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. Texas Department of Insurance PROPOSED ACTION The Commissioner of Insurance will hold a public hearing under Docket Number 2312 on December 3, 1997, at 10:00 a.m. in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, to consider a petition by the staff of the Texas Department of Insurance proposing numerous changes to the Homeowners and Dwelling sections of the Texas Personal Lines Manual (Manual) to implement the use of Public Protection Classifications (PPC) under the Fire Suppression Rating Schedule and to implement other necessary changes to the form and rating rules and rating tables and premium charts in these two sections. The petition also requests adoption of amendments to the declarations pages of Texas Homeowners Policy forms and Texas Dwelling Policy forms to implement the use of Public Protection Classifications under the Fire Suppression Rating Schedule. The petition requests consideration and adoption of: (1) in the Homeowners Section of the Texas Personal Lines Manual: (a) new rating rules, amendments to rating rules, and repeal of rating rules in Subsection VI to implement the use of Public Protection Classifications under the Fire Suppression Rating Schedule, in lieu of key rates, as a rating component in determining premiums for coverage under Texas Homeowners Policy forms; (b) new rate tables and premium charts, amendments to current rate tables and premium charts, and the repeal of current rate tables and premium charts to implement the use of Public Protection Classifications under the Fire Suppression Rating Schedule, in lieu of key rates, as a rating component in determining premiums for coverage under Texas Homeowners Policy forms; (c) changes to form and rating rules unrelated to implementation of the PPC system, including (i) repeal of Rule III-C, Minimum Coverage; (ii) amendment of Rule IV-A-14-h, Windstorm, Hurricane, and Hail Exclusion Endorsement and of the related Rating Examples; (iii) amendment of form rules to move applicable premium charges currently in the rules to new premium charts in the Rate Tables and Premium Charts subsection and to reference these charts in the rules, including Rule IV-A-12, Personal Computer Coverage; Rule IV-A-18, Unit Owners Outbuildings and Other Structures Coverage Endorsement HO-180; Rule IV-C-1, Townhouse Loss Assessment Coverage; Rule IV-C-3, Condominium Loss Assessment Coverage; and Rule IV-C-4, Neighborhood Homeowners Loss Assessment Coverage Endorsement HO-315; (iv) amendment of Rule VI-F, Specifically Rated Risks, to include the rating factors for fire resistive and semi-fire resistive and sprinklered risks currently in Premium Chart Number 4 - Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C which is proposed to be repealed; and (v) amendment of Rule VI-M-1, Premium Computation, relating to renewal policies; (d) changes to rate tables and premium charts unrelated to implementation of the PPC system, including: (i) amendments to specify premiums in dollars and cents in lieu of premiums rounded to the nearest dollar; and (ii) amendment of rating tables to reflect the fact that there is no longer a property minimum premium rule; and (iii) new premium charts that have been moved from rules in Subsection IV, Optional Additional Coverages and Endorsements; (2) in the Dwelling Section of the Texas Personal Lines Manual: (a) new rating rules, amendments to rating rules, and repeal of rating rules in Subsection VI to implement the use of Public Protection Classifications under the Fire Suppression Rating Schedule, in lieu of key rates, as a rating component in determining premiums for coverage under Texas Dwelling Policy forms; (b) new rate tables and premium charts, amendments to current rate tables and premium charts, and the repeal of current rate tables and premium charts to implement the use of Public Protection Classifications under the Fire Suppression Rating Schedule, in lieu of key rates, as a rating component in determining premiums for Texas Dwelling Policy forms; (c) changes to form and rating rules unrelated to implementation of the PPC system, including (i) repeal of Rule III-C, Minimum Coverage; (ii) amendment of Rule VI-C-2-a, Additional Premium Modifications, Tenant Occupancy Charge, to move the premium chart currently in the rule to the Rate Tables and Premium Charts subsection and to reference the chart in the rule; (iii) amendment of Rule VI-H-1-a on Premium Computation, relating to renewal policies and amendment of the rating example to provide for the flex calculation after the deductible calculation; and (iv) amendment of Rule VI-I, Interpolation of Premium; (d) changes to rate tables and premium charts unrelated to implementation of the PPC system, including: (I) amendments to specify premiums in dollars and cents in lieu of premiums rounded to the nearest dollar; (ii) amendment of rating tables to reflect the fact that there is no longer a property minimum premium rule; (iii) new premium chart that has been moved from Rule VI-C-2-a, Additional Premium Modifications, Tenant Occupancy Charge, to the Rate Tables and Premium Charts subsection; (iv) amendment of the instructions in the Deductible Adjustment Percentage Schedule; (v) rearrangement of rating tables. (3) non-substantive editorial changes in both the Homeowners and Dwelling Sections of the Texas Personal Lines Manual, including (a) updating of references, including change of former State Board of Insurance to the Texas Department of Insurance, change of Texas Catastrophe Property Insurance Association to Texas Windstorm Insurance Association, and correction of references to the Farm and Ranch and Farm and Ranch Owners Manual; (b) formatting, organizational, wording, and editorial changes for purposes of consistency and readability; and correction of misspelled words. (4) amendments to the declarations pages of Texas Homeowners Policy forms and Texas Dwelling Policy forms to implement the use of Public Protection Classifications. In addition, some tables and charts in both the Homeowners Section and Dwelling Section have been changed based on the adoption of new rating methodology and new rates and factors adopted under Commissioner's Order Number 97-0840 (August 21, 1997) which adopted benchmark rates for residential property, homeowners, tenants, dwelling fire, extended coverage, additional extended coverage and physical loss form effective February 1, 1998. No changes are proposed to the Farm and Ranch and Farm and Ranch Owners Sections of the Texas Personal Lines Manual. Pursuant to S.B. 1499 enacted by the 75th Legislature (Acts 1997, 75th Leg., p. 5030, ch. 1330, sec.1, eff. Sept. 1, 1997) farm and ranch and farm and ranch owners insurance is no longer regulated as a personal lines coverage but rather is regulated as commercial property insurance under Article 5.13-2 of the Insurance Code. However, the farm and ranch and farm and ranch owners form and rating rules and tables shall continue to be used by insurers who write such coverage under the Property Protection Program for designated underserved areas pursuant to Article 5.35-3 of the Insurance Code, and therefore the Farm and Ranch and Farm and Ranch Owners Sections are retained in the Texas Personal Lines Manual without change. PPC System. The petition requests consideration and adoption of several changes to the Homeowners and Dwelling sections of the Texas Personal Lines Manual (Manual) that are necessary to implement the use of Public Protection Classifications (PPCs) under the Fire Suppression Rating Schedule, in lieu of key rates, as a rating component in determining premiums to be charged for residential property insurance in Texas. Subsection VI of the Homeowners Section and Subsection VI of the Dwelling Section contain rating rules for determining the applicable premium to be charged for the various residential property insurance policies in Texas issued on the various Texas Homeowners Policy Forms and Texas Dwelling Policy Forms. The current rules include the use of a "key rate" component which is based on the available public fire protection afforded to individual risks. Pursuant to Commissioner's Order Number 96-1377 (November 25, 1996), the Commissioner adopted a new rating schedule that no longer uses key rates as a rating component for determining residential property insurance premiums. Under the new system, the Fire Suppression Rating Schedule will be used to determine the PPCs for cities, towns, and unincorporated areas based on the fire protection afforded to the individual city, town, or unincorporated area. The premium for an individual risk will be developed in accordance with the proposed new rating rules by using the applicable PPC of the city, town, or unincorporated area in which the risk is located in lieu of the key rate of the city or town. The proposal includes (i) amendments to rating rules, rate tables and premium charts; (ii) new rating rules, rate tables and premium charts; and (iii) repeal of rating rules, rate tables and premium charts. Homeowners Section Rating Rules. The petition requests the repeal of four rating rules in Subsection VI of the Homeowners Section of the Manual that are based on key rating and adoption of four new rules based on the PPC system to replace these repealed rules. The rules proposed for repeal are (i) Rule VI-A-2, Rating Classifications relating to Protection Classifications which provides for the key rating of protected and unprotected areas; (ii) Rule VI-A-3, Determination of Key Rate, which specifies separate procedures for determining key rates for residential risks located in Class A protected areas, in Class B unprotected areas, in Class A unprotected fringe areas, and `in rural fire prevention districts or metropolitan county fire protection districts; (iii) Rule VI-B, Determination of Basic Premium, which provides procedures for determining the basic premium for Texas Homeowners HO-A, HO-B, and HO-C policy forms and Tenant Homeowners and Condominium forms using key rates and territorial multipliers; and (iv) Rule VI-J, Change in Premium, which provides procedures for computation of premium adjustment for change in hazard and includes use of key rates. The proposed new rules are (i) Rule VI-A-2, Public Protection Classification Codes which specifies the code for each protection class; (ii) Rule VI-A-3, Determination of Public Protection Class, which is necessary because the PPC system does not recognize protected and unprotected areas and does not provide any means to recognize certain unprotected areas which currently are allowed to fringe rate to a protected first key town; the proposed rule provides that the Public Protection Classes approved by the Texas Department of Insurance and listed in the Public Protection Class Manual apply to risks insured under Texas Residential Property Programs and provides methodology for determining the classification code in a municipality or classified area where two or more approved classifications are shown; (iii) Rule VI-B, Determination of Basic Premium, which is necessary to specify new procedures for determining the basic premium for Texas Homeowners Policy forms and Texas Tenant Homeowners and Condominium Policy forms which include use of the applicable protection class and elimination of the use of the territorial multiplier; the proposed rule includes rating examples; and (iv) Rule VI-J, Change in Hazard, which specifies new rating methodology using PPCs for a change in hazard during the policy period under a homeowners policy. Amendments are proposed to four rules in Subsection VI of the Homeowners Section to remove provisions based on the key rate system and to substitute or add provisions necessary to implement the new PPC system. These rules are: (i) Rule VI-C-1-a-(7)(b), Optional Homeowners Credits for Water Supply Points (Dry Hydrants); (ii) Rule VI-D, Interpolation, relating to determining premiums for any limit of liability in excess of the minimum policy amount not shown in the Amount of Insurance Factor Table, including a new example; (iii) Rule VI-I, Additional Amounts or Coverages, including an amended procedure to determine additional premium for an increase in Coverage A (Dwelling) to implement the PPC system; and (iv) Rule VI-M, Rate and Premium Computation Rule, including a new example illustrating revised premium computation procedure. Homeowners Section Rate Tables and Premium Charts. The proposal includes the repeal of the table on 1996 Homeowners Territorial Multipliers, Premium Chart Number 1 - Texas Homeowners Form A, Premium Chart Number 2 - Texas Homeowners Form B, and Premium Chart Number 3 - Texas Homeowners Form C and the replacement of these charts with three new tables: (i) Homeowners Table A, which specifies annual base premiums for deductibles Number 1 and 2 at 1% of Coverage A for the Form HOA, Form HOB, and Form HOC by territory; (ii) Tenant Homeowners - Table B which specifies protection/construction factors by type of construction and by Public Protection Class; and (iii) Tenant Homeowners - Table C, amount of insurance factor table. These new tables are based on new rating methodology and new rates and factors adopted under Commissioner's Order Number 97-0840 (August 21, 1997), which adopted benchmark rates for residential property, homeowners, tenants, dwelling fire, extended coverage, additional extended coverage and physical loss form. Also included are two new tables adopted under Commissioner's Order Number 97-0840: Homeowners - Table D-1, 10% Rate Capping Factors (First Year) and Homeowners - Table D-2, 21% Rate Capping Factors (Second Year). These tables provide factors to be applied to the premiums determined under the PPC system to limit the rate changes due solely to the conversion from the key rate to the PPC system. The proposal includes the repeal of the table on 1996 Tenant Territorial Multipliers and Premium Chart Number 4 - Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C (except that part of the chart for FR- SFR and Sprinklered Risks which is proposed to be included in Rule VI-F on specifically Related Risks and that part of the chart on the additive charge for Single Entrance to a Building which is proposed to be placed in proposed new Premium Chart Number 39) and the replacement of these charts with three new tables: (i) Tenant Homeowners Table A, which specifies annual base premiums for deductibles Number 3 at 1% of Coverage B for Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C by territory; (ii) Tenant Homeowners - Table B which specifies construction factors by type of construction and by Public Protection Class; and (iii) Tenant Homeowners - Table C, amount of insurance factor table. These new tables are based on new rating methodology and new rates and factors adopted under Commissioner's Order Number 97-0840 (August 21, 1997), Benchmark Rates for Residential Property, Homeowners, Tenants, Dwelling Fire, Extended Coverage, Additional Extended Coverage and Physical Loss Form. Also included are two new tables adopted under Commissioner's Order Number 97-0840: Tenant Homeowners - Table D-1, 20% Rate Capping Factors (First Year) and Homeowners - Table D-2, 44% Rate Capping Factors (Second Year). These tables provide factors to be applied to the premiums determined under the PPC system to limit the rate changes due solely to the conversion from the key rate to the PPC system. Dwelling Section Rating Rules. The petition requests the repeal of three rating rules in Subsection VI of the Dwelling Section of the Manual that are based on key rating and adoption of three new rules based on the PPC system to replace these repealed rules. The rules proposed for repeal are (i) Rule VI-A-2, Rating Classifications relating to Protection Classifications which provides for the key rating of protected and unprotected areas; (ii) Rule VI-A-3, Determination of Key Rate, which specifies separate procedures for determining key rates for risks located in Class A protected areas, in Class B unprotected areas, in Class A unprotected fringe areas, and `in rural fire prevention districts or metropolitan county fire protection districts; and (iii) Rule VI-B, Determination of Premium by Peril, which provides that premiums for each peril shall be determined for each item of insurance and provides procedures using key rates and territorial multipliers. The proposed new rules are (i) Rule VI-A-2, Public Protection Classification Codes which specifies the code for each protection class; (ii) Rule VI-A-3, Determination of Public Protection Class, which is necessary because the PPC system does not recognize protected and unprotected areas and does not provide any means to recognize certain unprotected areas which currently are allowed to fringe rate to a protected first key town; the proposed rule provides that the Public Protection Classes approved by the Texas Department of Insurance and listed in the Public Protection Class Manual apply to risks insured under Texas Residential Property Programs and provides methodology for determining the classification code in a municipality or classified area where two or more approved classifications are shown; (iii) Rule VI-B, Determination of Premium by Peril, which is necessary to specify new procedures for determining the premium for each peril for each item of insurance for Texas Dwelling Policy Forms TDP-1, TDP-2, and TDP-3; the proposed rule includes rating examples. Amendments are proposed to five rules in Subsection VI of the Dwelling Section to remove provisions based on the key rate system and to substitute or add provisions necessary to implement the new PPC system. These rules are: (i) Rule VI-C, Additional Premium Modifications relating to Public Housing Authority; (ii) Rule VI-D, Change in Policy Form; (iii) Rule VI-E, Additional Amounts or Coverage; (iv) Rule VI-H, Rate and Premium Computation Rule, including a new example illustrating revised premium computation procedure; and (v) Rule VI-J, Change in Hazard, relating to new procedures using PPCs for determining the additional or return premium to be charged or credited for a change in hazard during the policy period under a dwelling policy. Dwelling Section Rate Tables and Premium Charts. The proposal includes the repeal of Dwelling Premium Chart Number 1 and the replacement of this chart with (i) Dwelling - Table A which specifies one-year base fire rates for buildings or contents per $1,000 of coverage by type of construction and protection class; and (ii) Dwelling - Table B, which specifies low value factors, an historical multiplier applied to the dwelling fire base rate. These new tables are based on new rating methodology and new rates and factors adopted under Commissioner's Order Number 97-0840 (August 21, 1997), which adopts benchmark rates for residential property, homeowners, tenants, dwelling fire, extended coverage, additional extended coverage and physical loss form. Also included are two new tables adopted under Commissioner's Order Number 97-0840: Dwelling- Table C-1, 30% Rate Capping Factors (First Year) and Dwelling - Table C-2, 69% Rate Capping Factors (Second Year). These tables provide factors to be applied to the premiums determined under the PPC system to limit the rate changes due solely to the conversion from the key rate to the PPC system. Declarations Pages. The petition requests the adoption of amendments to the declarations pages of Texas Homeowners Policy forms and Texas Dwelling Policy forms to add an entry for indicating the PPC for the risk to be insured. Because of the capping of premiums for the first two years, it is necessary to continue to provide an entry for indicating the key rate as well as the PPC. Other Proposed Changes to Form and Rating Rules. The petition requests repeal of or amendments to several rules in the Homeowners and Dwelling sections of the Manual that are not related to implementation of the PPC system. This includes both form and rating rules. Two of these rules are contained in both the Homeowners and Dwelling sections: (i) repeal of Rule III-C, Minimum Coverage, in both sections; and (ii) amendment of Rule VI-M-1-a, Rate and Premium Computation, in the Homeowners Section and Rule VI-H-1-a, Rate and Premium Computation, in the Dwelling Section to change the premium computation for renewal policies from the current procedure in the first step of using the premium in effect on the policy renewal date to a new procedure that would allow insurers to use the base premium in effect on the policy renewal effective date. Homeowners Section. The petition requests amendment of Rule IV-A-14-h, Windstorm, Hurricane, and Hail Exclusion Endorsement relating to Deductible Adjustments in Subsection IV (Optional Additional Coverages and Endorsements) of the Homeowners Section. The proposed amendment excludes Deductible Clause Number 1 from the calculation of the total basic homeowners premium when Windstorm, Hurricane, and Hail Exclusion Endorsement Number HO-140 is attached to a homeowners policy. The petition requests adoption of amendments to rules in Subsection IV (Optional Additional Coverages and Endorsements) to move applicable premium charges currently in the rules to proposed new premium charts in the Rate Tables and Premium Charts subsection and to reference these charts in the rules, including amending (i) Rule IV-A-12, Personal Computer Coverage Endorsement, to reference new Premium Chart Number 36 for the applicable premium charge for the attachment of this endorsement; (ii) Rule IV-A-18, Unit Owners Outbuildings and Other Structures Coverage Endorsement HO-180 to reference new Premium Chart Number 37 for the applicable premium charge for the attachment of this endorsement; (iii) Rule IV-C-1, Townhouse Loss Assessment Coverage to reference New Premium Chart Number 38 for the applicable premium charge for the attachment of this endorsement; (iv) Rule IV-C-3, Condominium Loss Assessment Coverage to reference new Premium Chart Number 38 for the applicable premium charge for the attachment of this endorsement; and (v) Rule IV-C-4, Neighborhood Homeowners Loss Assessment Coverage Endorsement HO-315 to reference new Premium Chart Number 38 for the applicable premium charge for the attachment of this endorsement. The petition proposes to amend Rule VI-F, Specifically Rated Risks to include the rating factors for fire resistive and semi-fire resistive and sprinklered risks currently in Premium Chart Number 4 - Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C which is proposed to be repealed. The petition requests adoption of new Rule VI-B-2-f, Determination of Basic Premium as part of the rules needed to implement the PPC system; the rule also includes a reference to proposed new Premium Chart Number 39, Tenants Single Entrance to Building Surcharge. The premium charges in proposed new Premium Chart Number 39 are currently contained in Premium Chart Number 4 - Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C which is proposed to be repealed. Dwelling Section. The petition requests amendments to Rule VI-H, Rate and Premium Computation Rule, to repeal the current rating example and adopt a new rating example that includes the application of the flex calculation after the deductible calculation to correct an inadvertent error in the example. The petition requests an amendment to Rule VI-C-2-a, Additional Premium Modifications, Tenant Occupancy Charge to move the applicable premium charges from the text of the rule to a new Premium Chart Number 18 in the Rate Tables and Premium Charts subsection and to reference the new chart in the rule. The petition requests an amendment to Rule VI-I, Interpolation of Premium, relating to determining premiums for any amount of insurance not shown in the premium charts, including a new example. This amendment is necessary to conform this rule and rating example to the parallel rule and example in the Homeowners Section which is proposed for change because of the implementation of the PPC system. Other Proposed Changes to Rate Tables and Premium Charts. The petition requests amendments to several premium charts in both the Homeowners and Dwelling sections of the Manual. Amendments are proposed to premium charts for endorsements in both sections to provide for all premium amounts in dollars and cents in lieu of rounding these premium amounts to the nearest dollar. Some premium charts currently in both sections contain premium amounts rounded to the nearest dollar, but several charts do not. Homeowners Section. In the Homeowners Section, amendments are proposed to several existing premium charts to provide for all premium amounts in dollars and cents in lieu of rounding these premium amounts to the nearest dollar, including (i) Premium Chart Number 5, Unscheduled Residence Glass Coverage; (ii) Premium Chart Number 6, Jewelry, Watches and Furs - Increased Limits; (iii) Premium Chart Number 8, Money/Bank Cards, and Bullion/Valuable Papers - Increased Limits; (iv) Premium Chart Number 12, Physicians, Surgeons and Dentists Outside Coverage; (v) Premium Chart Number 14, Other Structures on the Premises - Additional Amount; (vi) Premium Chart Number 20, Personal Injury Coverage; (vii) Premium Chart Number 21, Office, Private School or Studio; (viii) Premium Chart Number 22, Farmer's Personal Liability; (ix) Premium Chart Number 25, Animal Collision Coverage; (x) Premium Chart Number 26, Watercraft; (xi) Premium Chart Number 27, Business Pursuits; (xii) Premium Chart Number 28, Additional Premiums for Increased Limits of Liability & Medical Payments to Others; and (xiii) Premium Chart Number 35, Additional Insured. The petition requests adoption of amendments to two charts in the Rate Tables and Premium Charts subsection of the Homeowners Section to reflect the fact that there is no longer a property minimum premium rule: (i) Premium Chart Number 12, Physicians, Surgeons, and Dentists Outside Coverage; and (ii) Premium Chart Number 13, Additional Extended Coverage Endorsement (Form HOA only). In addition, the petition requests the adoption of such amendments to new proposed premium charts that are proposed to be moved from current rules to the Rate Tables and Premium Charts subsection of the Homeowners Section, including (i) Premium Chart Number 36, Personal Computer Coverage; (ii) Premium Chart Number 37, Unit Owners Outbuildings and Other Structures Coverage; and (iii) Premium Chart Number 38, Condominium Loss Assessment Coverage, and also to Premium Chart Number 39, Tenants Single Entrance to Building Surcharge which is proposed as a separate premium chart due to the proposed repeal of Premium Chart. Number 4 - Texas Tenants Forms HOB-T and HOC-T or Condominium Forms HO-CON-B and HO-CON-C. Also included are changes to premium charts resulting from the adoption of Commissioner's Order Number 97-0840 (August 21, 1997) which adopts benchmark rates for residential property, homeowners, tenants, dwelling fire, extended coverage, additional extended coverage and physical loss form effective February 1, 1998. These premium charts include (i) Premium Chart Number 5, Unscheduled Residence Glass Coverage; (ii) Premium Chart Number 6, Jewelry, Watches and Furs-Increased Limits; (iii) Premium Chart Number 7, Additional Limit on Business Personal Property; (iv) Premium Chart Number 8, Money/Bank Cards, and Bullion/Valuable Papers-Increased Limits; (v) Premium Chart Number 9, Radio and Television Antenna; (vi) Premium Chart Number 10, Greenhouses; (vii) Premium Chart Number 11, Cloth Awnings; (viii) Premium Chart Number 12, Physicians, Surgeons and Dentists Outside Coverage; (ix) Premium Chart Number 13, Additional Extended Coverage Endorsement (Form HOA only); (x) Premium Chart Number 14, Other Structures on the Premises-Additional Amount; (xi) Premium Chart Number 20, Personal Injury Coverage; (xii) Premium Chart Number 21, Office, Private School or Studio; (xiii) Premium Chart Number 22, Farmer's Personal Liability; (xiv) Premium Chart Number 22A, Custom Farming; and (xv) Premium Chart Number 23, One Year Rates Farm Employers Liability Rates for $100 Payroll; (xvi) Premium Chart Number 25, Animal Collision Coverage; (xvii) Premium Chart Number 26, Watercraft; (xviii) Premium Chart Number 27, Business Pursuits; (xix) Premium Chart Number 28, Additional Premiums for Increased Limits of Liability & Medical Payments to Others; and (xx) Premium Chart Number 35, Additional Insured; (xxi) Premium Chart Number 36, Personal Computer Coverage; (xxii) Premium Chart Number 37, Unit Owners Outbuildings and Other Structures Coverage; (xxiii) Premium Chart Number 38, Loss Assessment Coverage; and (xxiv) Premium Chart Number 39, Tenants Single Entrance to Building Surcharge. Dwelling Section. In the Dwelling Section, amendments are proposed to two existing premium charts to provide for all premium amounts in dollars and cents in lieu of rounding these premium amounts to the nearest dollar: Premium Chart Number 4, Greenhouses Extended Coverage Rates; and Premium Chart Number 9, Residential Glass; and to one chart that is proposed to be moved from the current Rule VI-C-2-a, Premium Chart Number 18, Tenant Occupancy Charge. The petition requests adoption of amendments to five charts in the Rate Tables and Premium Charts subsection of the Dwelling Section to reflect the fact that there is no longer a property minimum premium rule, including (i) Dwelling Chart Number 1A; (ii) Dwelling Chart Number 1B; (iii) Additional Extended Coverage Premium Chart in which the additional extended coverage base premiums are specified by zone and therefore, separately from the chart on vandalism/malicious mischief premiums which are specified for all territories, as provided in Commissioner's Order Number 97-0840; (iv) new Vandalism/Malicious Mischief Premium Chart; and (v) All Risk Premium Chart. The petition also requests adoption of an amendment to the existing Deductible Adjustment Percentage Schedule in the Rate Tables and Premium Charts subsection of the Dwelling Section to delete the second sentence of the instructions to conform the instructions for determining the deductible adjustment premium for the building and/or contents insured under a Texas Dwelling Policy with Rule I-B on application of the flex bands filed by individual insurers. The petition also requests the rearrangement of rate tables in the Rate Tables and Premium Charts subsection of the Dwelling Section to more closely follow rating methodologies. Also included are changes to premium charts resulting from the adoption of Commissioner's Order Number 97-0840 (August 21, 1997) which adopts benchmark rates for residential property, homeowners, tenants, dwelling fire, extended coverage, additional extended coverage and physical loss form effective February 1, 1998. These premium charts include (i) Dwelling Extended Coverage Territory Multipliers; (ii) Additional Extended Coverage Premium Chart; (iii) Vandalism/Malicious Mischief Premium Chart; (iv) All Risk Premium Chart; (v) Premium Chart Number 4, Greenhouses Extended Coverage Rates; (vi) Premium Chart Number 5, Cloth Awnings Extended Coverage Rate; (vii) Premium Chart Number 6, Radio and Television Antenna Extended Coverage Rate; (viii) Premium Chart Number 11, Vacancy Clause (TDP-011); (ix) Premium Chart Number 12, Miscellaneous Property Schedules (TDP-012); and (x) Premium Chart Number 18, Tenant Occupancy Charge. Some premium charts' base rates do not change as a result of the adoption of new benchmark rates because the benchmark rate change is incorporated into the territory multiplier instead of the base rate: Dwelling Chart Number 1A, Dwelling Chart Number 1B, Additional Extended Coverage Premium Chart; and All Risk Premium Chart. Non-substantive Editorial Changes. The petition requests the adoption of numerous amendments for non-substantive editorial changes throughout both the Homeowners and Dwelling sections of the Manual. These amendments include (i) updating of references, including change of former State Board of Insurance to the Texas Department of Insurance, change of Texas Catastrophe Property Insurance Association to Texas Windstorm Insurance Association, and correction of references to the Farm and Ranch and Farm and Ranch Owners Manual; and (ii) formatting, organizational, wording, and other technical editing changes for purposes of consistency and readability, including assigning current subsections with Roman numeral designations and reNumbering subsequent subsections accordingly; and (iii) correction of misspelled words. The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.35, 5.96, 5.98, and 5.101. The background and justification for the proposed changes are fully explained in the staff's petition. Copies of the full text of the staff petition, the proposed Manual rules and rate tables and premium charts and proposed amendments to the declarations pages are available for review in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. For further information or to request copies of the staff petition, proposed Manual rules and rate tables and premium charts and proposed amendments to the declarations pages (Ref. Number P-1097-32-I) please contact Angie Arizpe at (512) 322-4147, or the documents may be accessed using the Department's website on the Internet at www.tdi.state.tx.us. The documents can be located using the Quick Access link to "company". Comments on the proposal must be submitted in writing within 30 days after publication of the proposal in the Texas Register to the Office of the Chief Clerk, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of the comments should be submitted to David Durden, Deputy Commissioner for Property and Casualty Lines, 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 Article 5.96 from the requirements of the Administrative Procedure Act (Government Code, Title 10, ch. 2001). Issued in Austin, Texas, on October 14, 1997. TRD-9713624 Bernice Ross General Counsel and Chief Clerk Texas Department of Insurance Filed: October 15, 1997 Texas Department of Insurance PROPOSED ACTION The Commissioner of Insurance will hold a public hearing under Docket Number 2313 on December 3, 1997, at 10:00 a.m., in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, to consider a petition by the staff of the Texas Department of Insurance proposing amendments to the Texas Statistical Plan for Residential Risks ("Residential Plan") and to the Texas Commercial Lines Statistical Plan ("Commercial Plan"). The amendments in the staff petition are necessary to implement S.B. 1499 passed by the 75th Legislature which amended the Texas Insurance Code Article 5.13-2 to include Farm and Ranch and Farm and Ranchowners coverages in the commercial lines of insurance. Staff's petition (Reference P-1097-33-I) was filed on October 14, 1997. The petition proposes the amendment of the Texas Statistical Plan for Residential Risks ("Residential Plan") to delete the Farm and Ranch ("FR") and Farm and Ranch Owners ("FRO") reporting provisions from the Residential Plan and the amendment of the Texas Commercial Lines Statistical Plan ("Commercial Plan") to adopt two new chapters relating to FR and FRO reporting. The proposed changes are necessary in order to comply with the 75th Legislature's passage of S.B. 1499, which amended the Texas Insurance Code Article 5.13-2 to include FR and FRO policies as commercial lines insurance policies. The proposed amendments also include the incorporation of minor changes to the statistical plans for consistency with the existing procedure. The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.96 and 21.69. Copies of the full text of the staff 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, 78714-9104. 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 P-1097-33-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, P. O. Box 149104, MC113-2A, Austin, Texas 78714-9104. An additional copy of the comment should be submitted to C.H. Mah, Associate Commissioner for Policy and Research, P. O. Box 149104, MC113-1C, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.96 which exempt action taken under this article from the requirements of the Administrative Procedure Act (Government Code, Title 10, ch. 2001). This agency hereby certifies that the proposed amendments have been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on October 15, 1997. TRD-9713657 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Filed: October 15, 1997