Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 3.
LIFE, ACCIDENT AND HEALTH INSURANCE AND ANNUITIES
Subchapter FF. CREDIT LIFE AND ACCIDENT AND HEALTH INSURANCE
The Commissioner of Insurance adopts amendments to §§3.5601-3.5603,
3.5605-3.5610, 3.5701, 3.5702, 3.5801, and 3.6011, concerning credit life
and accident and health insurance. These amended sections are adopted without
changes to their proposed text as published in the December 6, 2002, issue
of the
Texas Register
(27 TexReg 11465) and
will not be republished. The December 6, 2002 proposal also included amendments
to §§3.5103, 3.5105 and 3.5106. However, those amendments are not
included in this adoption.
The amendments have several purposes. First, they are necessary to implement
Texas Insurance Code Art. 3.53, as amended by Acts 2001, 77th Legislature
in House Bill (HB) 2159. HB 2159 requires that the commissioner set the presumptive
premium rate by rule, rather than through a contested case proceeding. It
also allows insurers to set their rates in an amount that deviates from the
presumptive premium rate without seeking written approval of the commissioner,
as long as the deviated rate is no more than 30% above nor more than 30% below
the presumptive premium rate. Second, the amendments introduce more flexibility
into the department’s process for annual calls for statistical data
and experience reports regarding credit life and accident and health insurance.
Finally, the amendments update language in the rules regarding where filings
are to be delivered within the department, and the correct name of the department.
Sections 3.5601 and 3.5801 are amended to replace references to the State
Board of Insurance with references to the commissioner and the department,
respectively, to reflect the current structure of the agency. Sections 3.5601
through 3.5603 and §§3.5605 through 3.5610 primarily will implement
Texas Insurance Code Art. 3.53, as amended by Acts 2001, 77th Legislature
in HB 2159. The amendment to §3.5601 includes changes to rate setting
that HB 2159 effected. The amendment notes that two types of rate deviation
are allowed. Deviations that are no more than 30% above nor more than 30%
below the presumptive premium rate are designated in amended §3.5601(1)
as "automatic deviations," because they are effective immediately upon filing
with the department. An insurer's request for deviations that are more than
30% above or more than 30% below the presumptive premium rate are designated
in amended §3.5601(2) as "approved deviations" or "approved deviated
rates." These rates are not effective until the commissioner has issued written
approval for them. However, if the commissioner has not taken action to approve
or disapprove the request before the 60th day after the insurer filed the
rate for approval, the rate is considered approved and the insurer may use
the rate.
Section 3.5601(3) identifies the grounds that the commissioner may rely
upon to deny a request for an approved deviated rate. The commissioner can
disapprove a request for an approved deviated rate if the requested rate is
not actuarially justified. HB 2159 enacted this standard at Insurance Code
Art. 3.53, §8(A)(6). All rates must still meet the standards of Art.
3.53, §8(A)(3), which were in place before the passage of HB 2159. However,
HB 2159 provided more guidance about how to determine if a proposed rate is
excessive or inadequate, which is found at Art. 3.53, §8(A)(7). The amendment
restates this standard so that the rule contains a complete statement of possible
grounds for disapproval of a request for an approved deviated rate.
The grounds for disapproval identified in amended §3.5601(3) must
be considered in tandem with the loss ratio standard found currently in §3.5202.
The department will review the latter section in the next proceeding to set
a presumptive premium rate. The department will also consider at that time
giving more specific guidance by rule on how to identify whether a reasonable
degree of competition exists with regard to a classification to which a proposed
rate applies, and how to identify whether a proposed rate will, or is likely
to, substantially impair competition.
Section 3.5601(4) recognizes that an approved deviation will take effect
if it is not disapproved by the commissioner before the 60th day after the
rate is filed by the insurer.
Sections 3.5602, 3.5606, 3.5607, 3.5608 and 3.5610 add the word "approved,"
where appropriate, to reflect that these sections address requests for those
rate deviations that must be submitted for the commissioner's written approval
before they can become effective. The amendment to §3.5602 also includes
updated language to reflect that requests for such approval are now filed
with the Filings Intake Division of the department. The amendment also deletes
a specific reference to a form number and substitutes the language that these
requests are to be submitted in the manner prescribed on the form provided
by the department. Amendments conforming to this procedure are also found
in the amended definition of "earned premium" in §3.5603 and amended §3.5610.
An unnecessary word was removed from §3.5603(5).
Section 3.5605 reflects the differing effective dates for the two types
of deviations from the presumptive premium rate. Section 3.5609 clarifies
that when a creditor charging a rate other than the presumptive rate changes
insurers, the previous insurer must send notice to the commissioner, whether
the rate is an automatic deviated rate or an approved deviated rate.
Sections 3.5701 and 3.5702 create more flexibility in the process of annual
calls by the department for statistical data and experience reports from credit
life and credit accident and health insurers.
Section 3.5701 points out that the forms are available from the department's
Filings Intake Division and accessible at the department's internet web site.
Section 3.5702 deletes the instructions for the specific forms that are
identified in §3.5702. Because the instructions accompany the forms and
will continue to do so, there is no need to include them in the rule. The
list of forms remains in the rule, because those same forms will continue
to be used. However, the amendment removes the reference to revision dates.
Subsection (a) directs the public to the department's Filings Intake Division
and web site for copies of the forms. Subsection (c) provides for the electronic
submission of experience data. Section 3.6011 directs the public to the correct
sources for obtaining a copy of the Consumer Bill of Rights for Credit Life,
Credit Disability and Involuntary Unemployment Insurance.
The agency received no comments during the comment period set forth in
the published proposal.
6.
DEVIATION PROCEDURES
28 TAC §§3.5601 - 3.5603, 3.5605 - 3.5610
The amendments are adopted under the Insurance Code Article
3.53 and §36.001. Article 3.53 provides the statutory basis for the regulation
of credit life and credit accident and health insurance in Texas, including
the setting of rates. Section 36.001 provides that the Commissioner of Insurance
may adopt rules to execute the duties and functions of the Texas Department
of Insurance as authorized by statute.
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.
Filed with the Office of
the Secretary of State on May 29, 2003.
TRD-200303314
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: June 18, 2003
Proposal publication date: December 6, 2002
For further information, please call: (512) 463-6327
28 TAC §3.5701, §3.5702
The amendments are adopted under the Insurance Code Article
3.53 and §36.001. Article 3.53 provides the statutory basis for the regulation
of credit life and credit accident and health insurance in Texas, including
the setting of rates. Section 36.001 provides that the Commissioner of Insurance
may adopt rules to execute the duties and functions of the Texas Department
of Insurance as authorized by statute.
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.
Filed
with the Office of the Secretary of State on May 29, 2003.
TRD-200303315
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: June 18, 2003
Proposal publication date: December 6, 2002
For further information, please call: (512) 463-6327
28 TAC §3.5801
The amendments are adopted under the Insurance Code Article
3.53 and §36.001. Article 3.53 provides the statutory basis for the regulation
of credit life and credit accident and health insurance in Texas, including
the setting of rates. Section 36.001 provides that the Commissioner of Insurance
may adopt rules to execute the duties and functions of the Texas Department
of Insurance as authorized by statute.
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.
Filed
with the Office of the Secretary of State on May 29, 2003.
TRD-200303316
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: June 18, 2003
Proposal publication date: December 6, 2002
For further information, please call: (512) 463-6327
7.
EXPERIENCE CALL
8.
ADDITIONAL COVERAGES
10.
RESPONSIBILITIES AND OBLIGATIONS OF INSURANCE COMPANIES AND THEIR AGENTS AND REPRESENTATIVES