EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96
ADOPTION OF REVISED WORKERS' COMPENSATION CLASSIFICATION RELATIVITIES AND AMENDMENTS TO THE TEXAS BASIC MANUAL OF RULES, CLASSIFICATIONS AND EXPERIENCE RATING PLAN FOR WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE UPDATING THE EXPECTED LOSS RATES AND DISCOUNT RATIOS TABLE
The Commissioner of Insurance (Commissioner) adopts the amendments proposed by the Texas Department of Insurance (Department) staff in a petition (Ref. No. W-1208-20) filed with the Office of the Chief Clerk of the Department on December 19, 2008. Notice of the proposal was published in the January 2, 2009, issue of the Texas Register (34 TexReg 71). The amendments were considered at a public hearing held under Docket No. 2703 on February 3, 2009, at 9:30 a.m., in Room 100 of the William P. Hobby Building, 333 Guadalupe Street, Austin, Texas. The amendments are adopted without changes to the proposed amendments.
The adopted amendments include (i) revised Texas Workers' Compensation Classification Relativities (classification relativities) to replace those adopted pursuant to Commissioner's Order No. 07-0915, dated October 23, 2007; and (ii) a revised table to amend the Texas Basic Manual of Rules, Classification, and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (Basic Manual) concerning the Expected Loss Rates and Discount Ratios used in experience rating.
The Department received one comment regarding the proposed amendments from Texas Mutual Insurance Company. The commenter recommended that all future amendments to the classification relativities, expected loss rates, and discount ratios be made with a May 1st effective date. The commenter stated that maintaining the same date would allow all policyholders, regardless of their effective date, to receive consistent changes. The commenter further suggested that each set of amendments be effective for 12 months in order to ensure that all policyholders benefit equally from the changes. The Department appreciates the suggestions and will consider them in planning future updates to the classification relativities, expected loss rates, and discount ratios.
The Commissioner has jurisdiction over this matter pursuant to Article 5.96 and §2053.051 and §2053.052 of the Texas Insurance Code. Section 2053.051 requires the Department to determine hazards by class and establish classification relativities applicable to the payroll in each class for workers' compensation insurance. Section 2053.052 requires the Commissioner to adopt a uniform experience rating plan for workers' compensation insurance. Section 2053.051 and §2053.052 further provide that the classification system and experience rating plan be revised at least once every five years. Article 5.96 authorizes the Department to prescribe, promulgate, adopt, approve, amend, or repeal standard and uniform manual rules, rating plans, classification plans, statistical plans, and policy and endorsement forms for various lines of insurance, including workers' compensation insurance.
The Commissioner has determined that it is necessary to revise the classification relativities and the Basic Manual as proposed by staff in the December 19, 2008 petition in order to utilize the most recent experience data available. The revised classification relativities schedule and Basic Manual table, which are adopted without changes to the proposed amendments, are incorporated by reference into this Order.
This adoption is made pursuant to Article 5.96 of the Texas Insurance Code, which exempts actions taken under Article 5.96 from the requirements of the Administrative Procedures Act (Government Code, Title 10, Chapter 2001).
IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the amendments to the classification relativities and the Basic Manual proposed by the staff petition (Ref. No. W-1208-20) and incorporated by reference into this Order are adopted.
IT IS FURTHER ORDERED that the revised classification relativities are available for immediate use by insurers and that their use is mandatory for all policies with an effective date on or after May 1, 2009, unless the insurer makes an independent filing to justify insurer-specific classification relativities.
IT IS FURTHER ORDERED that the amendments to the Basic Manual apply to all policies with an effective date on or after May 1, 2009.
TRD-200900717
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: February 19, 2009