28 TAC §5.9301
The Texas Department of Insurance proposes an amendment to
§5.9301, which concerns the policy form and endorsement filing requirements
for insurers sharing primary, excess or layered insurance coverage on a single
commercial risk or account on a pro rata basis. The amendment is necessary
to conform this section to amendments to the Insurance Code, Article 5.13-2
enacted by Senate Bill 1499, 75th Texas Legislature, 1997. Commercial property
insurers, general liability insurers, and commercial casualty insurers, pursuant
to Article 5.13-2, §8, Insurance Code, and commercial multi-peril insurers,
pursuant to Article 5.81, Insurance Code, and §5.9101 of this title (relating
to commercial multi-peril policies) are required to file, on an individual
insurer basis, policy forms and endorsements for approval by the commissioner.
This individual insurer filing procedure is required regardless of whether
several insurers are insuring the same risk or account on a shared basis.
The rule provides that policy forms and endorsements filed for approval and
used for insuring a single commercial risk or account shared by two or more
insurers must meet the applicable equivalent coverage requirements set forth
in §5.9302 of the subchapter. Senate Bill 1499 amended subsection (e),
section 8, of Article 5.13-2 to delete the requirements that forms submitted
by individual insurers for approval must provide coverage equivalent to that
provided in the policy forms used for these lines of coverage and that an
endorsement may not reduce coverage provided under the approved policy form.
Since there is no longer an equivalent coverage requirement for individual
insurer policy form filings and no longer a prohibition against filing endorsements
that reduce coverage, §5.9301 must be amended to reflect these statutory
changes.
David Durden, deputy commissioner for property and casualty lines has determined
that for the first five-year period the proposed amendment is in effect, there
will be no fiscal implications for state or local government as a result of
enforcing or administering the section and there will be no effect on local
employment or the local economy.
Mr. Durden has also determined that for each year of the first five years
the proposed amendment is in effect, the public benefit anticipated as a result
of administering the section will be that §5.9301 will be in accord with
Article 5.13-2. It is anticipated that the proposed amendment will increase
competition in the commercial insurance marketplace as insurers provide a
wider variety of products designed to meet the specific needs of insurance
consumers. This proposed amendment will also simplify the form filing procedure
for the insurers who make individual policy form and endorsement filings.
It is further anticipated that the proposed amendment will give insurers greater
flexibility to adapt their products or respond in a timely fashion to changes
in the insurance marketplace. There is no anticipated adverse economic effect
on large or small insurers who are required to comply with the proposed amendment.
It is anticipated that there would be a benefit to both large and small insurers
because with the elimination of the equivalent coverage requirement from policy
forms and endorsement filings, insurers will be able to file the same forms
in Texas that they file nationwide, thereby, reducing the insurers' cost of
doing business in Texas. Although insurers may have some costs associated
with making new filings, those additional costs may be offset by the fact
that the insurers will not have to produce a Texas specific policy form or
endorsement which is different from the other programs that the insurers write
in other states.
Comments on the proposal to be considered by the Department must be submitted
within 30 days after publication of the proposed section in the Texas Register
to Caroline Scott, General Counsel and Chief Clerk, Texas Department of Insurance,
P. O. Box 149104, Mail Code 113-2A, Austin, Texas 78714-9104. An additional
copy of the comment should be submitted to David Durden, Deputy Commissioner
for Property and Casualty Lines, Texas Department of Insurance, P. O. Box
149104, Mail Code 104-5A, Austin, Texas 78714-9104.
The amendment is proposed under the Insurance Code, Articles
5.13-2, 5.81, 5.98, and 1.03A; and the Government Code §§2001.004-2001.038.
Article 5.13-2 regulates the policy forms submitted by insurers for approval
in general liability, commercial property, commercial casualty, and medical
professional liability insurance. Article 5.81 authorizes the commissioner
to approve forms for multi-peril policies of insurance and to adopt rules
as in the best judgment of the commissioner are necessary and desirable to
carry out the purposes and objectives of this article. 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, which must be for general and uniform regulation,
for the conduct and execution of the duties and functions of the department
only as authorized by a statute. The Government Code, §§2001.004-2001.038
(Administrative Procedure Act) authorize and require each state agency to
adopt rules of practice stating the nature and requirements of available formal
and informal procedures and prescribe the procedures for adoption of rules
by a state administrative agency.
The following articles of the Insurance Code are affected by this section:
Insurance Code, Articles 5.13-2 and 5.81
§5.9301. Commercial Risks Shared By Two Or More Insurers.
(a)-(b)
(No change.)
(c)
The policy forms and endorsements issued to provide coverage
on a single commercial risk or account which is shared by two or more insurers
must be filed and approved for the lead insurer. Other insurers sharing such
coverage on a single commercial risk or account with the lead insurer must
use the filed and approved policy forms and endorsements of the lead insurer.
These approved policy forms and endorsements may be used by such other insurers
sharing such coverage without making a separate filing to the
Texas Department
[
State Board
] of Insurance for approval.
(d)
(No change.)
[
(e)
The policy forms and endorsements
filed for approval and used for insuring a single commercial risk or account
shared by two or more insurers must meet the applicable equivalent coverage
requirements set forth in §5.9302 of this title (relating to Equivalent
Coverage).]
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 January 5, 1998.
TRD-9800050
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: February 16, 1998
For further information, please call: (512) 463-6327