Final Action on Rules
EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE CHAPTER 5, SUBCHAPTER
L, ARTICLE 5.96 ADOPTION OF AMENDMENTS TO THE TEXAS AUTOMOBILE RULES AND RATING
MANUAL, NEW ENDORSEMENT TE 99 87, EXCLUSION OF ACTS OF TERRORISM AS DEFINED
IN THE FEDERAL TERRORISM RISK INSURANCE ACT OF 2002, AND NEW ENDORSEMENT TE
99 88, CAP ON LOSSES FROM ACTS OF TERRORISM PURSUANT TO THE FEDERAL TERRORISM
RISK INSURANCE ACT OF 2002
The Commissioner of Insurance is adopting amendments proposed by Staff
to the Texas Automobile Rules and Rating Manual (the Manual), by adding new
Endorsement TE 99 87, Exclusion of Acts of Terrorism as Defined in the Federal
Terrorism Risk Insurance Act of 2002, and new Endorsement TE 99 88, Cap on
Losses from Acts of Terrorism Pursuant to the Federal Terrorism Risk Insurance
Act of 2002. The purposes of these amendments are to provide a possible option
for commercial automobile policyholders with respect to the terrorism risk
insurance coverage that is required to be made available by insurers pursuant
to the Terrorism Risk Insurance Act of 2002 (the federal Act), and to disclose
to commercial automobile policyholders that the Texas Department of Insurance-promulgated
commercial automobile policy forms containing coverage for acts of terrorism
are subject to the cap on liability for payment for insured losses pursuant
to the federal Act. Staff’s petition (Ref. No. A-0203-04-I) was published
in the February 28, 2003 issue of the
Texas Register
(28 TexReg 1901).
An insurer may offer Endorsement TE 99 87, Exclusion of Acts of Terrorism
as Defined in the Federal Terrorism Risk Insurance Act of 2002, to each applicant
or insured regarding the commercial automobile policies named in the endorsement.
Endorsement TE 99 88, Cap on Losses from Acts of Terrorism Pursuant to
the Federal Terrorism Risk Insurance Act of 2002, may be attached to the promulgated
commercial automobile policies that provide terrorism insurance coverage.
Commissioner’s Bulletin No. B-0074-02, concerning the federal Act,
sets forth in pertinent part:
The Act preserves the Texas Department of Insurance's (Department) jurisdiction
and regulatory authority over rates and forms except for the period from the
date of enactment of the Act through December 31, 2003, rates and forms for
certain terrorism coverage shall not be subject to prior approval or a waiting
period. However, it should be noted that this exception to Texas' filing laws
applies only to coverage that is applicable to losses covered under the Federal
program. As a means of providing policyholders with an option respecting the
coverage made available under the Act, the Department will consider endorsements
excluding coverage for acts of terrorism as defined by the Act. The Act preserves
the Department's authority to disapprove any rates pertaining to such losses
if it finds them to be excessive, inadequate or unfairly discriminatory.
To the extent that the promulgated commercial automobile policies provide
coverage for acts of terrorism and in accord with Insurance Code Article 5.06,
there is a need to promulgate the endorsements as a means of providing policyholders
a possible option with respect to the coverage made available under the federal
Act and to inform policyholders that such coverage is subject to caps on losses
as provided in the federal Act.
The Commissioner of Insurance has jurisdiction over this matter pursuant
to Insurance Code Articles 5.06, 5.10, 5.96, and 5.98.
This notification is made pursuant to Insurance Code Article 5.96, which
exempts it from the requirements of the Government Code, Chapter 2001 (Administrative
Procedure Act).
Consistent with Insurance Code Article 5.96(h), the Department will notify
all insurers writing automobile insurance of this adoption by letter summarizing
the Commissioner's action.
IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the Manual
is amended as described herein, and the amendments are adopted to become effective
on the 15th day after publication of the notification of the Commissioner’s
action in the
Texas Register
.
TRD-200302175
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: April 2, 2003