 1, 2009. |