ADOPTED
The Commissioner of Insurance has adopted amendments to the Texas Basic
Manual of Rules, Classifications and Experience Rating Plan for Workers'
Compensation and Employers' Liability Insurance (the Manual). The amendments
were proposed in a petition proposed by the staff of the Workers' Compensation
Division of the Texas Department of Insurance on October 16, 1996. Notice
of the proposal (Reference Number W-1096-44-I) was published in the October
22, 1996, issue of the
Texas Register
(21
TexReg 10441). The amendments were considered at a public hearing held on
November 26, 1996, at 9:00 a.m. under Docket Number 2260 in Room 100 of the
Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas.
The purpose of these amendments to the Manual is to eliminate conflicting
language within the Manual and to provide clarification to rules, classifications,
endorsements and forms by amending the language.
The adopted changes are summarized as follows:
1. Clarify the rules to reflect that (1) the effective date of the policy
determines the rules and rates applicable to the policy; (2) the anniversary
rating date determines the date the experience modifier applies and the date
the Experience Rating Plan rules are applicable to the policy.
2. Amend the language in the rules to reflect the language of the standard
workers' compensation policy as amended in November, 1995.
3. Show the order of calculation of workers' compensation policy costs
in a rule and delete all other examples in the rules of how the policy costs
are determined in order to eliminate conflicts.
4. Clarify the rules to reflect that the payroll limitations for executive
officers apply regardless of the classification applicable to that executive
officer.
5 .Clarify the rules to reflect that business allowances, such as automobile,
housing, etc., per diem expenses in excess of IRS guidelines, and automobile
mileage reimbursements in excess of IRS guidelines are included in the definition
of remuneration.
6. Amend the maximum minimum premium from $500 to $250.
7. State in the rules that "test modifiers" cannot be applied to the policy
and cannot be negotiated.
8. Add a rule to define Schedule Rating.
9. Amend the language concerning premium discount as it applies to workers'
compensation policies written through the group purchase program and allow
the insurance company and the group administrator to agree on how to determine
the final premium discount for the group even though not all of the policies
have been audited.
10. Delete obsolete language from Rule IX. E. Employee Leasing Arrangements
and allow the completion of the Employee Provider Form EP-1, Employee Provider
Form EP-1A and the Employee Provider/Client Company Endorsement to be optional
with the insuring company, which includes the Texas Workers' Compensation
Insurance Fund.
11. Amend Rule IX Deductible Programs to discontinue the filing of the
Deductible Notice of Election form with the Texas Department of Insurance,
but require the insuring company to have the completed Deductible Notice
of Election form in the file for each insured so that it is available to
the Department upon specific request.
12. Amend Section I A. of the Experience Rating Plan to clarify which insurance
company is responsible for calculating the experience modifier for a risk
when there are multiple insurers writing the risk.
13. Amend Section I A. of the Experience Rating Plan to require that upon
receipt of a written request, an insurance company is to provide unit statistical
data to the insurance company responsible for calculating the experience
modifier for an insured or to the entity calculating experience modifiers
on behalf of that insurance company. In addition, upon request, an insurance
company must provide a copy of the modifier calculation of an insured to
another insurance company. All requests must include either the current policy
information page for the insured or a letter of authority signed by the insured.
14. Amend Section 1 C. 4. of the Experience Rating Plan to clarify how
the anniversary rating date is established when there are multiple policies
for the same risk.
15. Amend Section I C. of the Experience Rating Plan to set forth ways
to establish a different anniversary rating date.
16. Clarify Section III A. of the Experience Rating Plan so that only experience
developed under a workers' compensation policy or as a certified self-insurer
can be used to determine eligibility for experience rating and to actually
calculate the experience modifier.
17. Amend Section V E. of the Experience Rating Plan to indicate what experience
modifier applies when there is no modifier calculated at the time the policy
is issued; to indicate that whenever there is a decrease in the premium as
a result of an experience modifier being added to the policy, the decrease
in premium is always applicable to the effective date of the policy or to
the anniversary rating date, if different than effective date of the policy
and to indicate when an increase in premium as a result of adding the experience
modifier is applicable to the policy.
18. Amend Section V F. of the Experience Rating Plan to clarify that when
the unit statistical data is received by the insuring company, the experience
modifier will be recalculated and the application of the revised modifier
is governed by Section G. of the Experience Rating Plan.
19. Amend the Introduction to the Endorsements & Forms Section to require
insurance companies to either show an endorsement issue date or a sequential
number on each endorsement in order to determine the order of issuance.
20. Amend the Texas Amendatory Endorsement WC 42 03 01 to delete the reference
to the short rate cancellation penalty being applied at the time of final
payroll audit since short rate cancellations are no longer applicable.
21. Delete the following endorsements as they are no longer applicable:
Texas Assigned Risk Pool--Maritime Coverage Endorsement (Limited Coverage
for Masters or Members of the Crews of Vessels) WC 42 02 01; Texas Workers'
Compensation Insurance Fund -Other States Endorsement (Reimbursement for
Temporary Operations Only) WC 42 03 07; and S.B. 1 Litigation Surcharge Endorsement
WC 42 04 05;
22. Amend Employee Provider/Client Company Endorsement WC 42 04 06A to
substitute the Fund for the Facility in the wording of the endorsement and
to delete Section 12 of the endorsement in its entirety since it is in conflict
with the Statute.
23. Amend the language in form DNE-1 to track the language in the rule
and the endorsements pertaining to the deductible to eliminate the conflicts.
24. Amend the timing of the filing requirements for the filing of form
GPP-2 for groups participating in the group purchase program.
25. Eliminate the Workers' Compensation Negotiated Experience Modifier
form.
26. Editorial changes throughout the Manual to correct punctuation, typographical
errors, reference to the Statutes, and reference to rules contained in the
Manual.
27. Editorial changes to the footnotes and classification wordings in the
Classification Section of the Manual.
28. Addition of several classification wordings that were inadvertently
left out when then classifications were reduced and combined effective January
1, 1994.
29. Divide the Wrecking Classification Code 5701 into the following classifications:
Concrete or Concrete Encased Steel & Drivers-Code 5213; Iron or Steel
& Drivers-Code 5057; Masonry & Drivers-Code 5022 and Wooden - including
dwellings & Drivers-Code 5403.
30. Changes in the following classifications to classifications with lower
relativities: Appraisers - Tax from Code 4511 to Code 8742; Breakwater or
Jetty Construction from Code 6219 to Code 6045; Dike or Revetment Construction
& Drivers from Code 6219 to Code 6045; Kennel Employees & Drivers
from Code 0113 to Code 8831; Forestry Personnel-Planting & Supervision
of Timber Forest from Code 0042 to Code 0005; Inspection of Risks for Insurance
or Valuation Purposes from Code 4511 to Code 8742; Plant Rental or Maintenance
from Code 0035 to Code 8017; Satellite Dish Installation from Code 5l90 to
Code 7600; and Service Station Wash Pit Cleaning from Code 9402 to Code 7219.
The Commissioner adopted, with several changes to the proposal as noticed
in the Texas Register , the amendments to the rules, endorsements and forms
set forth above. Based on written comments on the proposal, the Commissioner
adopted editorial changes to the footnotes of several classifications. In
addition, Section D. 4. of the Procedures Section of the Appendix of the
Manual was amended to reflect the same language as adopted in Section 1 A.
5th paragraph of the Texas Experience Rating Plan; Rule VI J. Schedule Rating
was amended to delete the last phrase "nor must application be uniform between
risks"; and the proposed changes to endorsement WC 42 03 04 were withdrawn
by the staff at this time.
The amendments as adopted by the Commissioner of Insurance are shown in
exhibits on file with the Chief Clerk under Reference Number W-1096-44-I,
which are incorporated by reference into Commissioner's Order Number 96-1471.
The Commissioner has jurisdiction over this matter pursuant to the Insurance
Code, Articles 5.56, 5.57. 5.60 and 5.96.
This notification is made pursuant to the Insurance Code, Article 5.96,
which exempts it from the requirements of the Government Code, Chapter 2001
(Administrative Procedure Act).
IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the amendments
to the Texas Basic Manual of Rules, Classifications and Experience Rating
Plan for Workers' Compensation and Employers' Liability Insurance , which
are attached and incorporated hereto are hereby adopted to be effective for
workers' compensation policies written with an effective date on and after
March 1, 1997.
Issued in Austin, Texas, on December 23, 1996.
TRD-9618646
Caroline Scott
Assistant General Counsel
Texas Department of Insurance
Filed: December 23, 1996