ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION PART XII. Advisory Commission on State Emergency Communications CHAPTER 251.Regional Plan-Standards 1 TAC sec.251.2, sec.251.6 The Advisory Commission on State Emergency Communications adopts new sec.251.2, concerning guidelines for changing or extending 9-1-1 service arrangements and an amendment to sec.251.6, concerning guidelines for Strategic Plans, amendments, and Equalization Surcharge Allocation, with changes to the proposed text as published in the January 7, 1997, issue of the Texas Register (TexReg 97). These sections provide guidelines for changing or extending 9-1-1 service arrangements in the new competitive and fast-changing telecommunications environment. The new section provides guidelines to ensure that changing or extending service arrangement does not degrade the provision of the highest level of 9-1-1 service or fail to address technical or cost issues that may result from the new telecommunication environment. The amended section incorporates the new section into the existing guidelines for strategic plans, amendments and equalization surcharge allocation. XYPOINT Corporation (XYPOINT) filed a comment to the proposed sec.251.2. No comments were received regarding the amendment to sec.251.6. XYPOINT states that proposed sec.251.2(c)(1)(A)(vi) might inappropriately subject wireless carriers, who are not rate regulated entities, to ratemaking or tariff setting procedures by the Public Utility Commission of Texas. The commission disagrees with XYPOINT's interpretation of this section. The express language of sec.251.2(c)(1)(A)(vi) states that "any necessary new or modified interconnection agreements relating to 9-1-1 service will be approved by the Public Utility Commission of Texas before the effective date of the proposed agreement and as necessary thereafter." (Emphasis added.) This provision expressly applies only where any interconnection agreement approved by the PUC is necessary . However, subsection (c)(1)(A)(viii), (ix), and (x) could be misread as attempting to fix rates or charges, and therefore are modified to reflect that any additional rates or charges must be specified in the proposal. XYPOINT also states that "the requirement for most favored nation treatment by a carrier to charge the same rate to each PSAP without regard to cost recovery under sec.251.2(c)(1)(A)(xiii) likely violates the FCC cost recovery mandate." The commission disagrees. A most favored nation clause merely requires that a service provider price its service on uniform statewide basis. Such a clause is consistent with the FCC's cost recovery mandate and is generally used by governmental entities to obtain the best value in the use of public funds. However, the Commission does add additional language to clarify that the clause applies to a similarly situated entity. The new rule and amendment are adopted under the Health and Safety Code, Chapter 771, sec.sec.771.051, 771.056, 771.059, which provides the Advisory Commission on State Emergency Communications the authority to administer the implementation of statewide 9-1-1 service, to develop minimum performance standards for 9-1-1 service to be followed in developing regional plans, and to allocate money for the operation of 9-1-1 service. Health and Safety Code, Chapter 771 is affected by these adopted amendments. sec.251.2.Guidelines for Changing or Extending 9-1-1 Service Arrangements. (a) Definitions. When used in this rule, the following words and terms shall have the meanings identified in paragraphs (1)-(5) of this subsection, unless the context of the word or term clearly indicates otherwise. (1) Automatic Number Identification (ANI)-A system which permits the identification of the caller's telephone number. For purposes of this rule, the term has the same meaning as in 47 C.F.R sec.20.18. (2) Emergency Communications District-A public agency or group of public agencies acting jointly that provided 9-1-1 service before September 1, 1987, or that had voted or contracted before that date to provide that service; or a district created under Texas Health and Safety Code, Chapter 772, Subchapters B, C, D, or E. (3) Pseudo Automatic Number Identification (Pseudo ANI)-A system which identifies the location of the base station or cell site through which a mobile call originates. For purposes of this rule, the term has the same meaning as in 47 C.F.R sec.20.18. (4) Regional Plan-A plan for the establishment and operation of 9-1-1 service throughout the region that regional planning commissions serves. The plan must meet the standards established by and be amended in accordance with the standards established by the Advisory Commission on State Emergency Communications. (5) Regional Planning Commission-A commission established under Local Government Code, Chapter 391, also referred to as a regional council of governments (COG). (b) Policy and Procedures. As authorized by Health and Safety Code, Chapter 771, the Advisory Commission on State Emergency Communications (ACSEC) may impose 9- 1-1 emergency service fees and equalization surcharges to support the planning, development, and provision of 9-1-1 service throughout the State of Texas. ACSEC is responsible for administering the implementation of statewide 9-1-1 service. ACSEC is also responsible for minimum performance standards for the operation of 9-1-1 service to be followed in developing regional plans. One of the most fundamental components of any 9-1-1 service operation and any regional plan is how the 9-1-1 service will be provided by the service provider(s) directly connecting to the Public Safety Answering Point (PSAP). Changing the tandem and/or database service arrangements for direct connection to the PSAP, adding additional tandem and/or database service providers, or extending current service arrangements for a fixed period may potentially adversely effect the level, quality, and costs of 9-1-1 service. Changing the tandem and/or database service arrangements for direct connection to the PSAP, adding additional tandem and/or database service providers, or extending current service arrangements for a fixed period may also potentially adversely effect other service providers that rely on another service provider for interconnection to the PSAP (e.g., other service providers need to know which provider to send Automatic Number Identification (ANI) information and Automatic Location Information (ALI) records, the format for ALI records, the procedures for modifying 9-1-1 database information, and how 9-1-1 service will be provided to their end-user customers). It is the policy of ACSEC that the highest level of 9-1-1 emergency service continue to be provided notwithstanding the new competitive telecommunications environment. Therefore, any agreement by a regional planning commission with a service provider to change or to extend 9-1-1 service arrangements for a fixed period must be made contingent upon final approval of a regional plan amendment. For emergency communication districts requesting 9-1-1 funds in accordance with established rules and procedures for 9-1-1 service arrangements, the extent to which the guidelines below are satisfied may be considered in allocating equalization surcharges. (c) Guidelines (1) Changes or extensions of 9-1-1 service arrangements must include the following: (A) The service provider making the proposal to the regional planning commission or emergency communications district verifies in writing, as part of the proposed agreement, that: (i) Reasonable notice of the proposal (i.e., at least ten days before a joint planning meeting) has been provided to the current service provider (if a change in service providers is involved) and to other potentially affected service providers. The service provider also verifies that at least one joint planning meeting occurred with at least ten days notice to all affected service providers that they may participate in the joint planning meeting. (ii) As a result of the joint planning meeting either each technical issue, or objection by other service providers has fully been resolved or an impartial statement of each unresolved issue or objection has been provided. (A joint planning meeting is open to evaluate all alternatives and is not limited to a discussion of one service provider's proposal.) (iii) An inventory of each affected exchange, central office, and tandem has been provided to all affected service providers involved. (iv) An itemization of all costs under the proposal and an itemized comparison with all costs under current rates (e.g., itemized list and comparison of all charges for each level of service, for all database service, etc.). (v) Any and all changes in E9-1-1 or 9-1-1 service features (i.e., all additional service features or reductions in service features that may result from the proposal) must be clearly specified. The service provider must also explain the justifications for any and all changes and why those changes do not degrade the level of 9-1-1 service and are consistent with providing the highest level of 9-1-1 service to all customers. (vi) The service provider takes full responsibility to professionally and timely coordinate all 9-1-1 service changes and modifications with all service providers and private switch providers involved in the geographic area, and that any necessary new or modified interconnection agreements relating to 9-1-1 service will be approved by the Public Utility Commission of Texas before the effective date of the proposed agreement and as necessary thereafter. (vii) The proposal includes a statement of work to be performed that includes: (I) an implementation schedule; (II) diagrams of all proposed changes; (III) how testing will occur and be coordinated; (IV) how interfaces with other service providers will be accomplished and coordinated; (V) an explanation of everything necessary for implementation; (VI) a schedule of everything necessary for database service implementation, including Emergency Service Number (ESNs) assignments and Master Street Address Guide (MSAG) revisions and distribution to other service providers; and (VII) an explanation of any potential Customer Premises Equipment (CPE) impacts. (viii) The proposal provides for service providers that are wireless carriers to be able to pass ANI and Pseudo ANI or that on request any modifications necessary to pass ANI and Pseudo ANI by the Federal Communications Commission's eighteen month deadline in 47 C.F.R sec.20.18(d) will be specified. (ix) The proposal provides for and enables long-term number portability or that any modifications necessary for long-term number portability will be specified. (x) The proposal specifies any additional costs to any PSAP or 9-1-1 entity for any modifications necessary during the period of the agreement because of Number Plan Area (NPA) splits and/or existing tandem or other network limitations. (xi) The proposal provides that there will be no additional costs to any PSAP or 9-1-1 entity to maintain the current level of E9-1-1 service, except as specifically set forth in an itemized list that is part of the proposed agreement. (xii) No further agreement by the regional planning commission is necessary to implement the proposal (e.g., the service provider and not the regional planning commission is responsible for any and all coordination with other parties or service providers that may be necessary to implement the proposal). (xiii) A most favored nation provision (i.e. a provision that requires the best price provided to any other similarly situated entity in Texas for comparable service) is included in the agreement and the service provider will automatically reduce the rates and charges in the agreement if comparable service is offered in Texas at a lower rate or charge by that service provider to any similarly situated other PSAP or 9-1-1 entity. (xiv) The service provider will comply with all ACSEC and Public Utility Commission of Texas rules or regulations relating to 9-1-1 service. (B) The regional planning commission requesting the plan amendment verifies in writing, as part of the proposed plan amendment, that: (i) Competitive procurement procedures were used or an explanation of the applicability of an exception to competitive procurement requirements. (ii) All neighboring or adjacent 9-1-1 entities that could potentially be affected by the requested plan amendment have been provided a copy of the plan amendment either before or concurrently with the filing of the plan amendment with the ACSEC. (2) Emergency communication districts requesting 9-1-1 funds in accordance with established rules and procedures for 9-1-1 service arrangements shall ensure that any changes or extensions of service arrangements meet or exceed the guidelines for regional planning commissions in this section. (3) Annual budgeted costs associated with 9-1-1 service arrangements shall be monitored by the ACSEC staff for consistency with this section. Such costs that are determined by the ACSEC staff to not be consistent with this section shall be reviewed by the commission. sec.251.6.Guidelines for Strategic Plans, Amendments, and Equalization Surcharge Allocation. (a)-(e) (No change) (f) Funding Parameters. The Commission will look favorably on plan amendments for tandem and/or database service arrangements and ancillary equipment that will improve the effectiveness and reliability of 9-1-1 call delivery systems. This will include the following when the equipment is 9-1-1 call delivery: surge protection devices, uninterrupted power source (UPS), power backup, voice recorders, paging systems for 9-1-1 call delivery, security devices, and other backup communication services. (1)-(2) (No change) (g)-(h) (No change) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 12, 1997. TRD-9703472 James D. Goerke Executive Director Advisory Commission on State Emergency Communications Effective date: April 1, 1997 Proposal publication date: January 7, 1997 For further information, please call: (512) 305-6911 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 5.Property and Casualty Insurance SUBCHAPTER B.Insurance Code, Chapter 5, Subchapter B 28 TAC sec.5.1201 The Texas Department of Insurance adopts the repeal of sec.5.1201, concerning the regulation of excess liability insurance, including automobile liability insurance. Repeal of sec.5.1201 is made without changes to proposed repeal of the section as published in the Texas Register November 12, 1996 at (21 TexReg 11067). The repeal of this section is necessary to enable the Department to simultaneously adopt a new section which replaces the repealed section with provisions concerning the regulation of umbrella liability insurance. This repeal and adoption of a new section is necessary to allow insurers to offer consumers a wider range of policy provisions and self-insured retentions for umbrella liability insurance. The adopted repeal will result in the elimination of a confusing, difficult to administer section with limited consumer or regulatory utility. Moreover, the repeal enables the commissioner to adopt a new section that will allow insurers to offer consumers a wider range of policy provisions. No comments were received regarding the adopted repeal. The repeal is adopted under the Insurance Code, Articles 5.98 and 1.03A and the Government Code sec.sec.2001.004 et seq. Article 5.98 authorizes the commissioner to adopt reasonable rules and rates that are appropriate to accomplish the purposes of Chapter 5. 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 Procedures Act) authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedure for adoption of rules by a state administrative agency. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 13, 1997. TRD-9703530 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: April 1, 1997 Proposal publication date: November 12, 1996 For further information, please call: (512) 463-6327 The Texas Department of Insurance adopts new sec.5.1201, concerning the regulation of umbrella liability insurance with changes to the proposed text as published in the November 12, 1996 issue of the Texas Register (21 TexReg 11067). The new section replaces repealed sec.5.1201 relating to the regulation of excess liability insurance. The adoption of the new sec.5.1201 is simultaneous with the repeal of the existing sec.5.1201. The new section is necessary to provide procedures and requirements for insurers writing personal and commercial umbrella liability insurance in Texas. An umbrella policy cannot be written with automobile liability insurance as the only primary underlying coverage. An insured that has some auto liability exposure is required to have at least two primary liability policies including an auto liability policy as a condition for obtaining umbrella coverage. An individual may self-insure for the required minimum limits in lieu of purchasing an auto policy. The group of individuals who do not have an auto liability exposure are not required to purchase an auto liability policy or self-insure and are only required to have a single underlying liability policy. The limits for commercial automobile liability coverage have to be at least $100,000 per person, $300,000 per occurrence with respect to bodily injury liability, and $50,000 per accident or occurrence with respect to property damage or combined single limits of $350,000. The limits for private passenger automobile liability have to be at least $100,000 per person, $300,000 per occurrence for bodily injury, and $25,000 per accident or occurrence for property damage or combined single limits of $325,000. These requirements concerning automobile liability insurance are designed to prevent an umbrella liability policy from being used to circumvent the promulgated rates and forms for automobile insurance. The new section allows the payment provision of an umbrella policy to be written to indemnify the insured, pay to the insured, or pay on behalf of the insured. Under the previous rule an umbrella liability policy could be written only to indemnify the insured. This requirement is inconsistent with the concept of liability insurance. Under a liability policy the insurer is required to make payment although the insured has not yet suffered any loss, because, by definition, the purpose of a liability policy is to shield the insured from being required to make any payment on the claim for which he is liable. In contrast, under an indemnity contract the insurer is required to only indemnify the insured after he has sustained actual loss. This requires the insured to pay the damages and then be indemnified or reimbursed for those damages. Thus the distinction between an indemnity and liability policy is that payment by the insured is necessary under the indemnity contract, but not under the liability contract. If the damages are large, it is very probable that an insured would not have the funds to pay the damages or it might place a tremendous burden on the insured's financial resources. It is more in line with the concept of liability insurance to have a "pay on behalf of" payment provision so that the insured's financial resources are not jeopardized by paying the damages out of his own pocket and then seeking indemnification. The new section allows for umbrella policies to include defense coverage, but it is not required. If defense coverage is provided, the policy is required to pay certain supplementary costs without reducing the policy limits. These costs include all expenses the insurer incurs, prejudgment and post judgment interest, and expenses incurred by the policyholder including up to $100 per day for lost earnings while helping the insurer defend the case. The new section provides that on all umbrella policies, exposures not covered by primary liability insurance would be subject to optional self-insured retentions. The minimum required limits for exposures covered by primary liability insurance, other than auto liability, would be the basic limits of liability for each primary liability insurance coverage. The new section prohibits individual (a) rate submissions departing from an insurer's approved rating plan for commercial or personal umbrella liability policies. This change was necessary because Article 5.13-2, which governs commercial umbrella liability policies, does not contain provisions allowing for (a) rate submissions. In response to comments several changes were made to the section. Subsection (c)(2) was changed to add language to differentiate the group of individuals who have an auto liability exposure from the group who have no auto liability exposure and should not be required to own an auto liability policy. New subsection (e)(3) was added to define the group of individuals with no auto liability exposure and permit them to qualify for an umbrella liability policy without requiring auto liability as a primary coverage. This change was necessary because there is a segment of the population who have no auto liability exposure and, therefore, have no need to own an auto policy, but still desire umbrella coverage to protect them for other liability exposures. Subsection (d)(2) concerning defense coverage was changed to clarify that defense coverage is optional. In subsections (a)(4) and (f)(2), the word "retentions" was replaced with the word "limits" because policy limits were being referenced rather than retentions. In subsection (b)(4) the word "insurance' was added to clarify this definition. Subsection (a) outlines the purpose and scope of the new section. Subsection (b) defines terms used in the new section. Subsection (c) addresses the general requirements for the underlying primary liability insurance for writing umbrella liability insurance. Subsection (d) specifies policy provisions which are required or may be included in umbrella liability policy forms filed for approval. This subsection allows insurers writing umbrella liability insurance to convert from an indemnity payment provision to a "pay on behalf of" payment provision. This new subsection also allows insurers to offer defense coverage and it specifies the supplementary payments required for insurers electing to provide defense coverage. Subsection (e) specifies the insured or retained automobile liability minimums that are required for writing umbrella liability insurance. Subsection (f) addresses the self-insured retentions and minimum required limits on primary liability insurance that are required for writing umbrella liability insurance. Subsection (g) specifies the filing procedures for rating plans, policy and endorsement forms, and statistical data for insurers writing personal umbrella liability coverage, and specifies that (a) rate applications for personal umbrella policies will no longer be accepted after November 1, 1995. Subsection (h) addresses the filing procedures for rating plans, policy and endorsement forms, and statistical data for insurers writing commercial umbrella liability insurance and specifies that (a) rate applications for commercial umbrella policies will no longer be accepted after November 1, 1995. No position with changes: State Farm Insurance Companies and Government Employees Insurance Company. Comment: One commenter expressed concern that subsection (c)(2) requiring two primary liability policies, one of which must be an automobile liability policy, was unfair to umbrella policyholders who for various reasons, such as physical, disability cannot drive and do not own an automobile. Response: The Department agrees that there is a segment of the population who have no automobile liability exposure and, therefore, have no need to own an auto policy, but may still desire umbrella coverage to protect them from other liability exposures. Subsection (c) was amended to add language to paragraph (2), and new paragraph (3) was added to address these concerns. Paragraph (2), as amended, differentiates the group of individuals who have an automobile liability exposure from the group who have no auto liability exposure and should not be required to own an auto policy. New subsection (3) defines the group of individuals with no auto liability exposure and permits them to obtain an umbrella liability policy without requiring auto liability as a primary coverage, but it does require that auto liability be excluded from the umbrella liability policy. The reason for this requirement is that auto liability rates and forms are regulated. If the Department allowed an insurer to write an umbrella policy with auto liability coverage for an individual who had an auto exposure, but had no auto policy, it would be substituting the umbrella auto liability coverage and rate for the prescribed auto liability coverage and rate. Comment: One commenter expressed concern that subsection (c)(2) which requires an umbrella policyholder to have two primary liability policies in order to be eligible for umbrella coverage encourages "tie-in" sales because many persons needing only one primary coverage would be forced to purchase another primary liability policy in order to meet this requirement. Response: The Department disagrees that subsection (c)(2) encourages "tie-in" sales. The Department has amended (c)(2) so that not all individuals are required to have two underlying policies. Only the group of individuals who have an auto exposure are required to have an auto policy and one other liability policy. However, the reason at least two policies are required due to an insured having an auto exposure, is that the Department has a duty to regulate auto insurance and must not allow an umbrella policy to circumvent the auto regulatory scheme. A "tie-in" sale is not related to a regulatory requirement, but is a requirement imposed by the insurer; therefore, the requirement in the section cannot be equated with "tie-in" sales. Comment: One commenter asserted that subsection (c) goes beyond a reasonable regulatory requirement because the two underlying policies, with one required to be automobile liability, establish an underwriting guideline which is beyond the grant of authority to the Department or the Commissioner in Articles 5.13, 5.13- 2 or 5.15. Response: The Department disagrees. The Legislature clearly intended that the Department promulgate personal and commercial auto policy forms and prescribe a range of rates through the benchmark rate process. The Legislature has further mandated that all individuals who operate a motor vehicle show proof of financial responsibility either through insurance or some other acceptable means. If the Department did not place requirements on the underlying auto liability coverage of an umbrella policy, an umbrella policy with auto liability coverage could be written for an individual who opted not to purchase a personal auto policy. This would allow the individual and the insurer to circumvent the regulatory scheme mandated by the Legislature that the policy forms and rates for auto insurance be strictly regulated. Comment: One commenter voiced concern that subsections (e)(3) and (e)(4), which recognize that persons who self-insure their auto liability exposure are eligible for umbrella coverage, are in conflict with subsection (c)(2) requiring an auto policy as an underlying coverage. Response: The Department agrees. Language has been added to subsection (c) (2) to clarify that self-insurance in the amounts specified in this section may be substituted for purchasing an auto liability policy. Comment: One commenter expressed concern that the definition of umbrella liability insurance in subsection (b)(4) was unclear and could be construed to require insurers to cover a business liability policy with a personal umbrella policy. Response: The Department disagrees. Subsection (b)(4) is a definition and does not contain any requirements regarding the writing of umbrella policies, but is merely a general description of both commercial and personal umbrella policies. It is not the Department's intent to require an insurer to cover a business liability policy with a personal umbrella. The distinction is made between personal and commercial umbrella policies in subsections (e), (g), and (h), and this distinction would be meaningless if insurers were required to cover commercial exposures such as business liabilities under a personal umbrella. Comment: One commenter expressed concern that subsection (b)(4) was written to say that any legal liability not excluded will be covered under the umbrella policy and that the product is not priced for that type of unlimited exposure for unforeseen items. The commenter suggested adding the word "some" before the word "exposures" in the second sentence of (b)(4). Response: The Department disagrees that language should be added to (b)(4). It is the Department's position that any legal liability not excluded would be covered under an umbrella policy. The Department is not dictating to the insurer how the umbrella policy should be priced. It is up to each individual insurer to develop a comprehensive application and have knowledgeable underwriters on staff to evaluate the applications and properly price the umbrella policies. Comment: One commenter expressed concern that subsection (d)(2) was unclear regarding whether defense coverage was optional. Response: The Department agrees. Language was deleted and new language added to clarify that defense coverage is optional. Comment: One commenter wanted the minimum required limits in subsection (e) for personal auto liability coverage set at the higher limit of 300/300/50. Response: The Department does not believe that the minimum required limits for personal auto liability coverage should be increased because it does not impair an insurer's ability to set higher minimum policy limits. The current limits of 100/300/25 for personal auto liability are merely a floor that insurers cannot go below. However, an insurer could set the policy limits at 300/300/50 or higher on their personal umbrella policy by simply filing a manual rule. Comment: One commenter requested that language be added to allow exclusion of uninsured or underinsured motorist coverage in the umbrella policy. Comment: The Department does not consider this to be necessary because these coverages can already be excluded if an insurer files a policy or endorsement excluding this coverage. The section does not prohibit the exclusion of uninsured or underinsured motorist coverage from an umbrella liability policy. The section is adopted under the Insurance Code, Articles 5.13, 5.13-2, 5.15, 5.98, and 1.03A and the Government Code sec.sec.2001.004 et seq. Articles 5.13 and 5.15 authorize the commissioner to approve policy and endorsement forms and rates for personal liability insurance. Article 5.13-2 authorizes the commissioner to approve policy forms, endorsements, and other related forms for commercial liability insurance. Article 5.98 authorizes the commissioner to adopt reasonable rules and rates that are appropriate to accomplish the purposes of Chapter 5. 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. authorizes and requires each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedure for adoption of rules by a state administrative agency. sec.5.1201.Regulation of Umbrella Liability Insurance. (a) Purpose and Scope. The purpose and scope of this section is to specify procedures and requirements for those insurers writing personal and commercial umbrella liability insurance in Texas. These procedures and requirements address: (1) general requirements for underlying primary liability insurance for umbrella liability insurance; (2) certain policy provisions which are required and policy provisions which are optional in umbrella liability policy forms; (3) the minimum insured automobile liability or retained automobile liability that is required for writing an umbrella liability policy; (4) the minimum required limits on primary liability insurance, other than automobile insurance, and self-insured retentions; and (5) the procedures for filing rating plans, forms, and statistical data by insurers who write commercial and personal umbrella liability insurance. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Excess liability insurance--liability insurance which provides coverage for a liability loss that is above the policy limit of the primary liability insurance coverage. (2) Primary liability insurance--liability coverage that provides benefits up to the limits of the liability policy regardless of other insurance policies in effect. The primary liability insurance is specified as underlying coverage in the umbrella liability insurance policy. (3) Self-insured retention--the portion of a liability loss that will be paid by the umbrella policyholder where the umbrella policyholder does not have primary liability insurance to cover the loss. (4) Umbrella liability insurance--excess liability insurance coverage above the limits of automobile liability and business or personal liability policies. The umbrella policy also provides liability coverage for exposures not covered under the primary liability insurance policies and not excluded by the umbrella liability insurance policy. (c) General Requirements for Umbrella Liability Insurance. The requirements for the primary liability insurance for writing umbrella liability insurance are as follows: (1) an umbrella liability insurance policy cannot be written with automobile liability insurance as the only primary liability insurance coverage; (2) if the insured has some automobile liability exposure, then an umbrella liability insurance policy shall have automobile liability insurance as a primary liability insurance coverage or the individual may be self-insured, pursuant to the Transportation Code sec.601.124, with the limits specified in subsections (e)(3) and (e)(4) of this section and is required to have at least one other type of liability insurance as a primary liability insurance coverage in addition to the automobile liability insurance; and (3) if the insured does not have an automobile liability exposure, then the insured is not required to have automobile liability insurance and is only required to have one type of liability insurance as a primary coverage, however, if the insured does not have automobile liability insurance as a primary coverage, then automobile liability coverage shall be excluded from the umbrella liability insurance policy. (d) Policy Provisions. The following are policy provisions which are required or may be included in umbrella liability policy forms filed for approval. (1) The payment provision in umbrella liability insurance policies shall be written to indemnify the insured, pay to the insured or pay on behalf of the insured, losses in excess of the specific required retention(s) or underlying insurances. (2) It is optional whether umbrella liability insurance policies provide for defense as a coverage. If defense is provided, the following supplementary payments shall be included in the policy and paid by the insurer with respect to any claim or suit that the insurer defends. These supplementary payments shall not reduce the limits of the umbrella liability insurance policy. (A) All expenses the insurer incurs. (B) Up to $250 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the bodily injury liability coverage applies. The insurer does not have to furnish these bonds. (C) The cost of bonds to release attachments, but only for bond amounts within the applicable limit of insurance. The insurer does not have to furnish these bonds. (D) All reasonable expenses incurred by the insured at the insurer's request to assist the insurer in the investigation or defense of the claim or suit, including actual loss of earnings up to $100 a day because of time off from work. (E) All costs taxed against the insured in the suit. (F) Prejudgment interest awarded against the insured on that part of the judgment the insurer pays. If the insurer makes an offer to pay the applicable limit of insurance, the insurer shall not pay any prejudgment interest based on that period of time after the offer. (G) All interest on the full amount of any judgment that accrues after entry of the judgment and before the insurer has paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance. (e) Required Insured or Retained Automobile Liability Minimums. The required insured or retained automobile liability minimums shall be no less than one of the following: (1) for commercial automobile liability coverage, policy limits of not less than $100,000 each person, $300,000 each accident or occurrence with respect to bodily injury liability and $50,000 each accident or occurrence with respect to property damage liability or combined single limits for bodily injury and property damage liability of not less than $350,000; (2) for personal automobile liability coverage, policy limits of not less than $100,000 each person, $300,000 each accident or occurrence with respect to bodily injury liability and $25,000 each accident or occurrence with respect to property damage liability or combined single limits for bodily injury and property damage liability of not less than $325,000; (3) for persons who are self-insured, pursuant to the Transportation Code sec.601.124, with respect to automobiles eligible for personal automobile coverage, a retention of automobile bodily injury liability and property damage liability of not less than $100,000 for bodily injury to or death of one person in one accident, $300,000 for bodily injury to or death of two or more persons in one accident and $25,000 for damage or destruction of property or a combined retention of bodily injury and property damage liability of $325,000; or (4) for persons who are self-insured, pursuant to the Transportation Code sec.601.124, with respect to automobiles eligible for commercial automobile coverage, a retention of automobile bodily injury liability and property damage liability of not less than $100,000 for bodily injury to or death of one person in one accident, $300,000 for bodily injury to or death of two or more persons in one accident and $50,000 for damage or destruction of property or a combined retention of bodily injury and property damage liability of $350,000. (f) Self-Insured Retentions And Minimum Required Retentions On Primary Liability Insurance. (1) On all umbrella liability insurance policies, the exposures not covered by primary liability insurance shall be subject to optional self-insured retentions. (2) On all umbrella liability insurance policies, the minimum required limits for exposures covered by primary liability insurance (other than automobile liability insurance) shall be at least the basic limits of liability for each primary liability insurance coverage. (g) Rate, Form, and Data Filing Procedures for Personal Umbrella Liability Insurers. (1) Each insurer writing personal umbrella liability insurance shall file with the commissioner a rating plan and rules on a prior approval basis. Policy and endorsement forms proposed to be used with such rating plan and rules shall be filed with the commissioner on a prior approval basis. Statistical data on personal umbrella liability insurance shall be filed and maintained in accordance with the prescribed statistical plan. These filings shall be processed in accordance with the commissioner's requirements and the requirements of Article 5.15 of the Insurance Code. (2) No individual (a) rate, being filed as a departure from the insurer's approved rating plan for personal umbrella liability insurance, shall be utilized after November 1, 1995. (h) Rate, Form, and Data Filing Procedures for Commercial Umbrella Liability Insurance. (1) Each insurer writing commercial umbrella liability insurance shall file with the commissioner a rating plan and rules on a file and use basis. Policy and endorsement forms proposed to be used with such rating plan and rules shall be filed with the commissioner on a prior approval basis. Statistical data on commercial umbrella liability insurance shall be filed and maintained in accordance with the prescribed statistical plan. These filings shall be processed in accordance with the commissioner's requirements and the requirements of Article 5.13-2 of the Insurance Code. (2) No individual (a) rate application, being filed as a departure from the insurer's approved rating plan for commercial umbrella liability insurance, shall be utilized after November 1, 1995. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 13, 1997. TRD-9703531 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: April 1, 1997 Proposal publication date: November 12, 1996 For further information, please call: (512) 463-6327 SUBCHAPTER C.Texas Medical Liability Insurance Underwriting Association 28 TAC sec.5.2004 The Commissioner of Insurance adopts amendments to sec.5.2004, concerning medical liability insurance and eligibility for insurance through the Texas Medical Liability Insurance Underwriting Association. Section 5.2004 is adopted without changes to the proposed text as published in the February 14, 1997 issue of the Texas Register (22 TexReg 1708), and will not be republished. The amendment is necessary to incorporate provisions for financially sound plans of self-insurance that meet the established criteria. The amendment changes a portion of the Plan of Operation of the Texas Medical Liability Insurance Underwriting Association (Texas JUA). The amendment clarifies that Texas hospitals and other health care providers with employed or contracted professional staff members insured by certain Self-Insurance Trusts and Medical Professional Liability Funds are eligible for insurance through the Texas JUA. These entities are authorized by article 21.49-4 and 4a of the Insurance Code and Chapter 59 of the Education Code. Among such entities are the Texas Medical Liability Trust (TMLT) sponsored by the Texas Medical Association and the Medical Professional Liability Plan of The University of Texas System Professional Medical Liability Self-Insurance Plan. It came to the attention of the Texas JUA that the authorizing statutes for such entities use the words "self-insurance" either in the title or the text. The term "self-insurance" is also used in the approved JUA application to clarify that self-insurance programs are not acceptable as fulfilling the individual medical professional liability insurance requirement. It declares Texas hospitals and other health care providers ineligible for insurance if they have any physicians or health care professionals insured by either TMLT or the University of Texas Plan. This is contrary to the intent of the Legislature in establishing the JUA. TMLT insures over seven thousand Texas physicians. The University of Texas Plan and the similar Texas Tech Plan insure approximately four thousand and eight hundred physicians each respectively. Both TMLT and The University of Texas System have submitted evidence to the Department of Insurance that they operate on an actuarially sound basis. Each is authorized by appropriate statute. Failure to recognize these plans as meeting the JUA's underwriting requirement as individual medical professional liability insurance for employed or contracted health care professionals at other health care facilities would disrupt the professional medical liability self-insurance arrangements of a large portion of the Texas health care industry. The amendment clarifies this situation by listing each eligible insuring entity by type including those authorized under the Texas Insurance Code, Article 21.49-4 and Chapter 59 of the Education Code. This amendment also clarifies that the Texas JUA's underwriting requirement for individual medical professional liability insurance does not apply to registered nurses. The amendment clarifies that Texas hospitals and other health care providers with employed or contracted professional staff members insured by certain Self- Insurance Trusts and Medical Professional Liability Funds are eligible for insurance through the Texas JUA. The amendment will prevent the disruption of medical professional liability insurance arrangements common throughout Texas among doctors and hospitals, which insure in whole or in part with the Texas JUA. The amendment will clarify this situation by listing each eligible insuring entity by type including those authorized under the Texas Insurance Code, Article 21.49-4 and Chapter 59 of the Education Code. This amendment also clarifies that JUA's underwriting requirement for individual medical professional liability insurance does not apply to registered nurses. The amendment includes financially sound, self-funded plans of medical malpractice insurance as acceptable insuring entities. The criteria established in the amendment eliminates plans which are not financially and actuarially sound. The amendment allows those self-funded plans that are sound and have been functioning at hospitals insured by JUA to continue operations and prevents disruption of patient care delivery in JUA insured hospitals. No comments were received regarding the adopted amendment. The amendment is adopted under the Insurance Code, Articles 21.49-3 and 1.03A, and 28 Texas Administrative Code sec.5.2005. Article 21.49-3 sec.3(C)(4) authorizes the Texas Department of Insurance to amend the plan of operation of the Texas JUA at the direction of the commissioner. 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. Section 5.2005 authorizes amendments to the Texas JUA Plan of Operation. 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. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 13, 1997. TRD-9703629 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Effective date: April 7, 1997 Proposal publication date: February 14, 1997 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION PART II. Texas Parks and Wildlife Department CHAPTER 61.Design and Construction Guidelines for Administration of Texas Local Parks, Recreation, and Open Space Fund 31 TAC sec.sec.61.138-61.139 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing, January 23, 1997, adopted new sec.sec.61.138-61.139 concerning Guidelines for Administration of Texas Local Parks, Recreation, and Open Space Fund without changes to the text as proposed in the December 20, 1996 issue of the Texas Register (21 TexReg 12292). Provisions of HB 706, enacted by the 73rd Texas Legislature, allowed assistance for indoor recreation projects through the Texas Recreation and Park Account Local Grant Program. The proposed new sections enact these indoor recreation provisions. The TRPA indoor recreation program will be administered pursuant to the TRPA Grants Manual. Provisions of HB 706, enacted by the 73rd Texas Legislature, allowed assistance for indoor recreation projects through the Texas Recreation and Park Account Local Grant Program. The proposed new sections enact these indoor recreation provisions provided in this legislation. The new rules establish system of administration for the Indoor Recreation Program of the Texas Recreation and Parks Account. When revenues to the TRPA exceed $14 million per year, an amount not to exceed 15% shall be made available for grants to local governments for up to 50% of the cost of acquisition or development of indoor public recreation facilities for indoor recreation programs. The TRPA indoor recreation program will be administered pursuant to the TRPA Grants Manual. Copies of the TRPA Grant Manual may be obtained by contacting Mr. Tim Hogsett, 4200 Smith School Road, Austin, Texas, 78644 or by calling (512) 912-7124. The department received no comments concerning the proposed new TRPA Indoor Recreation Program rules. The new rules are adopted under authority of Parks and Wildlife Code, sec.24.005. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1997. TRD-9703546 Bill Harvey Regulatory Coordinator Texas Parks and Wildlife Department Effective date: April 2, 1997 Proposal publication date: December 20, 1996 For further information, please call: (512) 389-4642 PART XVI. Coastal Coordination Council CHAPTER 504. Coastal Management Program The Coastal Coordination Council (Council) adopts new sec.504.1, concerning Permitting Assistance, sec.sec.504.10-504.13, concerning to Small Business Permitting Assistance, sec.sec.504.20-504.24 concerning Preliminary Consistency Review, and sec.504.30, concerning Assistance With Federal Actions, without changes to the proposed text as published in the January 10, 1997, issue of the Texas Register (22 TexReg 684). The Council adopts the sections to provide ways of more efficiently and effectively managing coastal resources. The sections set up processes whereby state agency staff time and resources are focused on resolving issues with proposed permits early in the permitting process, rather than later in the process when it is much more difficult, time consuming, and expensive for both agencies and the applicant to make changes to the proposed project. No comments were received regarding adoption of the new sections. SUBCHAPTER A. Permitting Assistance 31 TAC sec.504.1 The new section is adopted under Texas Natural Resources Code, sec.33.205, which provides the council with the authority to adopt rules establishing permitting assistance programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1997. TRD-9703568 Garry Mauro Chairman Coastal Coordination Council Effective date: April 3, 1997 Proposal publication date: January 10, 1997 For further information, please call: (512) 305-9129 SUBCHAPTER B. Small Business Permitting Assistance 31 TAC sec.sec.504.10-504.13 The new sections are adopted under Texas Natural Resources Code, sec.33.205, which provides the council with the authority to adopt rules establishing permitting assistance programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1997. TRD-9703567 Garry Mauro Chairman Coastal Coordination Council Effective date: April 3, 1997 Proposal publication date: January 10, 1997 For further information, please call: (512) 305-9129 SUBCHAPTER C. Preliminary Consistency Review 31 TAC sec.sec.504.20-504.24 The new sections are adopted under Texas Natural Resources Code, sec.33.205, which provides the council with the authority to adopt rules establishing permitting assistance programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1997. TRD-9703566 Garry Mauro Chairman Coastal Coordination Council Effective date: April 3, 1997 Proposal publication date: January 10, 1997 For further information, please call: (512) 305-9129 SUBCHAPTER D. Assistance with Federal Actions 31 TAC sec.504.30 The new section is adopted under Texas Natural Resources Code, sec.33.205, which provides the council with the authority to adopt rules establishing permitting assistance programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 14, 1997. TRD-9703565 Garry Mauro Chairman Coastal Coordination Council Effective date: April 3, 1997 Proposal publication date: January 10, 1997 For further information, please call: (512) 305-9129 PART V. Texas Board of Pardons and Paroles CHAPTER 145.Parole Parole Process 37 TAC sec.145.4 The Texas Board of Pardons and Paroles adopts new sec.145.4, concerning policy statements relating to consecutive felony sentences, without changes to the proposed text as published in the December 24, 1996, issue of the Texas Register (21 TexReg 12395), and as corrected in the January 31, 1997 issue of the Texas Register (22 TexReg 1267). The Board adopts new sec.145.4 in order to clarify that a Board panel is required to treat consecutive sentences individually and in sequence for the purposes of parole decisionmaking. The Board received one comment on the proposed new rule from the Executive Director of TDCJ, suggesting wording for policy and voting issues. The Board has incorporated most of these suggestions into proposed new Board Rule sec.145.13 which will be published at a later date and Board of Pardons and Paroles Policy 97-3.01, approved by the Board on March 6, 1997. The new rule is adopted under the Code of Criminal Procedure, Article 42.18, sec.7 and sec.8 (a)- (g), which provide a parole panel with the authority to release inmates eligible for parole. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 17, 1997. TRD-9703602 Laura McElroy General Counsel Texas Board of Pardons and Paroles Effective date: April 7, 1997 Proposal publication date: December 24, 1996 For further information, please call: (512) 463-1883 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 3.Income Assistance Services The Texas Department of Human Services (DHS) adopts the repeal of sec.3.1203; amendments to sec.3.1201 and sec.3.1202; and new sec.3.1203 and sec.3.1204, concerning failure to comply, work requirements, and subsequent eligibility in its Income Assistance Services chapter. The purpose of the repeal, amendments, and new sections is to include information mandated by federal law as a result of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and the Omnibus Budget Reconciliation Act of 1996. The title of Subchapter L is changed to "Work Requirements" to be more inclusive of the required employment process. The repeal, amendments, and new sections will function by ensuring that DHS will be in compliance with federal law. SUBCHAPTER L.Work Requirements 40 TAC sec.sec.3.1201-3.1204 The amendments and new sections are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. The amendments are adopted in compliance with federal requirements effective August 22, 1996. The amendments and new sections implement the Human Resources Code sec.sec.22.001-22.030. sec.3.1201.Employment and Training Requirements. (a) In all Food Stamp Employment and Training (E&T) Program counties each food stamp household member age 16 through 59 who is not exempted by 7 Code of Federal Regulations sec.273.7(b) must meet work registration requirements stipulated in 7 Code of Federal Regulations sec.273.7. (b) In all E&T counties the Texas Department of Human Services (DHS) pays for support services necessary for participation in the employment and training program as stipulated in sec.10.2304(1) of this title (relating to Employment Services). sec.3.1202.Failure To Comply. (a) In all Food Stamp Employment and Training (E&T) Program counties, the Texas Department of Human Services (DHS) penalizes households when a member fails to comply with work requirements stipulated in the Food Stamp Act of 1977, sec.6(d), (codified at 7 United States Code (USC) sec.2015(d)), as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Public Law Number 104- 193, Title VIII, sec.815. A household is denied for the period specified in subsection (b) of this section when the primary wage earner fails to comply with work requirements without good cause. A household member is disqualified for the period specified in subsection (b) of this section when a household member, who is not the primary wage earner, fails to comply with work requirements without good cause. (b) The penalty periods for noncompliance are: (1) first offense, until the client complies; (2) second offense, three months or until the client complies, whichever is later; and (3) third or subsequent offense, six months or until the client complies, whichever is later. 3.1203. Work Requirement. Pursuant to the requirements in sec.6 of the Food Stamp Act of 1977, (codified at 7 United States Code (U.S.C.) sec.2015), as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Public Law Number 104-193, Title VIII, sec.824, the Texas Department of Human Services (DHS) restricts food stamp eligibility of an individual to three months in a thirty-six month period if the individual does not meet the work requirements defined in 7 U.S.C. sec.2015 (o)(1) and (2), unless they are exempt as specified in 7 U.S.C. sec.2015(o)(3) or they reside in a federally approved waiver area to which this provision does not apply as prescribed for in 7 U.S.C. sec.2015(o)(4). 3.1204. Subsequent Eligibility. As specified in 7 United States Code sec.2015(o)(5), individuals disqualified due to this provision regain their eligibility if they subsequently begin meeting the work requirement and those individuals qualify for a second three month period of extended participation if they subsequently fail to continue meeting the 20-hour- per-week work requirement. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 12, 1997. TRD-9703431 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: August 22, 1996 Proposal publication date: N/A For further information, please call: (512) 438-3765 40 TAC sec.3.1203 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas Department of Human Services or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The repeal is adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. The repeal is adopted in compliance with federal requirements effective August 22, 1996. The repeal implements the Human Resources Code sec.sec.22.001-22.030. sec.3.1203.Who May Volunteer This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 12, 1997. TRD-9703432 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: August 22, 1996 Proposal publication date: N/A For further information, please call: (512) 438-3765