TEXAS DEPARTMENT OF INSURANCENotification Pursuant to the Insurance Code, 
Chapter 5, Subchapter LAs required by the Insurance Code, Article 5.96 and 5.97, 
the Texas Register publishes notice of proposed actions by the Texas Board of 
Insurance. Notice of action proposed under Article 5.96 must be published in the 
Texas Register not later than the 30th day before the board adopts the proposal. 
Notice of action proposed under Article 5.97 must be published in the Texas 
Register not later than the 10th day before the Board of Insurance adopts the 
proposal. The Administrative Procedure Act, the Government Code, Chapters 2001 
and 2002, does not apply to board action under Articles 5.96 and 5.97.
The complete text of the proposal summarized here may be examined in the offices 
of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714-
9104.)
This notification is made pursuant to the Insurance Code, Article 5.96, which 
exempts it from the requirements of the Administrative Procedure Act.

Notification Pursuant to the Texas Insurance Code, Chapter 5, Subchapter L
The Commissioner of Insurance, at a public hearing under Docket Number 2250 
scheduled for October 1, 1996 at 9:00 a.m., in Room 100 of the Texas Department 
of Insurance Building, 333 Guadalupe Street in Austin, Texas, will consider a 
petition by the staff of the Texas Department of Insurance proposing adoption of 
amendments of the Texas Automobile Rules and Rating Manual (the Manual) to 
revise Rule 74.E.2, driving safety course credits. Staff's petition (Reference 
Number A-0896-34-I) was filed on August 15, 1996.
The petition proposes eliminating specified courses from Manual Rule 74.E.2 and 
allowing the insurance credit for completion of any driving safety course 
approved under and taught through a school licensed under Texas Civil Statutes, 
Article 4413(29c), regardless of whether a uniform certificate of completion 
(defined in the statute) is issued to the graduates. Article 4413(29c) provides 
for approval of driving safety courses, schools, and course providers by the 
Texas Education Agency, which includes the State Board of Education and the 
Commissioner of Education. 
The petition also proposes that Rule 74 include one exemption from the previous 
mentioned requirements. The proposed exemption is based upon the exemption set 
forth in Article 4413(29c), Section 7(a), which totally exempts an organization 
having 50,000 or more members, which qualifies for a tax exemption under 
specified Internal Revenue Code provisions, and which conducts for its members 
and other individuals, who are at least 50 years of age, a driving course that 
is not used for purposes of former Texas Civil Statutes, Article 6701d, 
sec.143A, Uniform Act Regulating Traffic on Highways, now the Transportation 
Code, Title 7, sec.sec.543.101 et seq. (pertaining to dismissal of charges 
concerning traffic law violations). Staff asserts the fact that such a course 
has been granted a statutory exemption indicates confidence of the legislature 
in the course's quality, and that is a persuasive reason to allow the insurance 
credit for taking such a course. 
The petition also proposes deletion of the "Exception" appearing at the end of 
Rule 74.E.2, pertaining to Certified Driver Education Teachers. Such teachers 
would then be treated the same as other persons for purposes of the insurance 
credit. In other words, a teacher would need to take a driving safety course in 
order to receive the insurance credit, rather than automatically being entitled 
to the insurance credit through receipt of a license to teach a driver education 
course. 
The petition explains that current Manual Rule 74.E.2. requires insurers to 
apply a 10% credit to the rates for certain coverages on an auto afforded 
personal auto coverage when the insurer receives satisfactory evidence 
(certificate or photocopy) that the auto's principal operator has successfully 
completed a driving safety course listed in subsection E.2.a. The last category 
of courses listed in that subsection reads as follows: 
"(53) Any State of Texas Driving Safety Course approved by the Texas Education 
Agency, provided that certification is on the uniform Certificate of 
Completion."
The previous language was added to Rule 74.E.2.a. after the regulation of driver 
training schools was shifted by statute, effective September 1, 1989, from the 
Department of Public Safety (DPS) to the Texas Education Agency (TEA). Prior to 
then, the DPS licensed, regulated, and monitored such schools, but for any 
school to make its graduates eligible for the insurance discount, the school had 
to request and receive individual approval for its course(s) from TDI. 
Approximately when the previous mentioned statutory change became effective TDI 
and TEA entered into a memorandum of understanding, as required by the statute, 
regarding the curriculum for driving safety courses. TDI determined it did not 
have the personnel, resources, or authority to monitor driving safety schools 
nor the expertise to review curriculum. Therefore, the previous mentioned 
subsection (53) was added to Rule 74.E.2.a. TDI did not remove the schools 
specifically named in Rule 74, in part to allow ample time for transition to the 
new regulatory framework. 
As TDI staff recently learned, one problem with allowing the specifically named 
courses to remain in Rule 74.E.2.a. is that TEA's staff regards those courses as 
being outside its regulatory authority, provided that uniform certificates of 
completion are not issued. Although TDI never actually monitored operations of 
driving safety schools, certain requirements had to be met in order for TDI 
staff to recommend approval of the credit for such schools prior to September 1, 
1989. Each such application to TDI had to include a copy of (1) the school's 
license issued by DPS, (2) the DPS letter of approval of the curriculum, and (3) 
a sample of the certificate of completion to be issued to the graduates. Now 
that those safeguards are gone, individually named courses are escaping 
regulatory oversight. TDI staff believes the best way to eliminate this problem 
is to remove individually named courses from Rule 74.E.2.a. 
Another consideration is that the 74th Legislature, through SB 964 amended the 
Transportation Code, Title 7, sec.543.112 to provide that a driving safety 
course may not be provided to a student for less than $25. This portion of the 
Transportation Code, in Section 543.103, refers only to a course approved under 
Article 4413(29c) and utilizing a uniform certificate of completion. However, if 
a course is not used for "ticket dismissal," then the uniform certificate of 
completion is not needed in order for a graduate to receive the insurance 
discount, provided the course is individually named in Manual Rule 74.E.2.a. 
This fact may result in unfair treatment of the provider of a course not 
individually named in Rule 74. Although the provider of an unlisted course and 
the provider of a course listed in Rule 74 each may be teaching a curriculum 
approved by TEA, the provider of the unlisted course has to charge at least $25 
to its students, unlike the provider of a listed course, whose charge is 
unregulated. 
TDI staff asserts the proposed amendment of Rule 74.E.2.a. will eliminate the 
unfair result described previously. Staff's recommendation is to amend this rule 
to allow the insurance credit for completion of any driving safety course 
approved under and taught through a school licensed under Article 4413(29c), 
regardless of whether a uniform certificate of completion is issued to the 
graduates. Staff's proposal would result in more equal treatment of driving 
safety courses, schools, and course providers, as well as persons seeking the 
insurance credit. 
Staff requests that the proposed amendments be adopted to become effective on 
the 60th day after publication of the notification of the Commissioner's action 
in the Texas Register. The Commissioner has jurisdiction of this matter pursuant 
to the Insurance Code, Articles 5.10, 5.96, 5.98, and 5.101. 
Copies of the full text of the petition and the proposed amendments are 
available for review in the Office of the Chief Clerk of the Texas Department of 
Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to 
request copies of the petition and proposed amendments, please contact Angie 
Arizpe at (512) 463-6326; refer to (Reference Number A-0896-34-I).
Comments on the proposed changes must be submitted in writing within 30 days 
after publication of the proposal 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 comments should be submitted to David 
Durden, Deputy Commissioner, Property and Casualty Insurance Lines, Texas 
Department of Insurance, P.O. Box 149104, MC 104-5A, Austin, Texas 78714-9104. 
This notification is made pursuant to the Insurance Code, Article 5.96, which 
exempts action taken under this article from the requirements of the 
Administrative Procedure Act (Government Code, Title 10, Chapter 2001). 
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 August 21, 1996.
TRD-9612176
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: August 21, 1996