Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter M. FILING REQUIREMENTS
The Texas Department of Insurance proposes amendments to §§5.9310,
5.9332, 5.9340, 5.9341, and 5.9357, concerning form, rate, underwriting guideline,
and reduced filing requirements for certain property and casualty insurers.
The proposal is necessary to conform filings made by certain property and
casualty insurers pursuant to Insurance Code Articles 5.13-2, 5.55, and 5.55A
to legislative amendments that were enacted by the 79th Legislature, Regular
Session, in SB 99, HB 7, and HB 2437, and by the 78th Legislature, Regular
Session, in SB 14. SB 99 added Chapter 706 to the Insurance Code which authorizes
property and casualty insurers to offer insurance coverage for a loss suffered
by a policyholder who is a victim of identity theft or attempted identity
theft and also amended Insurance Code Article 5.13-2 to add identity theft
insurance coverage as a line of insurance subject to Article 5.13-2. The proposed
amendment to §5.9310(b)(7) is necessary to add identity theft insurance
as a commercial and a personal line of insurance in accordance with Chapter
706, each of which is subject to the filing requirements of §5.9310.
Section 5.9310 specifies the form and content of the filing transmittal form
that is to be used with form, rate, rule, underwriting guideline, and credit
scoring model filings. The proposed amendment to §5.9332(e)(1)(N) clarifies
that profit and contingency provisions should be included in the actuarial
supporting information that is submitted with a rate filing made in accordance
with the Insurance Code Article 5.55 (Workers' Compensation Rates) or Article
21.50 (Mortgage Guaranty Insurance). This amendment is necessary because an
amendment enacted in SB 14 to the Insurance Code Article 5.13-2 §4 (Rate
Standards) removes consideration of contingencies in an insurer's setting
of rates under Article 5.13-2, but Insurance Code Articles 5.55 §2(b)(4)
and 21.50 §1A(g)(1) were not amended to remove "contingencies" from factors
to be considered by insurers in setting rates under these two statutes. Therefore,
insurers regulated under these two statutes must continue to submit supporting
information on a reasonable margin for profit and contingencies with rate
filings. The proposed amendment to §5.9332(e)(1) that adds subparagraph
(O) is necessary for consistency with a provision enacted in HB 7, which requires
rates filed in accordance with Article 5.55 to consider the effect on premiums
of individual risk variations based on loss or expense considerations. Proposed
amendments to §5.9340 and §5.9341 regarding underwriting guideline
filing requirements for workers' compensation insurance are necessary to apply
the underwriting guideline filing requirements in those sections to workers'
compensation insurers. Under HB 7, which added Article 5.55A to the Insurance
Code, insurers of workers' compensation insurance are required to file their
underwriting guidelines with the Department; prior to this enactment, workers'
compensation insurers were only required to provide underwriting guidelines
to the Department upon request pursuant to the Insurance Code §38.003.
The proposed amendment to §5.9340 is necessary to amend the purpose of
Division 7, which regulates underwriting guideline filing requirements, to
include workers' compensation insurance. The proposed amendment to §5.9341
is necessary to provide that the definitions set forth in Insurance Code Article
5.55A apply to insurers filing underwriting guidelines for workers' compensation
insurance. The proposed amendments to §5.9357 are necessary to conform §5.9357
to Article 5.13-2 §13(h) which was enacted in HB 2437 to provide for
reduced filing requirements for certain insurers writing personal automobile
insurance. Accordingly, a proposed amendment to §5.9357(a) is necessary
to clarify that the reduced filing requirements of this subsection apply to
county mutual insurers that meet certain criteria, and a new subsection (b)
is proposed to provide reduced filing requirements for all insurers writing
personal automobile insurance that meet the criteria described in Insurance
Code Article 5.13-2 §13(h). The remaining subsections are proposed to
be re-lettered as subsections (c) and (d) to properly incorporate new §5.9357(b)
and to conform the application of re-lettered §5.9357(d) to the insurers
who qualify for reduced filing requirements specified in subsection (a), (b),
and (c) of §5.9357.
C.H. Mah, Senior Associate Commissioner, Property and Casualty Program,
has determined that for each year of the first five years the proposed amendments
will be in effect, there will be no fiscal impact to state and local governments
as a result of the enforcement or administration of the amendments. There
will be no measurable effect on local employment or the local economy as a
result of the proposal.
Mr. Mah has further determined that for each year of the first five years
the proposed amendments are in effect, there are several public benefits anticipated
as a result of the proposed amendments. The proposed amendment to §5.9310
adds identity theft insurance as a commercial and a personal line of insurance.
There are no costs required for insurers as a result of this amendment because
the sale of this product is voluntary, and thus individual insurers will determine
whether they want to incur any necessary expenses to market this product.
Additionally, any costs to insurers who voluntarily opt to market this product
are the result of the legislative enactment of SB 99 by the 79th Legislature,
Regular Session, and therefore, any costs to comply result directly from the
enactment of SB 99. The anticipated public benefit from the proposed amendment
to §5.9332(e)(1)(N) is uniform and unambiguous rate filing instructions
as a result of the clarification that profit and contingency provisions should
be included in the actuarial supporting information that is submitted with
a rate filing made in accordance with the Insurance Code Article 5.55 (Workers'
Compensation Rates) or Article 21.50 (Mortgage Guaranty Insurance). Also,
the amendment to §5.9332(e)(1)(N) provides conformity of the rule with
the SB 14 amendment enacted by the 78th Legislature, Regular Session, that
deletes "contingency provisions" in Article 5.13-2 §4(b)(7) from the
factors to be considered by insurers in setting rates under Article 5.13-2
and therefore, from supporting information that insurers must submit with
rate filings under Article 5.13-2. There is no additional cost to insurers
required to comply with this amendment because the amendment is consistent
with current statutory provisions with which insurers must already comply.
The anticipated public benefit from the proposed amendment to §5.9332(e)(1)
that adds subparagraph (O), which requires rates filed in accordance with
Article 5.55 to include the effect on rates and premiums of individual risk
variations based on loss or expense considerations, is that insurers need
to determine if their rates and premiums meet the statutory rate and premium
standards and likewise allows the Department to verify that they do meet the
statutory standards. There is no additional cost to insurers required to comply
with this amendment because the amendment is the result of the legislative
enactment of HB 7 by the 79th Legislature, Regular Session, and any costs
to comply result directly from the enactment of HB 7. The public benefit anticipated
as a result of the proposed amendments to §5.9340 and §5.9341, which
apply the underwriting guideline filing requirements in those sections to
workers' compensation insurers, will be the ability of the Department to conduct
a more efficient and thorough review of those guidelines thus promoting stronger
and more competitive insurance markets. There is no additional cost to insurers
required to comply with this amendment because the amendment is the result
of the legislative enactment of HB 7 by the 79th Legislature, Regular Session,
and any costs to comply result directly from the enactment of HB 7. The anticipated
public benefit resulting from the proposed amendment to §5.9357(a) will
be the availability of reduced filing requirements to additional insurers
writing personal automobile insurance that meet the criteria in the Insurance
Code Article 5.13-2 §13(h). This may promote an increase in the number
of insurers that offer personal automobile insurance to consumers, which will
result in consumers having a wider range of coverage and cost options. There
are no additional costs to insurers that comply with this amendment because
the amendment is the result of the legislative enactment of HB 2437 by the
79th Legislature, Regular Session, and any costs to insurers to comply result
directly from the enactment of HB 2437. Because there are no additional costs
to insurers as a result of the proposed amendments, there is no differential
impact between small, large, and micro-businesses to comply with the proposed
amendments and therefore, it is neither legal nor feasible nor necessary to
waive the requirements of the proposed amendments for small or micro-businesses.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on June 26, 2006 to Gene C. Jarmon, General Counsel and
Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously
submitted to Philip Presley, Mail Code 105-5F, Texas Department of Insurance,
P.O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing
should be submitted separately to the Office of the Chief Clerk by 5:00 p.m.
on June 26, 2006.
4.
FILINGS MADE EASY--FILING TRANSMITTAL FORM AND REQUIREMENTS FOR PROPERTY AND CASUALTY FORM, RATE, RULE, UNDERWRITING GUIDELINE, AND CREDIT SCORING MODEL FILINGS
28 TAC §5.9310
The amendments are proposed under Insurance Code Articles
5.13-2, 5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003, and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2 §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2 §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates, and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A §3,
Article 5.55A may be enforced in the manner provided by Section 38.003(g).
Chapter 706 was enacted and Article 5.13-2 §2 was amended in SB 99 by
the 79th Legislature, Regular Session, to add specific regulations for identity
theft as a commercial insurance product and as a personal insurance product.
Section 36.001 provides that the Commissioner of Insurance may adopt any rules
necessary and appropriate to implement the powers and duties of the Texas
Department of Insurance under the Insurance Code and other laws of this state.
The following statutes are affected by this proposal: Insurance Code Articles
5.13-2, 5.55, 5.55A , 21.50, §38.003, and Chapter 706.
§5.9310.Property and Casualty Filing Transmittal Form.
(a)
(No change.)
(b)
Definitions. Words and terms not defined in this division
may be defined in the Insurance Code Article 5.13-2 and Subchapter D of Chapter
5 and shall have the same meaning when used in this division. The following
words and terms when used in this division shall have the following meanings
unless the context indicates otherwise:
(1) - (6)
(No change.)
(7)
Line of insurance--For purposes of this section, each of
the following is a line of insurance:
(A) - (S)
(No change.)
(T)
identity theft (commercial);
(U)
identity theft (personal);
(V)
[
(W)
[
(X)
[
(Y)
[
(Z)
[
(AA)
[
(BB)
[
(CC)
[
(DD)
[
(EE)
[
(FF)
[
(GG )
[
(HH)
[
(II)
[
(JJ)
[
(KK)
[
(LL)
[
(c) - (g)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on May 15, 2006.
TRD-200602728
Gene Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: June 25, 2006
For further information, please call: (512) 463-6327
28 TAC §5.9332
The amendments are proposed under Insurance Code Articles
5.13-2, 5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003, and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2 §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2 §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates, and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A §3,
Article 5.55A may be enforced in the manner provided by Section 38.003(g).
Chapter 706 was enacted and Article 5.13-2 §2 was amended in SB 99 by
the 79th Legislature, Regular Session, to add specific regulations for identity
theft as a commercial insurance product and as a personal insurance product.
Section 36.001 provides that the Commissioner of Insurance may adopt any rules
necessary and appropriate to implement the powers and duties of the Texas
Department of Insurance under the Insurance Code and other laws of this state.
The following statutes are affected by this proposal: Insurance Code Articles
5.13-2, 5.55, 5.55A , 21.50, §38.003, and Chapter 706
§5.9332.Filing Requirements.
(a) - (d)
(No change.)
(e)
Except as provided in Division 9 of this subchapter (relating
to Filings Made Easy--Reduced Filing Requirements for Certain Insurers), insurers
must provide supporting information as necessary for the department to establish
that a filing produces rates which are adequate, not excessive or unfairly
discriminatory for the risks to which they apply. Categories of supporting
information are listed in paragraphs (1) - (7) of this subsection, but are
not necessarily required for every rate filing. Insurers must only provide
sufficient materials to justify specific rates or changes being proposed.
To the extent the information originally submitted in a rate filing is insufficient,
the department may request additional information as deemed necessary by the
department or commissioner.
(1)
Actuarial support. Actuarial support generally includes
rate indications and support, including the data and methodologies utilized
by the insurer to derive such indications. Supporting information that is
submitted with a filing should include each of the following to the extent
applicable:
(A) - (L)
(No change.)
(M)
expense and profit provisions; [
(N)
for rates filed in accordance with Articles 5.55 or
21.50, profit and
contingency provisions
; and
[
(O)
for rates filed in accordance
with Article 5.55, the effect on premiums of individual risk variations based
on loss or expense considerations.
(2) - (7)
(No change.)
(f) - (g)
(No change.)
(h)
Filings under this division may be combined with filings
made in accordance with Division 5 of this subchapter (relating to Filings
Made Easy--Requirements for Property and Casualty Policy Form, Endorsement,
and Manual Rule Filings). These combined filings may utilize a single transmittal
form. Filings under this division may not be combined with filings made in
accordance with Division 7 or 8 of this subchapter (relating to Filings Made
Easy--Underwriting Guideline Filing Requirements for Personal Automobile
,
[
(i)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed
with the Office of the Secretary of State on May 15, 2006.
TRD-200602729
Gene Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: June 25, 2006
For further information, please call: (512) 463-6327
28 TAC §5.9340, §5.9341
The amendments are proposed under Insurance Code Articles
5.13-2, 5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003, and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2 §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2 §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates, and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A §3,
Article 5.55A may be enforced in the manner provided by Section 38.003(g).
Chapter 706 was enacted and Article 5.13-2 §2 was amended in SB 99 by
the 79th Legislature, Regular Session, to add specific regulations for identity
theft as a commercial insurance product and as a personal insurance product.
Section 36.001 provides that the Commissioner of Insurance may adopt any rules
necessary and appropriate to implement the powers and duties of the Texas
Department of Insurance under the Insurance Code and other laws of this state.
The following statutes are affected by this proposal: Insurance Code Articles
5.13-2, 5.55, 5.55A , 21.50, §38.003, and Chapter 706
§5.9340.Purpose.
The purpose of this division is to specify underwriting guideline
filing requirements under Insurance Code §38.002
and Article 5.55A
for those insurers writing personal automobile insurance
,
[
§5.9341.Definitions.
The definitions set forth in Insurance Code §38.002 apply to
insurers filing underwriting guidelines for personal automobile or residential
property insurance. The definitions set forth in Insurance Code Article 5.55A
apply to insurers filing underwriting guidelines for workers' compensation
insurance
[
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed
with the Office of the Secretary of State on May 15, 2006.
TRD-200602730
Gene Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: June 25, 2006
For further information, please call: (512) 463-6327
(T)
] inland marine (commercial);
(U)
] inland marine (personal);
(V)
] involuntary unemployment;
(W)
] miscellaneous casualty;
(X)
] miscellaneous liability;
(Y)
] mortgage guaranty;
(Z)
] multi-peril;
(AA)
] personal liability;
(BB)
] professional liability;
(CC)
] property-commercial;
(DD)
] property-residential (dwelling);
(EE)
] property-residential (homeowners);
(FF)
] rain;
(GG)
] surety bonds (other than
criminal court appearance bonds);
(HH)
] umbrella-commercial;
(II)
] umbrella-personal; and
(JJ)
] workers' compensation.
6.
FILINGS MADE EASY--RATE AND RATE MANUAL FILING REQUIREMENTS
and
]
.
]
and
] Residential Property
, and Workers' Compensation
Insurance and Filings Made Easy--Credit Scoring Models Filing Requirements
for Personal Insurance) due to distinct and separate statutes governing underwriting
guidelines and credit scoring models.
7.
FILINGS MADE EASY--UNDERWRITING GUIDELINE FILING REQUIREMENTS FOR PERSONAL AUTOMOBILE, RESIDENTIAL PROPERTY, AND WORKERS' COMPENSATION INSURANCE
or
] residential property insurance,
or workers' compensation insurance
in this state.
this division
].
9.
FILINGS MADE EASY--REDUCED FILING REQUIREMENTS FOR CERTAIN INSURERS