PROPOSED RULES Before an agency may permanently adopt a new or amended section or repeal an existing section, a proposal detailing the action must be published in the Texas Register at least 30 days before action is taken. The 30-day time period gives interested persons an opportunity to review and make oral or written comments on the section. Also, in the case of substantive action, a public hearing must be granted if requested by at least 25 persons, a governmental subdivision or agency, or an association having at least 25 members. Symbology in proposed amendments. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 7. BANKING AND SECURITIES Part II. Texas Department of Banking Chapter 25. Prepaid Funeral Contracts Subchapter B. Regulation of Licenses 7 TACsec.25.24 The Banking Department of Texas (the department) proposes an amendment to sec.25.24, concerning examination costs and assessment fees applicable to sellers of prepaid funeral benefits contracts, as defined in Texas Civil Statutes, Article 548b (the Act), sec.1(a)(10). Only subsections (a), (b) and (c)(2) and (3) of this section are proposed to be amended. As proposed, subsection (b) of sec.25.24 requires a seller to pay $500 a day and travel costs for each examiner that performs an examination of the seller's prepaid funeral operations. In addition, proposed subsection (b) provides that the examination fee for the first annual examination of a seller in each year of a fiscal biennium may be offset against certain prior assessment fees. Finally this proposed subsection provides that an additional fee of $500 a day and examiner travel costs will be assessed against the seller for any subsequent examination performed in a given fiscal year because of a seller's noncompliance with the Act or rules adopted pursuant thereto or because of failure to respond to departmental requests in furtherance of the department's enforcement responsibilities. Fees and costs associated with subsequent examinations in a given fiscal year may not be offset against prior assessment fees. Other changes are proposed for clarification or to better comply with Texas Register form and style guidelines. The proposed fee increase and other fee-related amendments are necessary to enable the prepaid funeral benefits section of the special audits division to be self-funding as required by law. Stephanie Newberg, director, special audits division, has determined that, for each year of the first five years the section is in effect, there will be fiscal implications as a result of enforcing or administering the section. While no fiscal impact on local government is anticipated, an additional $1, 948,975 will be generated for state government. Although this increase appears substantial, for the past two years the prepaid funeral benefits section of the special audits division has been operating out of a carry-over fund balance, and fees have not been collected. As a result, the department, which has collected no fees for the last two years, proposes to collect $389,795.50 each year prospectively. Ms. Newberg also has determined that, for each year of the first five years the section is in effect, the public benefit anticipated as a result of its adoption is the ability of the prepaid funeral benefits section of the special audits division to examine each seller annually and pay for regulation under its jurisdiction without use of monies from sources other than the specific entities that are subject to examination. Annual examinations enable the department to more effectively regulate the prepaid funeral industry and better safeguard the rights and interests of the consumer. For each year of the first five years the section is in effect, the proposal will result in an increase in cost of approximately $400 to each small business and an increase of approximately $1,400 to each large business regulated by the department. The economic cost to persons required to comply with the section is approximately $0.08 for every $100 of prepaid funeral contract sales for both large and small businesses. Comments on the proposed adoption may be submitted in writing to Stephanie Newberg, Director, Special Audits Division, Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705-4294, (512) 475-1290. The amendment is proposed pursuant to the department's rulemaking authority under Texas Civil Statutes, Article 548b, sec.2. Section 2 permits the department to "prescribe reasonable rules and regulations concerning fees to defray the cost of administering this Act." This authority is limited by the mandate that the department "may not maintain unnecessary fund balances." Furthermore, the department is statutorily directed to set fee amounts in accordance with such limitation. Texas Civil Statutes, Article 548b, is affected by the proposed amendment. sec.25.24. Examination Costs and Assessment Fees. (a) Definitions. The words and terms used in this section that are
    [shall be] defined in
      [according to] Texas Civil Statutes, Article 548b (the Act), sec.1(b) , and sec.25.23(a) of this title (relating to Application Fees), have the same meanings defined therein
        . [unless otherwise defined herein or unless the context clearly indicates otherwise.] The following words and terms, when used in this section shall have the following meanings, unless the context clearly indicates otherwise. (1)-(2) (No change.) (b) Examination costs. Each seller shall be subject to annual examination by the department, [shall be examined at least once in each fiscal biennium,] shall be subject to such additional examinations as the department deems necessary, and shall pay for the cost of each examination, including the salary and travel expenses for department
          [Department] employees and all other expenses necessarily incurred in the examination. Examination costs [including expenses] shall be calculated at the rate of $500
            [$200] per examiner per day plus travel costs
              , and shall be due at the time of billing; provided, however, that the seller may offset [any] the
                examination fee due for the first annual examination in each year of a fiscal biennium
                  against and to the extent of prior assessment fees actually paid to the department in the current fiscal biennium pursuant to subsection (c) of this section. If additional examinations are required in the same fiscal year as a result of the seller's failure to comply with the Act or this chapter or as a result of its failure to comply with departmental requests in furtherance of the department's regulatory responsibilities under the Act or this chapter, an additional fee of $500 per day, plus examiner travel costs, will be assessed for each examiner assigned to such examination. Fees and travel costs for an additional examination may not be offset against prior assessment fees. (c) Assessment fees. (1) (No change.) (2) No more often than once each quarter of each fiscal biennium, the department shall calculate, based on the number of each seller's total outstanding contracts, a proportionate charge covering the cost of examination, the seller's equitable or proportionate cost of maintenance and operation of the department and the enforcement of the provisions of the Act, taking into account current fund balances and anticipated revenues from fees collected under sec.25.23(a) of this title (relating to Application Fees)
                    . The aggregate sum of assessments during a fiscal biennium shall not exceed $6.00 per outstanding contract, or $14,700 per seller, whichever is less. (3) A seller shall remit payment for any assessment fee due within 15 days from the date of billing by the department; provided, however, that the seller may offset any assessment fee due against and to the extent of the one annual
                      examination fee
                        [costs] actually paid to the department in the current fiscal biennium pursuant to subsection (b) of this section. If examination costs actually paid and not previously offset against assessments in the current fiscal biennium exceed the current assessment fee due, the seller shall be permitted to carry forward such excess amounts as a credit against future assessments within the current fiscal biennium, but not into the next succeeding fiscal biennium. The offset provisions of this paragraph and subsection (b) of this section shall be construed together to require that a seller pay the greater of the sum of all assessments during the fiscal biennium or the sum of all examination costs incurred during the fiscal biennium. No offset for additional examinations within a fiscal biennium will be permitted. (4) (No change.) (d) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600271 Everette D. Jobe General Counsel Texas Department of Banking Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 475-1300 Chapter 26. Perpetual-care Cemeteries 7 TAC sec.26.1 The Banking Department of Texas (the department) proposes an amendment to sec.26.1, concerning fees and assessments for perpetual-care cemetery corporations. Only subsections (a)(3), (b)(3) and (c) of this section are proposed to be amended. The proposed amendment to subsection (c) of sec.26.1 increases certain fees paid by corporations operating as perpetual-care cemeteries regulated by the department. As proposed, sec.26.1(c) permits the department to annually assess each corporation at a rate not greater than $0.0026 for each dollar of the value of its perpetual-care cemetery trust fund, excluding any voluntary contributions, in an amount not to exceed $5,500 for one examination in each fiscal year. The proposed amendment also would require each corporation to pay $500 a day plus travel costs for each examiner required to perform any subsequent examination in a given fiscal year because of noncompliance with the Texas Health and Safety Code, Title 8, Subtitle C, Chapter 712 (the Act), or rules adopted pursuant thereto, or because of failure to respond to departmental requests in furtherance of the department's enforcement responsibilities. In addition, as amended, sec.26.1(c) provides for a minimum $100 examination fee. Currently, the minimum examination fee is $25. The proposed fee increases and other fee-related amendments are necessary to enable the perpetual-care cemeteries section of the special audits division to be self-funding. In previous years, this section of the division has not borne the costs associated with regulating perpetual-care cemeteries; therefore, in the past, other areas of the agency have absorbed these costs. Other changes to the section are proposed to simplify its text. Stephanie Newberg, director, special audits division, has determined that, for each year of the first five years the section is in effect, there will be fiscal implications as a result of enforcing or administering the section. While no fiscal impact on local government is anticipated, an additional $302, 000 will be generated for state government as a result of enforcing or administering the section. Ms. Newberg also has determined that, for each year of the first five years the section is in effect, the anticipated public benefit is the ability of the perpetual-care cemeteries section of the special audits division to fund regulation under its jurisdiction without use of monies generated from other industries regulated by the special audits division of the department, as is required by law. Annual examinations enable the department to more effectively regulate the perpetual-care cemetery industry and better safeguard the perpetual-care trust fund and the rights and interests of the consumer. For each year of the first five years the section is in effect, the section will result in an annual increase of $75 to each small business and an increase of $500 to each large business regulated by the department; however, the cost to larger businesses per $100 of perpetual-care cemetery sales will decrease still further once the business has reached the maximum fee of $5,500. The economic costs to persons required to comply with the section are approximately $0.03 for every $100 of perpetual-care cemetery sales. Comments on the proposed adoption may be submitted in writing to Stephanie Newberg, Director, Special Audits Division, Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705-4294, (512) 475-1290. The amendment is proposed pursuant to the department's rulemaking authority under the Act, sec.712.042(a) and sec.712.044(b), which empowers the department to set fees in an amount sufficient to defray the cost of administering the Act. Texas Health and Safety Code, Title 8, Subtitle C, Chapter 712, is affected by the amendment to sec.26.1. sec.26.1. Fees and Assessments. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the text clearly indicates otherwise. (1)-(2) (No change.) (3) Corporation-A corporation [subject to the Act] that is organized under [Chapter 712 of] the Act, or any corresponding statute in effect before September 1, 1993, to operate one or more perpetual care cemeteries in Texas. (4)-(7) (No change.) (b) Filing fees. The filing fees set forth in this subsection are either specifically set out in the Act or have been set in accordance with the Act to reasonably approximate the agency's cost of administering the Act with respect to each particular filing. (1)-(2) (No change.) (3) Time of payment. Except as otherwise provided in this section, all fees are nonrefundable and due at the time the related documentary filing is made. Failure to timely pay fees or costs under this section constitutes
                          [shall be] grounds for enforcement action by the department under the Act. (c) Examination fees. The department shall assess and collect nonrefundable examination fees in accordance with this subsection. Except as otherwise provided in this section, any assessed fee or an installment payment as part of a fee is due at the time of billing. The department shall annually assess each corporation an examination fee for one examination
                            , not to exceed $5,500
                              [$5,000] in a fiscal year, at a rate of not more than $0.0026
                                [$0. 0012] per dollar of the aggregate of required deposits to the fund from inception of the fund to the date of the most recent examination report or annual statement
                                  as determined pursuant to the Health and Safety Code, sec.712.028, and reflected in the examination report or annual statement
                                    . The department may levy this fee in quarterly or fewer installments in such periodically adjusted amounts as reasonably appear necessary to defray the costs of examination and the administration of the Act. If the examination fee as computed in this subsection is less than $100
                                      [$25], a minimum examination fee of $100
                                        [$25] shall be levied and collected. If additional examinations of a corporation are required in the same fiscal year as a result of the corporation's failure to comply with the Act or this chapter or as a result of its failure to comply with departmental requests in furtherance of the department's regulatory responsibilities under the Act or this chapter, an additional fee of $500 per day, plus examiner travel costs, will be assessed against the corporation for each examiner assigned to an additional examination. (d)-(e) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600272 Everette D. Jobe General Counsel Texas Department of Banking Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 475-1300 TITLE 22. EXAMINING BOARDS Part XXIII. Texas Real Estate Commission Chapter 535. Provisions of the Real Estate License Act Education, Experience, Educational Programs, Time Periods, and Type of License 22 TAC sec.sec.535.62-535.64 The Texas Real Estate Commission proposes amendments to s535.62, concerning waiver of examination, to sec.535.63, concerning real estate broker education and experience, and to sec.535.64, concerning real estate salesman education. These amendments are proposed to permit previously licensed real estate brokers or salesmen to apply for the same kind of license previously held without being subject to all current requirements for licensing. The amendments generally would permit previous licensees to be relicensed on an active basis without examination if the application is filed within two years after expiration of the previous license. Applicants for either a real estate broker or real estate salesman license would be required to complete at least 15 hours of mandatory continuing education (MCE) courses within the two-year period prior to the filing of the application, or, if the prior salesman's license was subject to completion of core real estate courses, the applicant must have completed any courses which would have been required for timely renewal of the prior license. Nonresidents previously licensed as brokers or salesmen could also apply for a license under the provisions of the amended sections. The proposed amendment to sec.535.62 would waive the examination requirement for broker and salesman applicants licensed within the two-year period prior to the filing of the application. After two years, the applicant would be required to satisfy the examination requirement; after five years, the applicant would have to satisfy all current requirements. The proposed amendment to sec.535.63 would waive the education and experience requirements currently in place for broker licensing and would require the broker applicant licensed within the previous five-year period to have completed 15 hours of MCE courses within the two-year period prior to the filing of the application. The proposed amendment to 535.64 would waive the current education requirements for salesman applicants licensed within the five-year period prior to the filing of the education and would require the applicant either to complete 15 hours of MCE courses within the two-year period prior to the filing of the application, or, if the prior license was issued subject to the completion of core real estate courses, the applicant must have completed any core courses which would have been required for timely renewal of the prior license. Don Dudley, director of licensing and education, has determined that for the first five-year period the sections are in effect there will be fiscal implications for state government as a result of enforcing or administering the sections. For fiscal year 1996, and for each of the following four years in which the proposed sections would be in effect, there would be an estimated increase of $23,500 in filing fees received by the Texas Real Estate Commission. There are no anticipated fiscal implications for units of local government as a result of enforcing or administering the proposed sections. There is no anticipated impact on local or state employment as a result of implementing the sections. Mr. Dudley also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be the facilitation of the return to business of former real estate licensees. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections other than the filing of application fees required by the law and completion of courses required under the sections. Current application fees range from $92.50 to $320. Tuition fees for courses are estimated at $5.00 per credit hour. The sections would require applicants to have completed either a 15 hour MCE course or a 30 hour core real estate course. Comments on the proposals may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. The amendments are proposed under Texas Civil Statutes, Article 6573a, sec.24(g), which authorize the Texas Real Estate Commission to by rule provide for a waiver of some or all of the requirements for a real estate broker or real estate salesman license if the applicant was previously licensed within the five-year period prior to the filing of the application. The statute that is affected by these sections is Texas Civil Statutes, Article 6573a. sec.535.62. Waiver of Examination. (a) The commission shall waive the examination of an applicant for a broker license who has, within two years prior to the filing of the application, been licensed as a broker in this state. The commission shall waive the examination of an applicant for a salesman license who has, within two years prior to the filing of the application, been licensed in this state as a salesman.
                                          [The commission shall waive the examination of an applicant for broker or salesman licensure who has, within one year previous to the filing of the application, been the designated officer of a corporation licensed in this state as a broker.] (b) (No change.) sec.535.63. Broker: Education and Experience. (a) (No change.) (b) Applicable experience and education
                                            requirements may only
                                              [not] be waived in accordance with the provisions of this section
                                                . (c)-(e) (No change.) (f) If an application for an active broker license is filed within five years after the expiration of a broker license held by the applicant, the commission shall waive the education and experience required for a real estate broker license by Texas Civil Statutes, Article 6573a (the Act), sec.7. Prior to the issuance of a new license, however, the applicant must have completed at least 15 hours of mandatory continuing education (MCE) courses. The commission may not accept courses completed more than two years prior to the filing of the application. A nonresident previously licensed as a broker in this state may apply for a license under the provisions of this section. sec.535.64. Salesmen: Education. (a)-(b) (No change.) (c) If an application for an active salesman license is filed within five years after the expiration of a real estate broker license or real estate salesman license held by the applicant, the commission shall waive the education required for a real estate salesman license by Texas Civil Statutes, Article 6573a (the Act), sec.7(e); provided, however, that prior to the issuance of a new license the applicant must have completed any core real estate courses that would have been required for a timely renewal of the prior license. If renewal of the prior license was not subject to completion of core real estate courses, the applicant must prior to the issuance of a new license have completed at least 15 hours of mandatory continuing education (MCE) courses. The commission may not accept MCE courses completed more than two years prior to the filing of the application. A nonresident previously licensed as a broker or salesman in this state may apply for a license under the provisions of this section. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 9, 1996. TRD-9600255 Mark A. Moseley General Counsel Texas Real Estate Commission Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 465-3900 Mandatory Continuing Education 22 TAC sec.535.71, sec.535.72 The Texas Real Estate Commission proposes amendments to s535.71, concerning approval of mandatory education providers, courses and instructors, and to sec.535.72, concerning presentation of courses, advertising and records. The amendment to sec.535.71 would permit the commission to require persons applying for approval as mandatory continuing education (MCE) instructors to attend any training program offered by the commission which the commission determines significantly relates to the subject the persons are applying to teach. In lieu of attendance at the commission's training program, the applicant also could certify that the applicant has viewed a videotape of the program or received the training in another manner acceptable to the commission. The amendment to sec.535.72 would establish a process for the commission to ensure that significant information about changes in the law of agency or other topics is provided to students and included in the presentation of MCE courses. If the commission determines that the information should be included in a course previously approved by the commission, the commission would notify the MCE provider of the requirement and furnish the provider with a copy of the information. The provider would then be required to furnish copies of the information to students and to ensure that the provider's instructors included the information in the presentation of the course. Failure to comply would constitute grounds to discipline the provider or to disapprove a subsequent application for a providership. These amendments are proposed to provide a means for the commission to ensure that significant information reaches MCE students accurately and in a timely fashion. Mark A. Moseley, general counsel, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. The sections do not require the commission to offer training programs or provide information to MCE providers. If the commission does conduct training programs or develop information for distribution to MCE providers, the only additional expenses anticipated would be for travel to any training programs and nominal expenses for printing and mailing of materials. There is no anticipated impact on local or state employment as a result of implementing the sections. Mr. Moseley also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be the increased educational opportunities for real estate licensees attending continuing education courses. There will be no effect on small businesses. There are anticipated economic costs to persons who are required to comply with the proposed sections. Providers of MCE courses would have to furnish students with copies of any information sent to them by the commission, but the costs are indeterminant since the extent of the copies is unknown for any particular provider. Prospective instructors might have to attend commission-offered training programs, but the applicants could also view a videotape of the program available from the commission for an estimated cost of $10. Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. The amendments are proposed under Texas Civil Statutes, Article 6573a, sec.5(h), which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties. The statute that is affected by these sections is Texas Civil Statutes, Article 6573a. sec.535.71. Mandatory Continuing Education: Approval of Providers, Courses and Instructors. (a)-(e) (No change.) (f) To be approved as an instructor of any MCE course, a person must satisfy the commission as to the person's competency in the subject matter to be taught and ability to teach effectively. An instructor applicant must submit through the proposed provider an MCE Form 4A-2, MCE Instructor Application, the first time approval is sought to teach an MCE course. For subsequent approval to teach a different course, an MCE Form 4B-2, MCE Instructor Application Supplement, must be submitted. Once an instructor has been approved to teach a course, no further approval is required for the instructor to teach the same course for another provider, although the subsequent provider must complete MCE Form 4B-2 and file the form with the commission prior to using the instructor in the course. (1) Each person approved as an instructor must also meet the following requirements: (A)-(C) (No change.) (D) attendance at any training program offered by the commission which the commission has determined significantly relates to the subject the person is applying to teach in lieu of attendance, the person may certify in writing that the person has viewed a videotape of the program or received the training in a manner acceptable to the commission. (2) The commission may also approve an instructor for a single offering of a course. The provider must submit an MCE Form 3C-1, MCE Single Course Offering Application, show that the proposed instructor has complied with paragraph (1)(D) of this subsection
                                                  and provide additional information about the instructor's qualifications at the commission's request. (g)-(r) (No change.) sec.535.72. Mandatory Continuing Education: Presentation of Courses, Advertising and Records. (a)-(r) (No change.) (s) If the commission determines that it is in the public interest to cause significant information about changes in the law of agency or other topics to be included in an MCE course previously approved by the commission, the commission may require the provider to furnish each student with a copy of the information. The commission also may require the provider to ensure that the provider's instructors include the material in the presentation of the course. The commission shall furnish the provider with a copy of the information and notify the provider in writing that the commission requires compliance with this subsection in any course offered after the provider's receipt of the notice. Failure to comply with this subsection constitutes grounds for disciplinary action against the provider under sec.535.73 of this title (relating to Compliance and Enforcement) or for disapproval of an application for approval as a provider under s535.71 of this title (relating to Mandatory Continuing Education: Approval of Providers, Courses and Instructors) . This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 9, 1996. TRD-9600237 Mark A. Moseley General Counsel Texas Real Estate Commission Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 465-3900 Nonresidents 22 TAC sec.535.132 The Texas Real Estate Commission proposes an amendment to sec.535.132, concerning a nonresident's eligibility for a Texas real estate broker or real estate salesman license. The amendment would permit a resident of another state to apply for a license if the person was licensed as a Texas real estate broker or salesman within the five-year period immediately prior to the filing of the application. The section currently permits the application to be filed only if the applicant is licensed as a real estate broker by the other state or was licensed a Texas real estate broker or salesman within one year prior to the filing of the application. The amendment is proposed in connection with proposed amendments to other sections establishing requirements for broker and salesman licensing of former licensees under the authority of Texas Civil Statutes, Article 6573a, sec.24(g). Don Dudley, director of licensing and education, has determined that for the first five-year period the section is in effect there will be nominal fiscal implications for state or local government as a result of enforcing or administering the section. Application filing fees paid by nonresidents would increase by an estimated $1,500 per year for each year of the first five year period following adoption of the section. No fiscal implications for local government are anticipated. There is no anticipated impact on local or state employment as a result of implementing the section. Mr. Dudley also has determined that for each year of the first five years the section as proposed is in effect the public benefit anticipated as a result of enforcing the section will be facilitation of the return to business of former real estate licensees. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed section other than the application filing fees required by law, or the satisfaction of education requirements. Filing fees range from $92. 50 to $320; courses are generally available at an estimated cost of $5.00 per credit hour. Nonresident applicants would generally be required to have completed either a 15 hour MCE course or a 30 hour core real estate course. Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. The amendment is proposed under Texas Civil Statutes, Article 6573a, sec.5(h) , which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties. The statute that is affected by this section is Texas Civil Statutes, Article 6573a. sec.535.132. Eligibility for Licensure. (a) A person residing in another state may apply for a license under the provisions of Texas Civil Statutes, Article 6573a (the Act), sec.14(b) and this section if the person: (1) (No change.) (2) was licensed as a Texas real estate salesman or broker within the five-year
                                                    [one-year] period immediately prior to the filing of the application. (b)-(f) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 9, 1996. TRD-9600256 Mark A. Moseley General Counsel Texas Real Estate Commission Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 465-3900 Residential Rental Locators 22 TAC sec.535.300 The Texas Real Estate Commission proposes new sec.535.300, concerning residential rental locators. The new section would establish advertising guidelines for real estate brokers or salesmen who act as residential rental locators. The term "residential rental locator" refers to a person who offers for consideration to locate a unit in an apartment complex for lease to a prospective tenant. Adoption of advertising guidelines for residential rental locators is required of the commission by Texas Civil Statutes, Article 6573a, sec.24, adopted by the 74th Legislature (1995) so as to be effective January 1, 1996. The new section primarily addresses the advertising of apartment units by general terms without providing the features or amenities available at a specific rent for a specific unit. A residential rental locator would be required to include in such an advertisement language substantially equivalent to that provided in the section to inform a prospective tenant that all units do not have the advertised features or amenities or that the rent quoted may be for a unit which may not have all the features advertised. If, however, advertisements in a printed publication such as a newspaper are preceded by a notice provided in subsection (c), the advertisements would be deemed to be in compliance with the section. The notice advises prospective tenants that residential rental locators are required to be licensed by the Texas Real Estate Commission, that locators may advertise apartment units in general terms and that all units may not have the same features. The notice also advises the prospective tenant that the amount of tent quoted in an advertisement may be the starting rent for a basic unit or for a unit which does not have all the advertised features. The section would deem an advertisement by a residential rental locator of an apartment unit by general terms to be misleading unless at the time the advertisement is placed at least one unit meeting the description of the unit contained in the advertisement is available through the locator within either a time stated in the advertisement or within 30 days after the advertisement is submitted for publication if no time is stated. The section also would require the residential locator's advertisements to comply with Texas Civil Statutes, Article 6573a, sec.15(a)(6)(P), which generally prohibits misleading advertisements by real estate licensees, and to comply with commission rules which relate to misleading advertising. Mark A. Moseley, general counsel, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. There is no anticipated impact on local or state employment as a result of implementing the section. Mr. Moseley also has determined that for each year of the first five years the section as proposed is in effect the public benefit anticipated as a result of enforcing the section will be the elimination of confusion or misleading advertising of apartment units. There will be no effect on small businesses. There is a possible economic cost to persons who are required to comply with the proposed section, because residential rental locators who choose to advertise apartments units without specifying the rent for particular units may have to add language to their advertisements. The economic cost to any particular residential rental locator is indeterminant, because the printed publication used by the locator may display the notice provided by the section as an alternative to required language in each advertisements. Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. The new section is proposed under Texas Civil Statutes, Article 6573a, sec.24, which authorize the Texas Real Estate Commission to make and enforce advertising guidelines for residential rental locators. The statute that is affected by this section is Texas Civil Statutes, Article 6573a. sec.535.300. Advertising by Residential Rental Locators. (a) This section is intended to establish standards relating to permissible forms of advertising by a person licensed as a real estate broker or salesman and functioning as a residential rental locator ("locator"). For the purposes of this section, the term "residential rental locator" shall have the meaning provided by Texas Civil Statutes, Article 6573a, (the Act), s24. (b) If a locator advertises more than one apartment unit in the same advertisement and lists amenities or features generally without providing the features or amenities available at a specific rent for a specific unit, the advertisement must include a statement having a meaning substantially equivalent to one of the following. (1) "All units do not have the advertised features or amenities." (2) "The rent is $_____ or more, depending on the features of the unit." (3) "The rent quoted is the minimum for a unit which may not have all the features advertised." (c) Advertisements in a printed publication shall be deemed to be in compliance with the requirements of subsection (b) of this section if the publication in which an advertisement appears contains this notice at the beginning of the section in which the advertisement appears: Notice. Residential rental locators are required to be licensed by the Texas Real Estate Commission (P.O. Box 12188, Austin, Texas 78711-2188, 1-800-____). Locators may advertise apartment units in general terms, and all units may not have the same features. The amount of rent quoted in an advertisement may be the starting rent for a basic unit or for a unit which does not have all advertised features. (d) An advertisement by a locator of an apartment unit by general terms is misleading unless at the time the advertisement is placed at least one unit meeting the description of the unit contained in the advertisement is available through the locator within either a time stated in the advertisement or within 30 days after the advertisement is submitted for publication if no time is stated. (e) Advertising by locators must also comply with the provisions of the Act, sec.15(a)(6)(P) and sec.535.154 of this title (relating to Misleading Advertising). This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 9, 1996. TRD-9600238 Mark A. Moseley General Counsel Texas Real Estate Commission Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 465-3900 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 5. Property and Casualty Insurance Subchapter B. Insurance Code, Chapter 5, Subchapter B Rules to Implement the Omnibus Health Care Rescue Act's Reduction In Certain Professional Liability Insurance Premiums 28 TAC sec.sec.5.1301-5.1307 The Texas Department of Insurance proposes amendments to ssec.5.1301-5. 1307, concerning implementation of the Omnibus Health Care Rescue Act's reduction in certain professional liability insurance premiums. The amendments are necessary to conform these sections to the Insurance Code, Article 5.15-4 as recently amended by House Bill 1362, 74th Legislature, 1995. These amendments ensure that the definition of persons and entities entitled to a professional liability premium reduction will match the revised requirements now in Article 5.15-4, Insurance Code and sections 110.001, 110.002, 110.003 and 110.005, Civil Practice and Remedies Code. The changes include the deletion of all definitions of charity care except approved family practice residency training programs; the elimination of Medicaid managed care programs from the definition of "health care professional" and from the definition of "eligible health care liability claim;" and deletion of health centers (as defined in 42 U.S.C. Section 1396d) from eligibility under the premium reduction program which includes the elimination of the definition of "health center" and the elimination of the term "health center" wherever it appears throughout sec. s5.1301-5.1307. David Durden, deputy commissioner for property and casualty lines, has determined that for the first five years that the sections as proposed are in effect, there will be some fiscal implications to state government as a result of administering the sections. The administration of the claims generated by this program are handled by the Office of the Attorney General of Texas. The proposed sections reduce the number of physicians eligible for and participating in the program from approximately two thousand to approximately forty. This decrease in physician eligibility will result in a significant reduction in the number of claims that the Attorney General will administer under the program. The estimated cumulative decrease in the Attorney General's administrative cost due to the reduction in the number of claims is $100,313. This is based on average monthly administration expense of $4,265 and a decrease of 98% in the base of participating physicians two years earlier than scheduled by prior legislation. The Texas Department of Insurance presently administers, monitors, and collects and compiles data for this program. This proposal will have no fiscal implications for the department's administration and enforcement of the program. Mr. Durden has also determined that for each of the first five years these proposed sections will be in effect there will be no fiscal implications for units of local government or to small business as a result of enforcing or administering the sections and there will be no effect on local employment or the local economy. Mr. Durden also has determined that for each year of the first five years the proposed sections are in effect, the public benefit anticipated is the conformity of these sections to recently amended statutes to accurately reflect those persons and entities who are eligible for a reduction in their medical malpractice premiums. There is no anticipated cost to persons required to comply with the sections as proposed. Comments on the proposal to be considered by the department must be submitted in writing within 30 days after publication of the proposed sections in the Texas Register to Alicia M. Fechtel, General Counsel and Chief Clerk, Texas Department of Insurance, Mail Code 113-2A, Post Office Box 149104, Austin, Texas 78714-9104. An additional copy should be sent to David Durden, Deputy Commissioner for Property and Casualty Lines, Texas Department of Insurance, Mail Code 104-5A, Post Office Box 149104, Austin, Texas 78714-9104. A request for public hearing on the proposed section should be submitted separately to the Office of the Chief Clerk. The amendments are proposed under the Insurance Code, Articles 5.15-4 and 1. 03A and the Government Code, sec.sec.2001.004 et seq. Article 5.15-4 authorizes the Texas Department of Insurance to adopt necessary rules, forms, endorsements and procedures to carry out the purposes of the article. Article 1.03A authorizes the commissioner to adopt rules and regulations for the conduct and execution of the duties and functions of the department as authorized by statute. The Government Code, sec.sec.2001.004 et seq (Administrative Procedure Act) authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and to prescribe the procedures for adoption of rules by a state agency. The following statute is affected by this proposal: Insurance Code, Article 5.15-4. sec.5.1301. Definitions. The following words and terms, when used in ssec.5.1301-5.1309 of this title (relating to Insurer Filing Requirements; Determination of Premium Discount Amount; Qualifications for Premium Discount; Request for Premium Discount; Audit and Penalty Provisions; Prohibitions and Sanctions on Insurers; Data Collection and Reporting Requirements; and Expiration), shall have the following meanings, unless the context clearly indicates otherwise. Act-The Omnibus Health Care Rescue Act (Insurance Code, Article 5.15-1, sec.3 and sec.4B, and Article 5.15-4). Charity care or services-Care or services provided by a health care professional[, health center,] or health clinic through
                                                      [under:] [(A) Chapters 31, 32, 35, or 61, Health and Safety Code; [(B) the Medicaid program under Human Resources Code, Chapter 32; [(C) a contract with a migrant, community, or homeless health center that receives funds under 42 U.S.C. Section 254b, 254c, or 256; [(D) Subchapter B, Chapter 311, Health and Safety Code, or 42 U.S.C. Section 1395d, to the extent the professional or the hospital in which the care or services are provided is not compensated;] [(E)] an approved family practice residency training program established under Subchapter I, Chapter 61
                                                        [66], Education Code, to the extent the professional is not compensated for the services[;] [(F) an indigent health care program of a hospital district created under the authority of Article IX, Sections 4 through 11, of the Texas Constitution; or [(G) a county correctional institution health care program for inmates who are in the custody of such county correctional institution operated by such county or under contract with such county]. Eligible health care liability claim-A health care liability claim as defined in the Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Texas Civil Statutes) against a health care professional or health clinic that renders charity care in at least 10% of the patient encounters engaged in by said health care professional or health clinic during the policy year in which the claim was made[, or a claim against a health center or against a health care professional who participates in a Medicaid managed care project established under the Human Resources Code, Section 32.041]. For the purpose of implementing the provisions of the Act, the Texas Department of Insurance has interpreted an eligible health care liability claim as being made when the alleged negligent act or omission resulting in a claim arose. Health care professional-A person who is either: (A)-(B) (No change.) (C) recognized by the Board of Medical Examiners as a physician assistant[; or] [(D) a health care professional who participates in a Medicaid managed care project established under Section 32.041, Human Resources Code]. [Health center -A federally qualified health center, as that term is defined by 42 U.S.C. Section 1396d.] Health care liability claim-A claim or action against a health care professional[, health center,] or health clinic for treatment, lack of treatment, or other claimed departure from accepted standards of medical care or health care or safety which proximately results in injury to or death of a patient, without regard to whether said claim or action is based upon tort or contract principles. Patient encounter -An occasion on which a health care professional[, health center,] or health clinic renders professional health care services to a patient. For the purposes of implementing the provisions of the Act, the Texas Department of Insurance has interpreted a patient encounter to be as provided in subparagraphs (A) and (B) of this definition. A telephone consultation with or about the patient is not considered a patient encounter. (A)-(B) (No change.) sec.5.1302. Insurer Filing Requirements. An insurer required to participate in the Act's provisions for health care liability or medical professional liability insurance must submit the following for approval by the Texas Department of Insurance: (1) (No change.) (2) application forms for health care professionals[, health centers,] and health clinics, as specified in sec.5.1305 of this title (relating to Request for Premium Discount); and (3) endorsement forms to provide coverage as required by the Act, such endorsement forms to include: (A)-(B) (No change.) (C) a statement that the insurer's obligation to pay damages under the policy is reduced by the amount payable by the state's liability for indemnification of certain health care professionals[, health centers,] and health clinics under the Act and in compliance with the Insurance Code, Article 5.15-4; (D)-(G) (No change.) sec.5.1303. Determination of Premium Discount Amount. (a) The Texas Department of Insurance shall approve premium discounts to be used by each insurer on premiums charged to a health care professional,[ health center, ] or health clinic covered by the Act. The department shall base the approved discounts on: (1) (No change.) (2) the reduction in the insurer's liability exposure based on the state's indemnification of either the first $25,000 or the first $100,000 of an eligible health care liability claim against a health care professional[, health center,] or health clinic. Such reduction shall consider the percentage and type of a health care professional's practice and the percentage and type of care or services provided by the [health center or] health clinic eligible for indemnification for either the first $25,000 or the first $100,000. (b)-(c) (No change.) sec.5.1304. Qualifications for Premium Discount. (a)-(b) (No change.) [(c) A health center is entitled to a premium discount for professional liability coverage, if the health center adopts a quality assurance program.] (c)
                                                          [(d)] A health clinic [or health care professional under Section 110.001(3)(D), Civil Practice and Remedies Code,] is entitled to a premium discount for professional liability coverage if the health clinic [or health care professional under Section 110.001(3)(D), Civil Practice and Remedies Code,] provides at least 10% or more of charity care or services and adopts a quality assurance program. (d)
                                                            [(e)] Information concerning rules, procedures, and standards for patient safety and risk reduction training courses approved by the Texas Department of Insurance may be obtained directly from the Texas Department of Insurance, Loss Control Division, Mail Code 103-9A
                                                              [105-9A], P.O. Box 149104, Austin, Texas 78714-9104. sec.5.1305. Request for Premium Discount. (a)-(c) (No change.) (d) Requests or application forms for a premium discount for a [health center or] health clinic shall contain the same information as for health professionals, except that 15 hours of continuing education is not required. Health [centers and] clinics shall certify they have an ongoing quality assurance program. The program shall include a written plan providing for review of operations, improvement in patient safety, and continuing risk reduction and patient safety education for staff and employees. sec.5.1306. Audit and Penalty Provisions. (a) At the end of a policy year, an insurer may audit any health care professional[, health center, ] or health clinic receiving a premium discount to determine if charity care and services were provided to qualify the health care professional[, health center,] or health clinic for such premium discount. (b) To conduct such audit, an insurer is entitled to access to any books and records necessary to determine if: (1) the health care professional's[, health center's] or health clinic's verified application or statement submitted for coverage was correct; and (2) the health care professional[, health center] or health clinic was eligible for a premium discount. (c) If access is denied to the health care professional's[, health center's] or health clinic's property or books and records, the insurer may obtain an appropriate court order to gain access. (d) Within 30 days of the completion of an audit, the insurer shall notify the health care professional[, health center,] or health clinic of the outcome of the audit. If an insurer's audit indicates that the health care professional[, health center,] or health clinic did not provide charity care or services in 10% or more of the patient encounters, the insurer's notice shall contain the number of total encounters and charity care encounters which the insurer has determined were performed by the health care professional[, health center,] or health clinic. The notice shall also advise the health care professional[, health center,] or health clinic of the appeals procedure available to contest the determination, as described in sec.sec.5.1501-5.1503 of this title (relating to Procedure for Reconsideration; Grievance and Hearing Procedures; and Appeal to the State Board of Insurance). The insurer may charge the health care professional[, health center,] or health clinic the difference between the amount of premium paid and the nondiscounted premium that would have been paid, plus 20% of the nondiscounted premium amount. (e) A health care professional[, health center,] or health clinic will not be subject to the 20% penalty provided in subsection (d) of this section, if, having received a premium discount for the policy year, such health care professional[, health center,] or health clinic pays to the insurer the difference between the premium paid and the undiscounted premium amount. Such payment must include interest at the legal rate on the unpaid premium amount and must be received by the insurer prior to 30 days before the expiration of the policy year. sec.5.1307. Prohibitions and Sanctions on Insurers. (a) An insurer may not cancel or refuse to renew medical professional liability coverage solely on the basis that the health care professional[, health center, ] or health clinic is eligible for a premium discount under the provisions of the Act, except for the following reasons: (1)-(3) (No change.) (b) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600278 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 463-6327 Subchapter E. Texas Catastrophe Property Insurance Association Plan of Operation 28 TAC sec.5.4001 The Texas Department of Insurance proposes an amendment to sec.5.4001, concerning the plan of operation of the Texas Catastrophe Property Insurance Association (TCPIA). Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas Legislature in 1971 and is composed of all property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to residents in designated catastrophe areas who are unable to obtain such coverage in the voluntary market. Since its inception, the TCPIA has provided this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy. Pursuant to Commissioner's Order Number 95-1200 (November 14, 1995), effective March 1, 1996, the TCPIA will provide coverage to residents in two additional coastal areas-the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). The proposed amendment is necessary to amend subsection (e) of the plan of operation, relating to Building Codes, to include the two additional areas as designated catastrophe areas that are subject to the applicability of the TCPIA's building code specifications and standards and to the Department's Windstorm Inspection Program. It is proposed that subsection (e)(3) be amended to include a new subparagraph (B) specifying that the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) are subject to the building code requirements set forth in subsection (e) of the plan of operation. Under the proposed amendment, the current provision in subsection (e)(3) listing the counties of Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy is newly designated as subparagraph (A). It is also proposed that subsection (e)(4) be amended to add a new subparagraph (B) to provide that a structure constructed, repaired, or to which additions were made on and after January 1, 1988 and before March 1, 1996, that is located in an area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) or in an area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) shall be considered approved by the Commissioner of Insurance as being in compliance with the TCPIA's inland building code requirements contained in paragraph (2) of subsection (e) (Standard Building Code, 1973 Edition) and, therefore, shall be considered insurable property by the TCPIA if the owner of the structure presents to the TCPIA at the time of application a statement, as specified in subparagraph (B), signed by a city building official. In the statement, the city building official shall affirm that to his/her best belief and knowledge, the structure to be insured by the TCPIA was constructed, repaired or an addition was made on and after January 1, 1988 and before March 1, 1996, in accordance with building specifications and standards which comply with the Standard Building Code (1973 Edition) or an equivalent recognized code, and that the city has inspected the structure and enforced compliance to said code. It is also proposed that subsection (e)(4) be amended to add a new subparagraph (C) to provide that a structure constructed, repaired, or to which additions were made on and after March 1, 1996, that is located in an area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) or in an area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) shall be considered an insurable property for windstorm and hail insurance from the TCPIA only if the structure is inspected or approved by the Commissioner of Insurance for compliance with building specifications as provided in the plan of operation, including any specifications for roofing materials as provided in Article 21.49, sec.6A(a) of the Insurance Code. The amendment is proposed to be effective March 1, 1996. Lyndon Anderson, associate commissioner, property and casualty division, has determined that for each year of the first five years the proposed amendment is in effect, there will be no fiscal implications as a result of enforcing or administering the section to state or local government, except for the minimal cost to the cities of Seabrook and La Porte to issue the compliance certification required in proposed subsection (e)(4)(B). Mr. Anderson also has determined that for each year for the first five years the proposed amendment is in effect, the public benefit anticipated as a result of enforcing the section will be that structures insured by the TCPIA in the two newly designated catastrophe areas (east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County)) will be subject to the same building code and inspection requirements as other structures insured by the TCPIA. This will result in the availability of windstorm and hail insurance from the TCPIA for those individuals with property located in the two newly designated catastrophe areas. Many of these individuals have been unable to purchase such insurance or have purchased insurance through an unlicensed insurer at extremely high costs. As a result of the designation of these two areas as catastrophe areas, these individuals will be able to purchase windstorm and hail insurance through the TCPIA and may realize substantial savings in premium dollars. The availability of windstorm and hail insurance in these areas will allow new development of residential property and commercial property and will reverse any trend of reduced resale value of property because of windstorm and hail insurance being unavailable to the purchaser of existing properties. The cost for inspections required by proposed subsection (e)(4)(C) for applicants to the TCPIA for windstorm and hail insurance for structures constructed on and after March 1, 1996, located either in the area east of the boundary line of State Highway 146 and inside the city limits of Seabrook (Harris County) or in the area east of the boundary line of State Highway 146 and inside the city limits of La Porte (Harris County) is $100 for new structures, and for additions made on and after March 1, 1996, the cost for inspections is $35. There will be no effect on small business as a result of enforcing or administering the section. Comments on the proposed amendment must be submitted within 30 days after publication of the proposed amendment in the Texas Register to the Office of the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC #113-2A, Austin, Texas 78714-9104. An additional copy of the comment is to be submitted to Lyndon Anderson, Associate Commissioner, Property and Casualty Program, Texas Department of Insurance, P.O. Box 149104, MC #103-1A, Austin, Texas, 78714-9104. Article 21.49, sec.5A of the Insurance Code requires a hearing to be held before any orders may be issued pursuant to Article 21.49 and provides that any person may appear and testify for or against the adoption of this proposal. The amendment is proposed pursuant to the Insurance Code, Articles 21.49 and 1.03A, and the Government Code, sec.sec.2001.004-2001.038. Article 21.49, sec.3(h) authorizes the Commissioner to designate a city or a county as a catastrophe area to be served by the TCPIA upon determination, after notice of not less than ten days and a hearing, that windstorm and hail insurance is not reasonably available to a substantial number of owners of insurable property within that city or county that is subject to unusually frequent and severe damage resulting from windstorms and/or hailstorms. The 74th Texas Legislature amended Article 21.49, sec.3(h) in House Bill 2593 (Acts 1995, 74th Legislature, Page 4724, Chapter 944, sec.1, effective September 1, 1995) to provide that a part of a city or a part of a county could also be designated as a catastrophe area eligible for coverage by the TCPIA. Pursuant to Commissioner's Order Number 95-1200, effective March 1, 1996, the area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook and the area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte were designated by the Commissioner of Insurance as catastrophe areas eligible for windstorm and hail insurance coverage through the TCPIA. Article 21.49, sec.6A specifies building code requirements and approval or inspection procedures for windstorm and hail insurance through the TCPIA. Article 21.49, sec.5(c) of the Insurance Code provides that the Commissioner of Insurance by rule shall adopt the TCPIA plan of operation with the advice of the TCPIA board of directors. Section 5(f) of Article 21.49 provides that any interested person may petition the Commissioner to modify the plan of operation in accordance with the Administrative Procedure Act (Government Code, Title 10, Subtitle A, Chapter 2001). Article 21.49, s5, subsections (c) and (f), by their terms, delegate the foregoing authority to the State Board of Insurance. However, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001.004-2001.038 (Administrative Procedure Act) authorize and require each state agency to adopt rules of practice stating the nature and requirements of available formal and informal procedures and prescribe the procedures for adoption of rules by a state agency. The following statute is affected by this rule: Insurance Code, Article 21. 49. sec.5.4001. Plan of Operation. (a)-(d) (No change.) (e) Building Codes. (1)-(2) (No change.) (3) Limitations on applicability of building codes. Notwithstanding any other provisions of this section, the building code set forth in this subsection shall be applicable only in: (A) the [following] counties of Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy;
                                                                [.] and (B) the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). (4) Insurable property for windstorm and hail insurance. (A) A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area covered at the time by a building code recognized by the association shall be considered an insurance property for windstorm and hail insurance from the association without compliance with the inspection or approval requirements of Insurance Code, Article 21.49, sec.6A(a) or the plan of operation. A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area not covered by a building code recognized by the association shall be considered an insurable property for windstorm and hail insurance from the association without compliance with the inspection or approval requirements of Insurance Code, Article 21.49, sec.6A(a), or the plan of operation if that structure has been previously insured by a licensed insurance company authorized to do business in this state and the risk is in essentially the same condition as when previously insured, except for normal wear and tear, and without any structural change other than a change made according to code. Evidence of previous insurance includes a copy of a previous policy, copies of canceled checks or agent's records that show payments for previous policies, and a copy of the title to the structure or mortgage company records that show previous policies. (B) A structure constructed, repaired, or to which additions were made on and after January 1, 1988 and before March 1, 1996, that is located in an area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) or in an area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) shall be considered approved by the Commissioner of Insurance as being in compliance with the association's inland building code requirements contained in paragraph (2) of this subsection and shall be considered an insurable property for windstorm and hail insurance from the association if the owner of the structure to be insured by the association presents to the association at the time of application for insurance the following statement signed by a city building official
                                                                  : "To the best belief and knowledge of the undersigned, the structure located at (street address) in (name of city), Texas, was constructed, repaired or an addition was made on and after January 1, 1988 and before March 1, 1996, in accordance with the building specifications and standards which comply with the Standard Building Code (1973 Edition) or an equivalent recognized code; and the City of (name of city), Texas has inspected the structure and enforced compliance to said code." (C) A structure constructed, repaired, or to which additions were made on and after March 1, 1996, that is located in an area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) or in an area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) shall be considered an insurable property for windstorm and hail insurance from the association only if the structure is inspected or approved by the Commissioner of Insurance for compliance with building specifications in this plan of operation, including any specifications for roofing materials as provided in Article 21.49, sec.6A(a) of the Insurance Code. (f) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600284 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 463-6327 Standard Policy Forms-Windstorm and Hail 28 TAC sec.5.4201 The Texas Department of Insurance proposes an amendment to sec.5.4201, concerning the adoption by reference of a new endorsement form-TCPIA Form Number 525, Dwelling Optional Large Deductible Clause (One or Two-Family Dwellings) for attachment to a windstorm and hail insurance policy issued by the Texas Catastrophe Property Insurance Association (TCPIA). Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas legislature in 1971 and is composed of property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to residents in designated catastrophe areas who are unable to obtain such coverage in the voluntary market. Currently, the TCPIA provides this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy. Pursuant to Commissioner's Order Number 95-1200 (November 14, 1995), effective March 1, 1996, the TCPIA will provide coverage to residents in two additional coastal areas-the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). The proposed endorsement is necessary to provide a means to allow a TCPIA policyholder to select a large deductible of 1.0%, 2.0%, 2.0%, 3. 0%, 4.0%, or 5.0% for the perils of windstorm and hail for a dwelling risk. Currently, TCPIA policyholders may select deductibles of $100, $250, and 1.0%. The proposed amendatory endorsement provides that the percentage deductible of each item of insurance to which the deductible applies shall be deducted from a loss caused by the perils of windstorm and hail. The proposed endorsement further provides that in no event shall the deductible amount be less than $100 and that the provisions of this deductible endorsement shall apply separately to each item of insurance covering dwelling, dwelling contents, or dwelling household goods. Under the proposed endorsement, the term "dwelling(s) " shall also mean garage apartments, duplex dwellings, servants' houses, private garages, private barns, miscellaneous out buildings on the dwelling premises, seasonal dwellings, private club houses, and private camp houses. (The adoption of TCPIA Manual rules governing the use of this endorsement is proposed under an amendment to 28 TAC sec.5.4501.) It is proposed that the new endorsement become effective on March 1, 1996, but may only be used on TCPIA dwelling policies issued on or after the effective date of the residential property insurance benchmark rates determined pursuant to the December 20, 1995, benchmark rate hearing. Lyndon Anderson, associate commissioner, property and casualty division, has determined that for each year of the first five years the proposed amendment will be in effect, there will be no fiscal implications to state or local government. Mr. Anderson also has determined that for each year of the first five years the proposed amendment is in effect, the public benefit anticipated as a result of enforcing the proposed amendment is the availability of optional large deductibles for the perils of windstorm and hail. Under a windstorm and hail policy for dwelling risks issued by the TCPIA, those policyholders desiring to accept a large portion of any windstorm and hail loss will receive a reduction in the cost of insurance. There will be no effect on small business as a result of enforcing or administering the proposed endorsement. Comments on the proposal must be submitted within 30 days after publication of the proposed amendment in the Texas Register to the Office of the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC #113-2A, Austin, Texas, 78714-9104. An additional copy of the comment is to be submitted to Lyndon Anderson, Associate Commissioner, Property and Casualty Division, Texas Department of Insurance, P.O. Box 149104, MC #103-1A, Austin, Texas 78714-9104. Article 21.49, s5A of the Insurance Code requires a hearing to be held before any orders may be issued pursuant to Article 21.49 and provides that any person may appear and testify for or against the adoption of this proposal. The amendment is proposed pursuant to the Insurance Code, Articles 21.49 and 1.03A; and the Government Code, sec.sec.2001.004-2001.038. Article 21.49, sec.5A authorizes the Commissioner, after notice and hearing, to issue any orders which the Commissioner considers necessary to carry out the purposes of Article 21.49, including, but not limited to, maximum rates, competitive rates and policy forms. Article 21.49, sec.8 authorizes the Commissioner to approve every manual of classifications, rules, rates, rating plans, and every modification of any of the foregoing for use by the TCPIA. Article 21.49, sec.5A and sec.8, by their terms, delegate the foregoing authority to the State Board of Insurance; however, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001.004-2001.038 (Administrative Procedure Act) authorizes and requires each state agency to adopt rules of practice stating the nature and requirements of available formal and informal procedures and prescribe the procedures for adoption of rules by a state agency. The following article of the Insurance code is affected by this rule: Insurance Code, Article 21.49. sec.5.4201. Standard Texas Catastrophe Property Insurance Association Forms for Windstorm and Hail. The Commissioner
                                                                    [State Board] of Insurance adopts by reference the standard Texas Catastrophe Property Insurance Association forms for
                                                                      [-] windstorm and hail. Specimen copies of these forms are available from the Texas Catastrophe Property Insurance Association, P.O. Box 2930, Austin, Texas 78767. They are also available from the Property and Casualty Division
                                                                        [Program], MC #103-1A
                                                                          , Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The forms are more specifically identified as follows. (1)-(22) (No change.) (23) TCPIA FORM 525 -dwelling optional large deductible clause. Effective March 1, 1996. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600283 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 463-6327 Subchapter E. Texas Catastrophe Insurance Association Manual 28 TAC sec.5.4501 The Commissioner of Insurance proposes an amendment to s5.4501, concerning the adoption by reference of a revised manual of rules governing the writing of windstorm and hail insurance by the Texas Catastrophe Property Insurance Association (TCPIA), pursuant to Article 21.49 of the Insurance Code. Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas legislature in 1971 and is composed of all property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to residents in designated catastrophe areas who are unable to obtain such coverage in the voluntary market. Since its inception, the TCPIA has provided this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy. Pursuant to Commissioner's Order Number 95-1200 (November 14, 1995), effective March 1, 1996, the TCPIA will provide coverage to residents in two additional coastal areas: the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). The new manual is necessary to incorporate: (i) rule amendments to reflect adjustments to the maximum limits of liability for risks insured by the TCPIA; (ii) rule amendments to provide for the applicability of the TCPIA's building code and inspection requirements to two newly designated catastrophe areas which become eligible for coverage through the TCPIA on March 1, 1996; and (iii) new rules relating to the availability of optional large deductibles for dwelling risks insured under windstorm and hail policies issued by the TCPIA. As to the first set of proposed amendments, it is necessary that Rule J, relating to Limits of Liability, in Section I-General Rules of the TCPIA be amended to reflect adjustments to the maximum limits of liability applicable to risks being insured by the TCPIA. Pursuant to Article 21.49, sec.8D(c), the Commissioner, as part of the annual rate hearing, shall adjust the liability limits for inflation, including the statutory limits specified in subsection (a) of sec.8D, at a rate that reflects any change in the BOECK Index or other index that may accurately reflect changes in the cost of construction or residential values in the catastrophe area. Pursuant to Commissioner's Order Number 95-0525 (May 29, 1995), the limits of liability for TCPIA coverage are increased by 3.5% on an annual basis for dwellings and contents and 1.9% on an annual basis for government buildings, apartments and commercial buildings. These annual percentage increases are to be applied from the effective date of the last index adjustment (June 1, 1993) to the effective date of the current adjustment (August 1, 1995). Following the application of the annual percentage factors, the resulting maximum limits of liability are rounded up to the nearest $1,000 to produce the new applicable maximum limits of liability. These new maximum limits of liability as specified in the proposed amendments to Rule J are $279,000 (changed from $258,750) for a dwelling and its contents; $279,000 (changed from $258,750) for a townhouse unit and its contents; $804,000 (changed from $771,750) per building for an apartment, condominium or townhouse and the contents of the owner of the structure in which the apartment, condominium or townhouse is located; $108,000 (changed from $102,900) for individually owned contents in an apartment, residential condominium or townhouse unit; $2,144,000 (changed from $2,058,000) for a government building and its contents; and $1,084,000 (changed from $1,040,000) for a commercial building and its contents. Pursuant to Commissioner's Order Number 95-0525 the new maximum limits of liability are applicable on policies effective on and after August 1, 1995. In the second set of proposed amendments, it is necessary to revise the current TCPIA rules manual to provide for the applicability of the TCPIA's building code and inspection requirements to two newly designated catastrophe areas which become eligible for coverage through the TCPIA on March 1, 1996. The two newly designated catastrophe areas are: (i) the area east of a boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and (ii) the area east of a boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). These areas have been determined to be catastrophe areas by the Commissioner of Insurance and so designated under Commissioner's Order Number 95-1200 (November 14, 1995). It is proposed that Rule C, relating to Determination of Territory (Catastrophe Areas), in Section I-General Rules of the TCPIA manual be amended to add a new provision 2 to include the two newly designated catastrophe areas. It is also proposed that Rule D, relating to Insurable Property, in Section I-General Rules be amended in provision 3 and a new provision 4 be added to provide that for property located in the two newly designated catastrophe areas, all structures constructed, repaired or to which additions were made on and after January 1, 1988, and before March 1, 1996, are approved as complying with the TCPIA Inland Building Code (1973 Edition Standard Building Code) if the City of Seabrook or the City of La Porte has issued to the owner of the property a statement signed by a city building official that the structure was constructed, repaired, or an addition was made in accordance with the building specifications and standards which comply with the Standard Building Code (1973 Edition) or an equivalent recognized code; and the city inspected the structure and enforced compliance to said code. The proposed amendment provides that if such a statement is provided to the TCPIA, the structure shall be considered insurable property by the TCPIA. It is also proposed that Rule D, relating to Insurable Property, in Section I- General Rules be amended to add a new provision 5 to provide that for property located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and for property located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County), all structures constructed, repaired or to which additions were made on and after March 1, 1996, that have been certified by the Texas Department of Insurance as being in compliance with the building specifications of the plan of operation shall be considered insurable property. A certificate of compliance (Form WPI-8) issued by the Texas Department of Insurance shall be considered evidence of insurability of the structure by the TCPIA. An amendment is proposed to Rule B, relating to Windstorm, Hurricane, and Hail Deductible Endorsement Form Number 66, in Section II-Policy Forms and Endorsements, to delete the reference to the 14 counties being the designated catastrophe area and to provide that "Deductible Windstorm, Hurricane and Hail Insurance may be written only in the Catastrophe Area(s) designated by the Texas Department of Insurance." It is also proposed that the manual pages containing Rate Tables A, B, and C showing applicability to territories 8, 9 and 10 be amended to delete the reference to territories 8, 9 and 10 because with the designation of the new catastrophe areas the rate tables will apply to all commercial properties located in any of the designated catastrophe area and not just commercial properties located in territories 8, 9 and 10. In the third part of this proposal, it is proposed that Rule H, relating to Deductibles, in Section I-General Rules be amended to add a new provision 5 to authorize the attachment of TCPIA Endorsement Number 525 to provide for optional large deductibles of 1.0%, 2.0%, 2.0%, 3.0%, 4.0%, or 5.0% for dwelling risks insured by the TCPIA for the perils of windstorm and hail. (The adoption of TCPIA Endorsement Form Number 525 is proposed under an amendment to 28 TAC sec.5.4201.) Currently, TCPIA policyholders may select deductibles of $100, $250, and 1.0%. The proposed amendments also provide for appropriate premium credits for large deductibles applicable to the perils of windstorm and hail as set forth in the Optional Large Deductible Adjustment Chart of the dwelling section or farm and ranch section of the Texas Personal Lines Manual. The proposed amendment also specifies certain requirements and conditions for selection of the optional large deductible: (i) the minimum deductible amount may not be less than $100; (ii) the actual deductible amount in dollars must be shown on the declarations page of the policy; and (iii) the selection of a large deductible is at the option of the insured; the TCPIA may not require the selection of a large deductible as a condition to issue the windstorm and hail insurance policy. This rule is proposed to allow those residential policyholders desiring a large deductible for the perils of windstorm and hail under policies issued by the TCPIA to have a means of accepting a larger portion of a loss in return for a reduction in premium. It is proposed that all three parts of this proposal be effective March 1, 1996, as indicated in the proposed adoption by reference sec.5.4501. Lyndon Anderson, associate commissioner, property and casualty division, has determined that for each year of the first five years: (i) the proposed rule amendments to reflect adjustments to the maximum limits of liability for risks insured by the TCPIA are in effect, there will be no fiscal implications to state or local government as a result of enforcing or administering the proposed amendments; (ii) the proposed rule amendments to provide for the addition of the area east of a boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area east of a boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) as designated catastrophe areas eligible for coverage through the TCPIA are in effect, there will be no fiscal implications as a result of enforcing or administering the proposed amendments to state or local government, except for the minimal cost to the cities of Seabrook and La Porte to issue the compliance certification required in the proposed amendment to Section I, Rule D, provision 4; and (iii) the proposed rules providing for optional large deductibles for dwelling risks insured under windstorm and hail policies issued by the TCPIA will be in effect, there will be no fiscal implications to state or local government as a result of enforcing or administering the new rules. Mr. Anderson also has determined that for each year of the first five years: (i) the proposed rule amendments to reflect adjustments to the maximum limits of liability for risks insured by the TCPIA are in effect, the public benefit anticipated as a result of enforcing the amendments is the availability of increased maximum limits of liability for risks being insured through the TCPIA; these increased maximum limits of liability will reduce the uninsured portion of risks that have values greater than the maximum limits of liability written by the TCPIA; (ii) the proposed rule amendments to provide for the addition of the area east of a boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area east of a boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County) as designated catastrophe areas eligible for coverage through the TCPIA are in effect, the public benefit anticipated as a result of enforcing the proposed amendments is that structures insured by the TCPIA in these two newly designated catastrophe areas will be subject to the same building code and inspection requirements as other structures insured by the TCPIA. This will result in the availability of windstorm and hail insurance from the TCPIA for those individuals with property located in the two newly designated catastrophe areas. Many of these individuals have been unable to purchase such insurance or have purchased insurance through an unlicensed insurer at extremely high costs. As a result of the designation of these two areas as catastrophe areas, these individuals will be able to purchase windstorm and hail insurance through the TCPIA and may realize substantial savings in premium dollars. The availability of windstorm and hail insurance in these areas will allow new development of residential property and commercial property and will reverse any trend of reduced resale value of property because of windstorm and hail insurance being unavailable to the purchaser of existing properties. The cost for inspections required by the proposed amendments for applicants to the TCPIA for windstorm and hail insurance for structures constructed on and after March 1, 1996, located either in the area east of the boundary line of State Highway 146 and inside the city limits of Seabrook (Harris County) or in the area east of the boundary line of State Highway 146 and inside the city limits of La Porte (Harris County) is $100 for new structures, and for additions made on and after March 1, 1996, the cost for inspections is $35; and (iii) the proposed rules providing for optional large deductibles for dwelling risks insured under windstorm and hail policies issued by the TCPIA will be in effect, the public benefit anticipated as a result of enforcing the proposed rules is the availability of optional large deductibles for the perils of windstorm and hail. Under a windstorm and hail policy for dwelling risks issued by the TCPIA, those policyholders desiring to accept a larger portion of any windstorm and hail loss will receive a reduction in the cost of insurance. There will be no effect on small business as a result of enforcing or administering any of the three parts of this proposal. Comments on the proposal must be submitted within 30 days after publication of the proposed amendments in the Texas Register to the Office of the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC #113-2A, Austin, Texas 78714- 9104. An additional copy of the comment is to be submitted to Lyndon Anderson, Associate Commissioner, Property and Casualty Division, Texas Department of Insurance, P.O. Box 149104, MC #103-1A, Austin, Texas, 78714-9104. Article 21.49, s5A of the Insurance Code requires a hearing to be held before any orders may be issued pursuant to Article 21.49 and provides that any person may appear and testify for or against the adoption of this proposal. The amendment is proposed pursuant to the Insurance Code, Articles 21.49 and 1.03A and the Government Code, sec.sec.2001.004-2001.038. Pursuant to Article 21.49, sec.8D(c), the Commissioner, as part of the annual rate hearing, shall adjust the liability limits for inflation, including the statutory limits specified in subsection (a) of sec.8D, at a rate that reflects any change in the BOECK Index or other index that may accurately reflect changes in the cost of construction or residential values in the catastrophe area. Pursuant to Commissioner's Order Number 95-0525 (May 29, 1995), the limits of liability for TCPIA coverage are increased by 3.5% on an annual basis for dwellings and contents and 1.9% on an annual basis for government buildings, apartments and commercial buildings. These annual percentage increases are to be applied from the effective date of the last index adjustment (June 1, 1993) to the effective date of the current adjustment (August 1, 1995). Article 21. 49, sec.3(h) authorizes the Commissioner to designate a city or a county as a catastrophe area to be served by the TCPIA upon determination, after notice of not less than ten days and a hearing, that windstorm and hail insurance is not reasonably available to a substantial number of owners of insurable property within that city or county that is subject to unusually frequent and severe damage resulting from windstorms and/or hailstorms. The 74th Texas Legislature amended Article 21.49, sec.3(h) in House Bill 2593 (Acts 1995, 74th Legislature, page 4724, Chapter 944, sec.1, effective September 1, 1995) to provide that a part of a city or a part of a county could also be designated as a catastrophe area eligible for coverage through the TCPIA. Pursuant to Commissioner's Order Number 95-1200, effective March 1, 1996, the area east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook and the area east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte were designated by the Commissioner of Insurance as catastrophe areas eligible for windstorm and hail insurance coverage through the TCPIA. Article 21.49, sec.6A specifies building code requirements and the approval or inspection procedures for windstorm and hail insurance through the TCPIA. Article 21.49, sec.5A authorizes the Commissioner, after notice and hearing, to issue any orders which the Commissioner considers necessary to carry out the purposes of Article 21.49, including, but not limited to, maximum rates, competitive rates and policy forms. Article 21.49, sec.8 authorizes the Commissioner to approve every manual of classifications, rules, rates, rating plans, and every modification of any of the foregoing for use by the TCPIA. Articles 21.49, sec. s 5A, 6A, 8, and 8D, by their terms delegate the foregoing authority to the State Board of Insurance; however, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001. 004-2001.038 (Administrative Procedure Act) authorize and require each state agency to adopt rules of practice stating the nature and requirements of available formal and informal procedures and prescribe the procedures for adoption of rules by a state agency. The following article of the Insurance Code is affected by this proposal: Insurance Code, Article 21.49. sec.5.4501. Rules and Regulations for the Texas Catastrophe Property Insurance Association (association). The Texas Department of Insurance adopts by reference a rules manual for the association as amended effective March 1, 1996
                                                                            [July 14, 1995]. Copies of the rules manual may be obtained by contacting the Property/Casualty Division, Mail Code 103-1A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600285 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 463-6327 Subchapter K. Commercial Multi-peril Policies 28 TAC sec.5.9101 The Texas Department of Insurance proposes an amendment to sec.5.9101, concerning commercial multi-peril insurance and the filing of rates for a commercial multi-peril policy. The amendment is necessary to conform this section to amendments to the Texas Insurance Code, Article 5.13-2, enacted by House Bill 1988, 74th Texas Legislature, 1995. The amendment exempts reciprocal insurance companies from the rate filing requirements of the Texas Insurance Code, Article 5.13-2, sec.sec.4, 5, 6, and 7. David Durden, deputy commissioner of property and casualty lines, has determined that for the first five years the proposed section is in effect, there will be no fiscal implications for state or local government or for small businesses as a result of administering the section and there will be no effect on local employment or the local economy. Mr. Durden also has determined that for each year of the first five years the proposed section is in effect, the public benefit anticipated as a result of enforcing the amendment will be that monoline and multi-peril coverages will be regulated in the same manner resulting in a clarification of regulatory procedure. Comments on the proposal to be considered by the department must be submitted in writing within 30 days after publication of the proposed section in the Texas Register to Alicia M. Fechtel, General Counsel and Chief Clerk, Texas Department of Insurance, Mail Code 113-2A, Post Office Box 149104, Austin, Texas 78714-9104. An additional copy should be sent to David Durden, Deputy Commissioner of Property and Casualty Lines, Texas Department of Insurance, Mail Code 104-5A, Post Office Box 149104, Austin, Texas 78714-9104. The amendment is proposed pursuant to the Insurance Code, Articles 5.81, 5. 98, and 1.03A, and the Government Code, ssec.2001.004 et seq. Article 5.81 authorizes the Commissioner of Insurance to approve forms for multi-peril policies of insurance and to adopt rules to carry out the purposes and objectives of the article. Article 5.98 authorizes the commissioner to adopt reasonable rules that are appropriate to accomplish the purposes of Chapter 5 of the Texas Insurance Code, which regulates rating and policy forms for property and casualty insurance. Article 1.03A authorizes the commissioner to adopt rules and regulations, for the conduct and execution of the duties and functions of the department only as authorized by statute. The Government Code, sec.sec.2001.004 et seq (Administrative Procedure Act) authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and to prescribe the procedures for adoption of rules by a state agency. The following statutes are affected by this proposal: Insurance Code, Article 5.13-2 sec.5.9101. Multi-peril Policies. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) (No change.) (2) Insurer-Every insurance company, corporation, interinsurance exchange, mutual, reciprocal, association, Lloyds, or other organization or insurer writing any of the characters of insurance business herein set forth in this section, but does not include the Texas Catastrophe Property Insurance Association or any county or farm mutual insurance company or association as regulated under the Texas Insurance Code, Chapters 16 and 17. However, the provisions of subsections (c), (d), and (e) of this section shall not apply to Lloyds or reciprocals
                                                                              . (3)-(6) (No change. ) (b)-(g) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1996. TRD-9600282 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 16, 1996 For further information, please call: (512) 463-6327