TITLE 28.INSURANCE

Part 1. TEXAS DEPARTMENT OF INSURANCE

Chapter 1. GENERAL ADMINISTRATION

The Commissioner of Insurance adopts new §§1.2801 - 1.2803, Subchapter BB, concerning forms privacy notice. The sections are adopted without changes to the proposed text as published in the April 5, 2002 issue of the Texas Register (27 TexReg 2737) and will not be republished.

These new sections are necessary to implement the provisions of House Bill 1922 enacted by the 77th Texas Legislature (2001), relating to the state government privacy policy requirements of Texas Government Code Chapter 559. These sections only apply to forms adopted directly or by reference under Title 28 of the Texas Administrative Code, and for which the department collects information about an individual by means of a form that the individual completes and files with the department in a paper format or in an electronic format including on the department's Internet site. The sections incorporate a standardized notice into those forms, thereby eliminating the need for departmental staff to separately amend each rule to include the notice required by Chapter 559.

These sections only apply to forms adopted directly or by reference under Title 28 of the Texas Administrative Code, and for which the department collects information about an individual by means of a form that the individual completes and files with the department in a paper format or in an electronic format including on the department's Internet site. The sections incorporate a standardized notice into those forms, thereby eliminating the need for departmental staff to separately amend each rule to include the notice required by Chapter 559.

No comments were received.

The new sections are adopted under Texas Government Code Chapter 559 and Insurance Code §36.001. Texas Government Code §559.003 requires each state government body collecting information about an individual by means of a form that the individual completes and files with the governmental body in a paper format, or in an electronic format on an Internet site, to prominently state on the paper form certain statutorily required statements relating to the provision and correction of such information. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance as authorized by statute.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on May 16, 2002.

TRD-200203046

Lynda H. Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: June 5, 2002

Proposal publication date: April 5, 2002

For further information, please call: (512) 463-6327

Chapter 5. PROPERTY AND CASUALTY INSURANCE

The Commissioner of Insurance adopts amendments to §§5.206 and 5.3700 concerning the designation of underserved areas for private passenger automobile insurance and residential property insurance, respectively. The amended sections are adopted without changes to the proposed text as published in the March 15, 2002 issue of the Texas Register (27 TexReg 1977) and will not be republished.

The amendments to §§5.206 and 5.3700 are necessary to eliminate subsections which have been declared invalid by final court judgments. Section 5.206(h) was declared invalid and of no force or effect in a court judgment on June 29, 2001 in the case styled and numbered, National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. 97-09206, in the 98th Judicial District of Travis County, Texas. Section 5.3700(g) was declared invalid and of no force or effect in a court judgment on July 24, 2001 in the case styled and numbered, National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. GN 00-1769, in the 201st Judicial District of Travis County, Texas. These judgments became final by operation of law after no appeals were taken from either of these judgments. It is necessary for the department to amend these sections by deleting the invalid subsections to comply with the Government Code §2002.058 which requires state agencies to repeal their rules that have been declared invalid by a final court judgment.

The adoption of these amendments will amend §5.206 by deleting subsection (h) and §5.3700 by deleting subsection (g) because both of these subsections have been declared invalid by final court judgments. The remaining subsections will not change.

Comment: One commenter asserted that the deletion of the subsections goes beyond the scope of the court judgments concerning the validity of §5.206(h) and §5.3700(g). The commenter asserted that the court findings did not invalidate the rules in their entirety and that the information required by these subsections would continue to be useful if presented in the aggregate rather than by company as these subsections require. The commenter also stated that the courts found that the company-specific data mentioned in §5.206(h) and §5.3700(g) are trade secrets. The commenter suggested that the words "by company" be eliminated from the subsections instead of deleting the subsections in their entirety.

Agency Response: The department disagrees with the commenter that the deletion of §5.206(h) and §5.3700(g) is unnecessary and goes beyond the scope of the court rulings. In reviewing the court judgments related to these two subsections the department found that the court judgment in National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. 97-09206, in the 98th Judicial District of Travis County, Texas says in pertinent part "IT IS THEREFORE ORDERED ADJUDGED AND DECREED that 28 Tex. Admin. Code §5.206(h) is invalid and of no force or effect" and in National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. GN 00-1769, in the 201st Judicial District of Travis County, Texas says "IT IS

THEREFORE ORDERED ADJUDGED AND DECREED that 28 Texas Administrative Code §5.3700(g) is invalid and of no force or effect." No appeals were taken from either of these judgments. The department believes that since the subsections have been declared invalid by final court judgments, the department is required to omit these invalid subsections from its rules.

The department disagrees with the commenter's assertion that the data was found to be a trade secret. Concerning §5.206(h), although the order in National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. 97-09206, in the 98th Judicial District of Travis County, Texas does not mention "trade secrets" specifically, the order states that all other claims appearing in the plainitffs' pleadings are nonsuited. Concerning §5.3700(g), the order in National Association of Independent Insurers, et al. v. John Cornyn, Attorney General of Texas, et al., cause no. GN 00-1769, in the 201st Judicial District of Travis County, Texas states that all claims appearing in the plaintiffs' pleadings are nonsuited, specifically including "plaintiffs' claims that information on residential property insurance policies that insurers report to the Texas Department of Insurance is confidential commercial or financial information excepted from the public access requirements of the Public Information Act and trade secret information protected from disclosure and confidential under the Public Information Act and Texas common law." Consequently, the department believes that the courts did not rule that the company-specific data are trade secrets.

Against: Office of Public Insurance Counsel.

Subchapter A. AUTOMOBILE INSURANCE

3. MISCELLANEOUS INTERPRETATIONS

28 TAC §5.206