Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter U. USE OF CREDIT INFORMATION OR CREDIT SCORES
28 TAC §5.9941
The Texas Department of Insurance proposes amendments to §5.9941,
regarding the allowable differences in rates charged by insurers due solely
to differences in credit scores. In general, Insurance Code Article 21.49-2U
provides certain requirements pertaining to the use of credit information
and credit scoring by insurers in Texas for underwriting or rating certain
personal insurance policies. Article 21.49-2U applies to insurers authorized
to write property and casualty insurance in this state that write certain
types of personal insurance coverage and use credit information or credit
reports for the underwriting or rating of that coverage. However, Article
21.49-2U does not apply to farm mutual insurance companies.
Article 21.49-2U, Section 13(b) requires the commissioner to adopt rules
regarding the allowable differences in rates charged by insurers due solely
to differences in credit scores. The proposed amendments to §5.9941 establish
an allowable percentage difference in rates an insurer may charge due solely
to credit scoring if the difference in rates is based on sound actuarial principles
and fully supported by data filed with the department. Section 5.9941 was
adopted on November 10, 2003 and became effective on November 30, 2003. Prior
to the adoption of §5.9941, the Texas Department of Insurance received
numerous comments from members of the legislature, the public and insurers
on proposed §5.9941. Many comments were received concerning the appropriate
allowable differences in rates charged by insurers due solely to differences
in credit scores. Some commenters suggested that the allowable difference
be a dollar amount; most other commenters requested that a percentage amount
be set by the Commissioner. The department proposed an amendment to §5.9941
on December 12, 2003. A public hearing was held on January 7, 2004 where many
comments were received from insurers, legislators, and members of the public.
That proposed credit scoring amendment was withdrawn by operation of law on
June 12, 2004 in accordance with TEX. GOV’T CODE §2001.027. After
further evaluation of that proposed amendment, the department believes substantive
changes need to be made to include additional requirements regarding the use
of rates charged by insurers due solely to differences in credit scores.
After further consideration of the statute, comments received and legislative
history, the department is proposing an amendment to establish a rate difference
due solely to the use of credit scoring that cannot be greater than +/- 10%
from what would have been charged had credit scoring not been used. The amendment
further provides that if an insurer proposes to use credit scoring to rate
personal insurance policies and if the rate difference due solely to credit
scoring is greater than +/-10%, the insurer must request and justify an allowable
difference in rates and may not use the proposed rate difference until it
is permitted by the department. The insurer’s request must include actuarial
support and information required by the Commissioner. An insurer can reference
the Filings Made Easy Guide for information on actuarial support. The proposed
amendments to §5.9941 are necessary to ensure that insurance consumers
are charged premiums that are reasonable, fair, and related to their risk
profiles while minimizing market disruption. The proposed amendments will
further promote stability in the market and promote an increase in consumer
choices while promoting a competitive environment. The department believes
that it is good public policy to set some type of limitation on the allowable
differences in rates. The department further believes that to minimize market
disruption and to provide stability, insurers must request and justify a difference
in rates that exceeds the +/-10% limitation and this must be permitted by
the department before an insurer may charge such a rate. This would assure
that any rate increases due to a difference in rates greater than +/-10% are
fully supported and justified.
Marilyn Hamilton, Associate Commissioner, Property and Casualty Group,
has determined that for each year of the first five years the proposed section
will be in effect, there will be no fiscal impact to state and local governments
as a result of the enforcement or administration of the rule. There will be
no measurable effect on local employment or the local economy as a result
of the proposal.
Ms. Hamilton has determined that for each year of the first five years
the proposed section is in effect, the public benefit anticipated as a result
of the proposed section will be that consumers will not be charged rates,
due solely to the use of credit scoring, that vary more than +/-10% unless
they are fully supported by actuarial information that is reasonably related
to actual or anticipated loss experience and are permitted by the department.
Requiring insurers to request and justify differences in rates charged due
to the use of credit scoring minimizes the possibility that consumers will
realize unjustified rate increases and minimizes market disruption. The costs
of compliance with the proposed section for large, small and micro-businesses
result entirely from the legislative enactment of Senate Bill 14, 78th Legislature,
Regular Session, and not as a result of the administration or enforcement
of the rules. Based upon the cost of labor per hour, there will be no difference
in the cost of compliance between a large and small business as a result of
the proposal. There is no disproportionate economic impact on small or micro-businesses.
The proposed section may not be waived for insurers that qualify as small
or micro-businesses because the requirements of the section are prescribed
by statute, and the statute does not provide for an exemption.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on August 2, 2004, to Gene C. Jarmon, General Counsel
and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box
149104, Austin, Texas 78714-9104. An additional copy of the comment must be
simultaneously submitted to Marilyn Hamilton, Associate Commissioner, Property &
Casualty Group, MC 104-PC, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. Any request for a public hearing should be submitted
separately to the Office of the Chief Clerk.
The amendments are proposed under Insurance Code Article 21.49-2U
and §36.001. The 78th Legislature, Regular Session, enacted Senate Bill
14, which added Article 21.49-2U. Article 21.49-2U, Section 13(a) authorizes
the commissioner to adopt rules as necessary to implement the article. Article
21.49-2U, Section 13(b) requires the commissioner to adopt rules regarding
the allowable differences in rates charged by insurers due solely to differences
in credit scores. Section 36.001 provides that the Commissioner of Insurance
may adopt any rules necessary and appropriate to implement the powers and
duties of the Texas Department of Insurance under the Insurance Code and other
laws of this state.
The following statute is affected by this proposal: Rule Statute §5.9941
Insurance Code Article 21.49-2U
§5.9941.Differences in Rates Charged Due Solely to Difference in Credit Scores.
(a)
An insurer may vary its rates charged to applicants or
insureds for personal insurance policies due solely to credit scoring. The
differences in rates charged due solely to credit scoring shall be based on
sound actuarial principles and supported by data filed with the department
and must meet the following requirements:
[
(1)
The rate differences due solely to the
use of credit scoring cannot be greater than +/- 10% from what would have
been charged had credit scoring not been used.
(2)
Notwithstanding paragraph (1) of this subsection,
if an insurer proposes a credit scoring rating structure for rating personal
insurance policies in Texas that has a rate differential greater than +/-10%,
the insurer must request and justify an allowable difference in rates for
its proposed credit scoring rating structure. The request for a rate differential
shall include actuarial support and any information required by the Commissioner,
including the numbers of policyholders and associated premiums that would
be affected by the rate differential. For a definition of "actuarial support,"
insurers may refer to the Filings Made Easy Guide. The Filings Made Easy Guide
may be obtained from the TDI website at www.tdi.state.tx.us or by request
from the Texas Department of Insurance, Property and Casualty Intake Unit,
Mail Code 104-3B, P.O. Box 14910, Austin, TX 78714-9104.
(3)
An insurer may not use a rate differential
greater than +/-10% until it is permitted by the department.
(4)
An insurer that proposes a rate differential
that is not greater than +/-10% is subject to the filing requirements of article
5.13-2, 5.101 or 5.142 of the Insurance Code, whichever is applicable.
(b)
A request for a rate differential greater than +/-10%
filed
[
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.
Filed with the Office of
the Secretary of State on June 21, 2004.
TRD-200404069
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: August 1, 2004
For further information, please call: (512) 463-6327
Subchapter H. LICENSING OF PUBLIC INSURANCE ADJUSTERS
28 TAC §19.713
The Texas Department of Insurance proposes new §19.713,
concerning the Public Insurance Adjusters’ Rules of Professional Conduct
and Ethics. This proposal is required by Texas Insurance Code Article 21.07-5, §18(1).
Article 21.07-5 was adopted pursuant to Senate Bill 127, during the 78th Legislature’s
Regular Session. The proposed rule concisely states certain legal and ethical
requirements that are of prime importance for public insurance adjusters’
professional conduct. Many additional laws, however, govern public insurance
adjusters' conduct, including laws relating to matters of licensure, as well
as those defining specific obligations of public insurance adjusters. Accordingly,
while this proposal states certain requirements for the legal and ethical
professional conduct of public insurance adjusters, it does not exhaust the
legal or ethical requirements that govern their actions.
Proposed §19.713 is necessary to implement Article 21.07-5, §18(1)
and further effective regulation of public insurance adjusters by providing
public insurance adjusters with a statement of certain legal and ethical requirements
that are of prime importance in the conduct of their business. This proposed
rule is based upon the recommendations of the public insurance adjusters’
advisory committee, appointed by the commissioner pursuant to Insurance Code
Article 21.07-5, §18(1), and reflects requirements found in existing
law, as well as the National Association of Public Insurance Adjusters’
Rules of Professional Conduct and Ethics. The statement of these legal and
ethical requirements in proposed §19.713 should result in enhanced protection
for consumers and others interacting with public insurance adjusters by providing
a concise point of reference for judging the conduct of public insurance adjusters.
Matt Ray, deputy commissioner, licensing division, has determined that
for each year of the first five years the proposed section will be in effect
there will be no fiscal impact to state and local governments as a result
of the enforcement or administration of the proposed rule. There will be no
anticipated effect on local employment or the local economy as a result of
the proposal.
Mr. Ray has determined that for each year of the first five years the proposed
rule is in effect, the anticipated public benefit will be enhanced consumer
protection, as well as improved public understanding of the role that public
insurance adjusters play in the state’s insurance industry. Any economic
costs to comply with the proposed rule result from the enactment of Insurance
Code Article 21.07-5, §18(1), which requires the commissioner to adopt
a code of ethics for public insurance adjusters, as well as the other provisions
of Article 21.07-5 upon which the requirements of this proposed section are
based and not as a result of the adoption, enforcement, or administration
of the proposed section. There will be no difference in the cost of compliance
between a large and small business as a result of the proposed rule. Based
upon the cost of labor per hour, there is no disproportionate economic impact
on small or micro businesses. Even if the proposed rule would have an adverse
effect on small or micro businesses, it is neither legal nor feasible to waive
the provisions of the proposed section for small or micro businesses, when
the Insurance Code requires equal application of these provisions to all affected
persons.
To be considered, written comments on the proposal must be submitted no
later than 5 p.m. on August 2, 2004 to Gene C. Jarmon, General Counsel and
Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104,
Austin, Texas 78714-9104. An additional copy of the comments must be simultaneously
submitted to Matt Ray, Deputy Commissioner, Licensing Division, Mail Code
107-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.
Any requests for a public hearing should be submitted separately to the Office
of the Chief Clerk.
This section is proposed under the Insurance Code Article 21.07-5, §18(1)
and §36.001. Article 21.07-5, §18(1) directs the commissioner to
adopt a code of ethics for public insurance adjusters that governs their conduct.
This proposal is based upon the following Insurance Code statutes relating
to the conduct of public insurance adjusters. Article 21.07-5, §5(a)(4)
requires that public insurance adjusters conduct their business "fairly and
in good faith without detriment to the public." Article 21.07-5, §23(j)
requires that public insurance adjusters refrain from improper solicitation.
Article 21.07-5, §23(m)(1) requires that public insurance adjusters refrain
from using misrepresentations in the conduct of their business. Article 21.07-5, §22
sets forth the fees and commissions that public insurance adjusters may charge.
Article 21.07-5, §21(a) requires that public insurance adjusters complete
continuing education. Article 21.07-5, §§5(8) and 15(a)(8) require
that public insurance adjusters possess adequate knowledge and experience
to handle their work appropriately. Article 21.07-5, §2 prohibits public
insurance adjusters from engaging in the unauthorized practice of law. Article
21.07-5, §23(l) prohibits public insurance adjusters from engaging in
activities that may be construed as presenting a conflict of interest or obtaining
a financial interest in salvaged property that is the subject of a claim.
Article 21.07-5, §§28 and 29 prohibit public insurance adjusters
from using advertisements that violate the Insurance Code. Article 21.07-5, §23(d)
requires that public insurance adjusters use contract forms that are approved
by the commissioner. Finally, §36.001 provides that the commissioner
may adopt any rules necessary and appropriate to implement the powers and
duties of the Texas Department of Insurance under the Insurance Code and other
laws of this state.
The following statute is affected by the proposal: Insurance Code Article
21.07-5
§19.713.Public Insurance Adjuster Rules of Professional Conduct and Ethics.
(a)
This section states certain legal and ethical requirements
that are of prime importance for public insurance adjusters’ professional
conduct. This section does not exhaust the legal or ethical requirements that
govern public insurance adjusters.
(b)
All public insurance adjuster licensees shall comply with
the following requirements:
(1)
Licensees shall conduct business with their clients, insurance
companies, and the public, in a spirit of fairness and justice.
(2)
Licensees shall not employ any improper solicitation which
would violate Insurance Code Article 21.07-5 or this subchapter.
(3)
Licensees shall not make a misrepresentation, in violation
of Insurance Code Article 21.07-5, §23(m)(1), to an insured or to an
insurance company in the conduct of their actions as a public insurance adjuster.
(4)
Licensees shall charge only commissions and fees which
are in compliance with the requirements set forth in Insurance Code Article
21.07-5 and this subchapter.
(5)
Licensees shall complete continuing education as required
by Insurance Code Article 21.07-5 and this subchapter.
(6)
Licensees shall have appropriate knowledge and experience
for the work they undertake and should obtain competent technical assistance,
when necessary, to help handle claims and losses outside their area of expertise.
(7)
Licensees shall not engage in the unauthorized practice
of law.
(8)
Licensees shall avoid situations of conflict of interest,
including acquiring any interest in salvaged property or participating in
any way, directly or indirectly in the reconstruction, repair or restoration
of damaged property that is the subject of a claim adjusted by the licensee,
except as allowed in Insurance Code Article 21.07-5 and this subchapter.
(9)
Licensees shall not disseminate or use any form of agreement,
advertising, or other communication, regardless of format or medium, in this
state that is harmful to the profession of public insurance adjusting and
that does not comply with Insurance Code Article 21.07-5, this subchapter
or other provisions of the Insurance Code.
(10)
Licensees shall use only contracts that comply with Insurance
Code Article 21.07-5 and this subchapter.
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.
Filed with the Office of
the Secretary of State on June 21, 2004.
TRD-200404050
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: August 1, 2004
For further information, please call: (512) 463-6327
Chapter 122.
COMPENSATION PROCEDURE--CLAIMANTS
The Texas Workers' Compensation Commission (commission) proposes amendments
to §122.2, concerning Injured Employee's Claim for Compensation, and §122.100,
concerning Claim for Death Benefits.
The
Texas Register
published text shows
words proposed to be added to or deleted from the current text, and should
be read to determine all proposed changes.
The proposed amendments to §122.2 are to allow submission of an injured
employee's claim for compensation in an electronic format and delete the requirement
for the injured employee's signature. The proposed amendments to §122.100
are to allow submission of a claim for death benefits in an electronic format
and provide the manner of filing subsequent filings of all additional evidence
that establishes that the claimant is a legal beneficiary. The electronic
filing options provided by the proposed amendments are part of an overriding
goal of the commission, in its Business Process Improvement (BPI) project,
to improve and streamline agency processes and applications through the use
of advanced technology and tools, as appropriate, to increase agency effectiveness,
efficiency, and accountability.
Currently, §122.2 specifies the form that must be used by injured
employees to file a claim for compensation. In order to achieve standardization
with existing rule 102.5, General Rules for Written Communication to and from
the Commission, which allows electronic submission of information, the commission
proposes to amend subsection (c) to allow reporting of a claim for compensation
to the commission either on paper or via electronic transmission, in the form,
format, and manner prescribed by the commission.
The commission proposes to amend subsection (c)(6) by adding language to
clarify that, if the injury claimed is an occupational disease, the claim
must include the name and location of the employer at the time of the last
injurious exposure to the hazards of the occupational disease. As a result
of this clarification, the commission proposes to delete subsection (d) because
it is redundant of subsection (c)(6) as amended.
The commission proposes to delete current subsection (e), which requires
the prescribed form TWCC-41 or other written claim for compensation must be
signed by the person filing it and change the reference to "no later than"
one year to "within" one year. As a result of deleting subsections (d) and
(e), the commission proposes to re-designate subsection (f) as subsection
(d).
Currently, §122.100 specifies the form that must be used by claimants
to file a claim for death benefits. In order to achieve standardization with
existing rule 102.5, General Rules for Written Communication to and from the
Commission, which allows electronic submission of information, the commission
proposes to amend subsection (b) to allow reporting of a claim for death benefits
to the commission either on paper or via electronic transmission, in the form,
format, and manner prescribed by the commission.
The commission also proposes to amend subsection (c) to clarify that a
claimant is required to submit not only a copy of the deceased employee's
death certificate but also and any additional evidence that establishes that
the claimant is a legal beneficiary of the deceased employee. In subsection
(c), paragraphs (1) and (2) are added to address how the additional evidence
regarding legal beneficiary status should be submitted depending on whether
the claim is filed on paper or electronically. The commission also proposes
to amend subsection (c) by deleting certain unnecessary language.
Stacey Jefferson, Director of the commission's Business and Information
Technology Services Division, has determined that, for the first five-year
period the proposed rules are in effect, the proposed amendments will result
in minimal, if any, fiscal impact on state or local governments as a result
of enforcing or administering the amended rules. The commission may experience
minimal costs associated with staff time involved with any necessary modifications
to the instructions, or the potential development of educational materials,
associated with the use of the electronic interface referred to in the amended
rules. No other state or local governments will be involved in enforcing or
administering the amended rules.
Local governments and state governments as covered regulated entities will
be impacted in the same manner as described later in this preamble for persons
required to comply with the rules as proposed.
Ms. Jefferson has also determined that for each year of the first five
years the rules as proposed are in effect the public benefits anticipated
as a result of enforcing the rules will include easier access by claimants
to TWCC for purposes of reporting incident details because, in addition to
filing standard paper claims, claimants will be able to file the forms either
from a computer at home, office, or a TWCC field office; and ultimately allowing
access to the filing by associated claim participants, thereby eliminating
some requests for copies of claim file information.
There will be no anticipated economic costs to persons required to comply
with the rules as proposed because the rule allows, but does not require,
electronic filing. There will be no economic costs to injured employees, as
these proposed amendments remove a signature requirement and allow easier
and greater access to the commission.
There will be no costs of compliance for small businesses and no adverse
economic impact on small businesses or micro-businesses as a result of the
proposed amendments.
Comments on the proposal must be received by 5:00 p.m., August 2, 2004.
You may comment via the Internet by accessing the commission's website at
Commenters are requested to clearly identify by number the specific rule
and paragraph commented upon. The commission may not be able to respond to
comments that cannot be linked to a particular proposed rule. Along with your
comment, it is suggested that you include the reasoning for the comment in
order for commission staff to fully evaluate your recommendations.
Based upon various considerations, including comments received and the
staff's or commissioners' review of those comments, or based upon the commissioners'
action at the public meeting, the rule as adopted may be revised from the
rule as proposed in whole or in part. Persons in support of the rule as proposed,
in whole or in part, may wish to comment to that effect.
Subchapter A. CLAIMS PROCEDURE FOR INJURED EMPLOYEES
.
]
Filings
] under this section must be submitted to the
Texas Department of Insurance, [
no later than March 1, 2004 to the
]
Property & Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin,
Texas 78714-9104 or to the Texas Department of Insurance, Property & Casualty
Intake Unit, 333 Guadalupe, Austin, Texas 78701.
Chapter 19.
AGENTS' LICENSING
Part 2.
TEXAS WORKERS' COMPENSATION COMMISSION