79C143(4) KLA

 

CHAPTER 2252.  RATE ADMINISTRATION

SUBCHAPTER A.  GENERAL PROVISIONS

Revised Law

Sec. 2252.001.  APPLICABILITY OF CHAPTER.  (a)  Except as provided by Subsections (b) and (c), this chapter applies to an insurer, including a corporation, reciprocal or interinsurance exchange, mutual insurance company, association, Lloyd's plan, or other organization, writing casualty insurance or writing fidelity, surety, or guaranty bonds, on risks or operations in this state.

(b)  This chapter does not apply to:

(1)  a farm mutual insurance company or association regulated under Chapter 911; or

(2)  a county mutual insurance company regulated under Chapter 912.

(c)  This chapter does not apply to the writing of:

(1)  automobile insurance;

(2)  life, health, or accident insurance;

(3)  professional liability insurance;

(4)  reinsurance;

(5)  aircraft insurance;

(6)  fraternal benefit insurance;

(7)  fire insurance;

(8)  workers' compensation insurance;

(9)  marine insurance, including noncommercial inland marine insurance and ocean marine insurance;

(10)  title insurance;

(11)  explosion insurance, except insurance against loss from personal injury or property damage resulting accidentally from:

(A)  a steam boiler;

(B)  a heater or pressure vessel;

(C)  an electrical device;

(D)  an engine; or

(E)  all machinery and appliances used in connection with or in the operation of a boiler, heater, vessel, electrical device, or engine described by Paragraphs (A)-(D); or

(12)  insurance coverage for any of the following conditions or risks:

(A)  weather or climatic conditions, including lightning, tornado, windstorm, hail, cyclone, rain, or frost and freeze;

(B)  earthquake or volcanic eruption;

(C)  smoke or smudge;

(D)  excess or deficiency of moisture;

(E)  flood;

(F)  the rising water of an ocean or an ocean's tributary;

(G)  bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, or any order of a civil authority made to prevent the spread of a conflagration, epidemic or catastrophe;

(H)  vandalism or malicious mischief;

(I)  strike or lockout;

(J)  water or other fluid or substance resulting from:

(i)  the breakage or leakage of a sprinkler, pump, or other apparatus erected for extinguishing fire, or a water pipe or other conduit or container; or

(ii)  casual water entering a building through a leak or opening in the building or by seepage through building walls; or

(K)  accidental damage to a sprinkler, pump, fire apparatus, pipe, or other conduit or container described by Paragraph (J)(i).  (V.T.I.C. Art. 5.13, Secs. (a) (part), (b), (c).)

Source Law

Art. 5.13.  (a)  This subchapter applies to every insurance company, corporation, interinsurance exchange, mutual, reciprocal, association, Lloyd's plan, or other organization or insurer writing any of the characters of insurance business herein set forth, hereinafter called "Insurer";  provided that nothing in this entire subchapter shall be construed to apply to any county or farm mutual insurance company or association, as regulated under Chapters 911 and 912 of this code, … .

(b)  This subchapter applies to the writing of casualty insurance and the writing of fidelity, surety, and guaranty bonds, on risks or operations in this State except as herein stated.

(c)  Except as otherwise provided by this subchapter, this subchapter does not apply to the writing of motor vehicle, life, health, accident, professional liability, reinsurance, aircraft, fraternal benefit, fire, lightning, tornado, windstorm, hail, smoke or smudge, cyclone, earthquake, volcanic eruption, rain, frost and freeze, weather or climatic conditions, excess or deficiency of moisture, flood, the rising of the waters of the ocean or its tributaries, bombardment, invasion, insurrection, riot, civil war or commotion, military or usurped power, any order of a civil authority made to prevent the spread of a conflagration, epidemic or catastrophe, vandalism or malicious mischief, strike or lockout, water or other fluid or substance, resulting from the breakage or leakage of sprinklers, pumps, or other apparatus erected for extinguishing fires, water pipes or other conduits or containers, or resulting from casual water entering through leaks or opening in buildings or by seepage through building walls, including insurance against accidental injury of such sprinklers, pumps, fire apparatus, conduits or container, workers' compensation, noncommercial inland marine, ocean marine, marine, or title insurance;  nor does this subchapter apply to the writing of explosion insurance, except insurance against loss from injury to person or property which results accidentally from steam boilers, heaters or pressure vessels, electrical devices, engines and all machinery and appliances used in connection therewith or operation thereby.

Revisor's Note

(1)  V.T.I.C. Article 5.13 refers to "this subchapter," meaning Subchapter B, V.T.I.C. Chapter 5. Subchapter B, Chapter 5, is revised in various chapters in this title. Throughout this subchapter, the revised law substitutes references to "this chapter" for the references to "this subchapter" because the applicability of Article 5.13 is separately maintained for each of the chapters of this title in which other articles from Subchapter B, V.T.I.C. Chapter 5, are revised.

(2)  Section (a), V.T.I.C. Article 5.13, states that the law revised in this chapter applies to each "interinsurance exchange … [and] reciprocal."  The revised law substitutes "reciprocal or interinsurance exchange" because that is the term used in Chapter 942 of this code, which regulates reciprocal and interinsurance exchanges.

(3)  Section (a), V.T.I.C. Article 5.13, states that the law revised in this chapter does not apply to a "county or farm mutual insurance company or association, as regulated under Chapters 911 and 912 of this code."  The only applicable references to an "association" are in Chapter 911 of this code, which regulates farm mutual insurance companies.  The revised law is drafted accordingly.

(4)  Section (c), V.T.I.C. Article 5.13, states that "[e]xcept as otherwise provided by this subchapter," meaning Subchapter B, V.T.I.C. Chapter 5, "this subchapter" does not apply to the writing of certain insurance, including "motor vehicle" insurance.  The revised law omits the reference to "[e]xcept as otherwise provided by this subchapter" as unnecessary because the portions of Subchapter B, Chapter 5, that are codified in this chapter do not contain any exception to the general statement of inapplicability.  The revised law also substitutes "automobile insurance" for the reference to motor vehicle insurance for consistency with terminology used in this code and because "automobile insurance" is the term more commonly used to describe the kind of insurance that provides coverage for motor vehicles.

Revised Law

Sec. 2252.002.  CONSTRUCTION OF CHAPTER.  This chapter does not limit in any manner the kinds or classes of insurance that an insurer may write under an appropriate statute or the insurer's charter or certificate of authority.  (V.T.I.C. Art. 5.13, Sec. (d).)

Source Law

(d)  This subchapter shall not be construed as limiting in any manner the types or classes of insurance which may be written by the several types of insurers under appropriate statutes or their charters or permits.

Revisor's Note

Section (d), V.T.I.C. Article 5.13, refers to the kinds or classes of insurance that an insurer may write under the insurer's charter or permit.  The revised law substitutes "certificate of authority" for "permit" because "certificate of authority" is the term used throughout this code in relation to an entity's authority to engage in business.

[Sections 2252.003-2252.050 reserved for expansion]

SUBCHAPTER B.  RATING SYSTEMS

Revised Law

Sec. 2252.051.  INSURER TO PROVIDE RATE INFORMATION.  (a)  An insurer shall provide all information relevant to a rate used by the insurer to:

(1)  any person who is or will be affected by the rate or by a modification of the rate; or

(2)  the authorized representative of a person described by Subdivision (1).

(b)  The insurer shall provide the information within a reasonable time after receipt of a written request for the information and on payment of any reasonable charge set by the insurer.  (V.T.I.C. Art. 5.18, Sec. (a).)

Source Law

Art. 5.18.  (a)  Every insurer subject to this subchapter shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charges as it may make, furnish to any person then or thereafter affected by a rate used by the insurer or any modification thereof properly made, or to the authorized representative of such person, all information pertinent thereto.

Revisor's Note

Section (a), V.T.I.C. Article 5.18, refers to "a rate … or any modification thereof properly made."  The reference to "properly made" is omitted from the revised law as unnecessary because it is presumed that any modification to a rate is made properly.

Revised Law

Sec. 2252.052.  RIGHT TO HEARING ON RATING SYSTEM.  (a)  An insurer shall provide within this state reasonable means by which a person aggrieved by the application of the insurer's rating system may be heard on written request to review the manner in which the rating system has been applied in connection with the insurance afforded the person.

(b)  The person may be heard under this section in person or through the person's authorized representative.  (V.T.I.C. Art. 5.18, Sec. (b) (part).)

Source Law

(b)  Every insurer subject to this subchapter shall provide within this State reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which such rating system has been applied in connection with the insurance afforded him. …

Revised Law

Sec. 2252.053.  APPEAL OF DECISION ON RATING SYSTEM.  Any party affected by an action taken by an insurer or rating organization in response to a request for a hearing under Section 2252.052 may appeal that action to the commissioner not later than the 10th day after the date the party receives written notice of the action.  (V.T.I.C. Art. 5.18, Sec. (b) (part).)

Source Law

(b)  …  Any party affected by the action of such rating organization or such insurer on such request may, within ten (10) days after written notice of such action, appeal to the Board.

Revisor's Note

Section (b), V.T.I.C. Article 5.18, refers to the "Board," meaning the Board of Insurance Commissioners.  Under Chapter 499, Acts of the 55th Legislature, Regular Session, 1957, administration of the insurance laws of this state was reorganized and the powers and duties of the Board of Insurance Commissioners were transferred to the State Board of Insurance.  Chapter 685, Acts of the 73rd Legislature, Regular Session, 1993, abolished the State Board of Insurance and transferred its functions to the commissioner of insurance and the Texas Department of Insurance.  Throughout this chapter, references to the "Board" have been changed appropriately.

[Sections 2252.054-2252.100 reserved for expansion]

SUBCHAPTER C.  LOSS AND EXPENSE EXPERIENCE

Revised Law

Sec. 2252.101.  RECORDING AND REPORTING OF LOSS AND EXPENSE EXPERIENCE AND OTHER DATA.  (a)  The commissioner shall adopt reasonable rules and statistical plans for the recording and reporting of loss experience and other required data by insurers.  The rules and plans must ensure that each insurer's total loss and expense experience is made available at least as frequently as biennially in the form and with the detail necessary to aid in determining whether rating plans comply with the standards provided by this chapter, Chapter 1901, Chapter 2251, or Subchapter B, Chapter 5.

(b)  In adopting the rules and statistical plans, the commissioner shall have due regard for:

(1)  the rating plans used under this chapter, Chapter 1901, Chapter 2251, or Subchapter B, Chapter 5; and

(2)  the rules and forms of plans used in other states to ensure that the rules and plans are as uniform as is practicable.

(c)  Each insurer shall use the statistical plans adopted under this section to record and report loss experience and other required data in accordance with the rules adopted by the commissioner.

(d)  The commissioner may designate other agencies to gather and compile the loss experience and other data.

(e)  The commissioner may adopt modifications to statistical plans adopted under this section.  (V.T.I.C. Art. 5.19, Sec. (a).)

Source Law

Art. 5.19.  (a)  Recording and Reporting of Loss Experience and Other Data.  The Board shall, after due consideration, promulgate reasonable rules and statistical plans which may be modified from time to time and which shall be used thereafter by each insurer in the recording and reporting of its loss experience and such other data as may be required, in order that the total loss and expense experience of all insurers may be made available at least biennially in such form and detail as may be necessary to aid in determining whether rating plans comply with the standards set forth in this subchapter.  In promulgating such rules and plans, the Board shall have due regard for the rating plans used under this subchapter, and in order that such rules and plans may be as uniform as is practicable, to the rules and to the form of the plans used in other states.  The Board may designate other agencies to gather and compile such experience.

Revisor's Note

(1)  Section (a), V.T.I.C. Article 5.19, requires the commissioner of insurance to adopt reasonable rules and statistical plans "after due consideration."  The revised law omits "after due consideration" as unnecessary because the requirement that a rule or a plan be reasonable implies that the commissioner will give the rule or plan due consideration  before adopting that rule or plan.

(2)  Section (a), V.T.I.C. Article 5.19, requires the adoption of "rules and statistical plans which may be modified from time to time."  The revised law omits the authorization to modify a rule because the authority to adopt a rule includes the authority to modify that rule.  The revised law also omits "from time to time" with respect to the modification of statistical plans because without an express limitation, the authority to modify includes the authority to modify from time to time.

(3)  Section (a), V.T.I.C. Article 5.19, refers to rate standards and rating plans set forth in or used under "this subchapter," meaning Subchapter B, V.T.I.C. Chapter 5.  The revised law adds references to standards or plans provided by or used under this chapter, Chapter 1901, or Chapter 2251 to include citations to other provisions in which relevant portions of Subchapter B, Chapter 5, are revised.

Revised Law

Sec. 2252.102.  RULES AND PLANS REQUIRING INTERCHANGE OF LOSS EXPERIENCE.  The commissioner may adopt reasonable rules and plans requiring the interchange of loss experience necessary for the application of rating plans.  (V.T.I.C. Art. 5.19, Sec. (b).)

Source Law

(b)  Interchange of Rating Plan Data.--Reasonable rules and plans may be promulgated by the Board after due consideration, requiring the interchange of loss experience necessary for the application of rating plans.

Revisor's Note

Section (b), V.T.I.C. Article 5.19, authorizes the commissioner of insurance to adopt certain reasonable rules "after due consideration."  The revised law omits the quoted language for the reason stated in Revisor's Note (1) to Section 2252.101.

Revised Law

Sec. 2252.103.  EXCHANGE OF RATE INFORMATION WITH OTHER STATES.  To further the uniform administration of rating laws, the department or an insurer may:

(1)  exchange information and experience data with insurance supervisory officials, insurers, and rating organizations in other states; and

(2)  consult and cooperate with the individuals or entities described by Subdivision (1) with respect to ratemaking and the application of rating systems.  (V.T.I.C. Art. 5.19, Sec. (c).)

Source Law

(c)  Consultation with Other States. In order to further uniform administration of rating laws, the Board and every insurer may exchange information and experience data with insurance supervisory officials, insurers and rating organizations in other states and may consult and cooperate with them with respect to rate making and the application of rating systems.

[Sections 2252.104-2252.150 reserved for expansion]

SUBCHAPTER D.  PROHIBITED ACTS

Revised Law

Sec. 2252.151.  PROHIBITED CONDUCT RELATED TO RATES AND PREMIUMS.  (a)  A person or organization may not knowingly give false or misleading information to the department or commissioner, an insurer, or any other entity that will in any manner affect the proper determination of rates or premiums.

(b)  An insurer or agent who knowingly misrepresents the actual or replacement value of real or personal property to achieve an unfair competitive rate advantage commits an offense.  (V.T.I.C. Art. 5.21.)

Source Law

Art. 5.21.  No person or organization shall knowingly give false or misleading information to the Board, to any insurer, or to any other entity, which will in any manner affect the proper determination of rates or premiums.

An insurer or agent who knowingly misrepresents the actual or replacement value of real or personal property for the purpose of achieving an unfair competitive rate advantage commits an offense.

Revisor's Note

(End of Chapter)

Section (e), V.T.I.C. Article 5.13, states that the regulatory power conferred in this chapter is vested in the commissioner of insurance.  The revised law omits this statement as unnecessary. Section 31.021 of this code provides that the commissioner "is the department's chief executive and administrative officer" and "has the powers and duties vested in the department by this code."  The omitted law reads:

(e)  The regulatory power herein conferred is vested in the commissioner.