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. PROPOSED ACTION The Commissioner of Insurance, at a public hearing under Docket Number 2327 scheduled for January 29, 1998 at 9:00 a.m., in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, will consider a proposal made in a staff petition. Staff's petition seeks amendment of the Texas Automobile Rules and Rating Manual (the Manual) Rule 74, to set the amount of the optional youth group member discount, as required by the Insurance Code, Article 5.03-5, enacted through House Bill 1498 of the 75th Texas Legislature. Staff's petition (Ref. Number A-1197-38-I) was filed on November 14, 1997. Staff proposes that a credit of 5% be adopted as the optional discount to be available under a new section J, "Youth Group Member Discount," to be added to Manual Rule 74 as shown in Exhibit A attached to staff's petition. The Insurance Code, Article 5.03-5 provides an insurer may grant a discount for certain automobile insurance premiums for members of certain youth groups if necessary qualifications are met. Article 5.03-5 provides the "commissioner by rule shall set the amount of the discount applicable under this article...." This new article applies to policies "delivered, issued for delivery, or renewed on or after January 1, 1998. The Insurance Code, Article 5.03-5 defines "Youth group" as a nonprofit organization that is chartered as a national or statewide organization that is run exclusively for youth recreational or educational purposes. The group must have, as part of its program, components relating to prevention of drug abuse, character development, citizenship training, and physical and mental fitness. The group must have been in existence for at least 10 years, and must have a membership of which at least 65 percent is younger than age 22. In order for an applicant to be eligible, among under requirements and restrictions, he or she must: (1) be licensed to drive in this state; (2) be a member of a youth group, including an adult leader, board member, or officer of the group; (3) be younger than 22 years of age or an adult leader, board member, of officer of the group; (4) have held a driver's license for at least three years on the date the application is filed; (5) have not, during the three years preceding the date of the application, been convicted of a violation of a traffic safety regulation that involves a moving vehicle; and (6) have not, during the three years preceding the date of the application, been found at fault in a motor vehicle accident. TDI's Technical Analysis Division recommends that a credit of 5% be established as the optional discount under Manual Rule 74.J. The proposed amount of credit is based on judgment, since no data concerning likely experience is known to exist. Once credible actual experience has been gathered, staff will propose any amendements to the amount of credit as deemed necessary. A copy of the petition containing the full text of the proposed amendments to the Manual is available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to request copies of the petition, please contact Angie Arizpe at (512) 463-6326; refer to (Ref. Number A-1197-38-I). Comments on the proposed changes must be submitted in writing within 30 days after publication of the proposal in the Texas Register, to the Office of the Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of comments is to be submitted to David Durden, Deputy Commissioner, Property and Casualty Insurance Lines, Texas Department of Insurance, P. O. Box 149104, MC 104-5A, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act). Issued in Austin, Texas, on November 19, 1997. TRD-9715560 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Filed: November 19, 1997 PROPOSED ACTION The Commissioner of Insurance, at a public hearing under Docket Number 2326 scheduled for January 29, 1998 at 9:00 a.m., in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, will consider a proposal made in a staff petition. Staff's petition seeks amendment of the Texas Automobile Rules and Rating Manual (the Manual), and the Texas Standard Provisions for Automobile Policies (the Standard Provisions), through changes to Amendatory Endorsements 593C and TE 00 40. Staff's petition (Ref. Number A-1197- 37-I) was filed on November 13, 1997. Staff proposes to amend Automobile Policy Endorsements 593C (applicable to the Personal Auto Policy) and TE 00 40 (applicable to the Business Auto, Garage and Truckers Coverage Forms). Endorsement 593C will become 593D and Endorsement TE 00 40 will become TE 00 40A. The proposal amends the physical damage coverage limit of liability to allow an insurer to waive the deductible, should there be one, when damage to glass is repaired rather than replaced. The proposal requires that the insurer and insured must mutually agree to the settlement option. The proposed amendments are shown in exhibits attached to the petition. The proposed amendments are enhancements without additional premium charge. Under policy liberalization clauses the proposed changes will become effective upon the effective date of the amendments, without policies having to be endorsed until future renewal dates. Since the early 1980's some insurers have been offering insureds the option of repair of glass damage rather than replacement, and waiving the deductible if the repair option was taken. Shortly after this practice was implemented questions were raised of possible statutory violations. These questions were addressed in Attorney General Opinion Number JM-218, dated October 24, 1984. Although the Opinion did not find the practice to be a direct violation of Article 5.06 of the Insurance Code, it outlined situations that would constitute violations: "We conclude that if such offers were made before a covered loss occurred, the practice would violate article 5.06(1) of the Insurance Code. Similarly, if the practice of waiving the comprehensive deductible in settlement after a loss occurred were prevalent enough to constitute a trade usage or custom, the practice would violate article 5.06(1)." The practice of waiving the deductible has continued since 1984. Staff has learned that one or more insurers have recently made a decision to discontinue the practice of offering the option of repairing glass damage due to a concern that the practice may constitute a violation of Article 5.06. Staff believes the practice of waiving the deductible when glass is repaired rather than replaced is good public policy. The insured benefits by not having to pay the deductible and the insurer benefits by holding down the cost of losses. The general insuring public benefits by the lower cost of losses, which holds down physical damage insurance rates. Staff also notes that one concern expressed in Attorney General Opinion Number JM-218 centered on whether the practice of waiving the comprehensive deductible after the loss could be considered a contract provision not written into an approved policy form or not otherwise approved by the Board. Staff believes that any concerns or reservations regarding the practice of allowing an insurer to waive a deductible when glass damage is repaired can be addressed by the approval of an amended endorsement that allows the insurer and insured to agree to the waiver of deductible and the glass repair. The proposed language accomplishes this purpose by providing that upon mutual agreement between the insurer and insured, the insurer will waive the applicable deductible for a glass loss if the glass is repaired rather than replaced. Requiring mutual agreement between the insurer and insured assures that the glass repair option will be utilized only when feasible and when it is acceptable to an insured. A copy of the petition containing the full text of the proposed amendments is available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to request copies of the petition, please contact Angie Arizpe at (512) 463-6326; refer to (Ref. Number A-1197-37-I). Comments on the proposed changes must be submitted in writing within 30 days after publication of the proposal in the Texas Register, to the Office of the Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of comments is to be submitted to David Durden, Deputy Commissioner, Property and Casualty Insurance Lines, Texas Department of Insurance, P. O. Box 149104, MC 104-5A, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act). Issued in Austin, Texas, on November 19, 1997. TRD-9715561 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Filed: November 19, 1997 PROPOSED ACTION The Commissioner of Insurance, at a public hearing under Docket Number 2325 scheduled for January 29, 1998 at 9:00 a.m., in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, will consider a proposal made in a staff petition. Staff's petition seeks amendment of the Texas Automobile Rules and Rating Manual (the Manual), Rule 74.E.1., credit for young driver training. Staff's petition (Ref. Number A-1197-36-I) was filed on November 14, 1997. Staff proposes to amend Manual Rule 74.E.1. regarding the 10% credit given for young driver training, commonly referred to as "driver education." Staff proposes to add new forms of certificates (including 964-D and 964-E, Driver Education Certificates) to those currently listed as satisfactory evidence of course completion. Staff also proposes deletion from Rule 74.E.1. of the standards for these courses and instructors set forth in subsections, a, b, and, c as those standards are said to be no longer appropriate because of statutory changes and rule changes by other agencies of the state. Staff's petition includes an exhibit marked "Proposed" with the recommended changes, and an exhibit marked "Current" with the current wording in the rule. Senate Bill 964, passed by the 74th Texas Legislature in 1995 made numerous changes regarding driver education courses. One change allows the parent or legal guardian, hereafter referred to as "parent" to teach the course to his or her child or ward, rather than requiring the course to be taught by a certified instructor at a driver education school licensed by the Texas Education Agency (TEA) (including the Central Education Agency, the State Board of Education or the Commissioner of Education). Although Senate Bill 964 made this change by reciting the addition of Section 7A to Texas Civil Statutes, Article 6687b, that article was repealed during that same legislative session by adoption of the Transportation Code, of which Section 521.142 is the current applicable statute. That statute requires the Department of Public Safety (DPS) to administer parent-taught driver education, and DPS has adopted rules accomplishing that mission (37 TAC sec.sec. 18.21-18.24 and 18.31-18.33, all effective April 7, 1997). The Transportation Code, Section 521.142 provides in regard to parent-taught driver education, "(d) Completion of a driver training course approved under this section has the same effect under this Act as completion of a driver training course approved by the Central Education Agency." Staff has been advised by several members of the Texas Legislature that the legislative intent of this statutory provision is that parent-taught trainees are entitled to all privileges (such as insurance discounts) that are extended to driver education school trainees. Staff asserts that many factors in addition to the legislative intent as expressed by several legislators support extension of the insurance discount to parent-taught trainees. One factor is that DPS rules require the parent-teacher to use a DPS-approved course, which substantially meets or exceeds DPS's own model curriculum prescribed for parent-taught driver education, as well as the TEA "Driver Education Classroom and In-Car Instruction Curriculum Guide," which was initially developed for driver education schools. Furthermore, the parent- taught trainee must pass DPS tests for vision, road signs, and road rules before an instruction permit (restricted driver's license) is issued. Staff notes that the curriculum for parent-taught trainees under DPS rules must contain a minimum of 14 hours of in-car training, which is the same total required under TEA rules for school-taught trainees, though there are certain differences in the details of these requirements. Also, DPS rules for parents, like TEA rules for schools, require at least 32 hours of classroom instruction. Furthermore, Staff is informed that parent-taught trainees generally receive much more training than these minimum requirements. Staff has informally reviewed a privately developed course that has received DPS approval for parent-taught driver education, which requires a minimum of 70 hours behind-the-wheel instruction and 45 hours of classroom instruction. Staff also reviewed a study initiated by Advanced Traffic Technologies, Inc. concerning the effectiveness of parent-taught driver education. The study found that the average behind-the-wheel test score for students completing driver education school courses is 87 (out of 100 possible) compared to 94 for parent- taught students. The study also found that within the first 18 months after licensing, parent-taught students are involved in severe crashes less frequently than school-taught students. A severe crash is defined in the study to be one causing damage exceeding $3,000.00 and/or injuries resulting in hospitalization. Staff believes that the information outlined in its petition warrants the extension of the 10% credit, currently given to school-taught trainees, to parent-taught trainees. Staff's position is that the standards for driver education courses and instructors set forth in subsections, a, b, and c, of Rule 74.E.1. need to be deleted because they do not allow the credit for parent- taught driver training. Because all driver education courses and instructors (including parents) are regulated by other state agencies, the Texas Department of Insurance does not need to specify course standards nor to require certified instructors, according to Staff. Another result of Senate Bill 964 has been the development by the Texas Education Agency of two new forms, (pursuant to Texas Civil Statutes, Article 4413 (29c), Section 9A) issued as evidence of completion of driver education courses, namely, 964-D and 964-E, Driver Education Certificates. Staff indicates those new form designations need to be added to the current list of forms in Manual Rule 74.E.1. that serve as satisfactory evidence of course completion for purposes of the 10% insurance credit. Staff also proposes language to allow the use of any other form approved for this purpose by the Texas Education Agency. A copy of the petition containing the full text of the proposed amendments to the Manual is available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas. For further information or to request copies of the petition, please contact Angie Arizpe at (512) 463-6326; refer to (Ref. Number A-1197-36-I). Comments on the proposed changes must be submitted in writing within 30 days after publication of the proposal in the Texas Register, to the Office of the Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of comments is to be submitted to David Durden, Deputy Commissioner, Property and Casualty Insurance Lines, Texas Department of Insurance, P. O. Box 149104, MC 104-5A, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act). This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt. Issued in Austin, Texas, on November 19, 1997. TRD-9715562 Caroline Scott General Counsel and Chief Clerk Texas Department of Insurance Filed: November 19, 1997