Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter M. FILING REQUIREMENTS
The Commissioner of Insurance adopts amendments to §§5.9310,
5.9332, 5.9340, 5.9341, and 5.9357, concerning form, rate, underwriting guideline,
and reduced filing requirements for certain property and casualty insurers.
The amendments to §5.9310 and §5.9332 are adopted with changes to
the proposed text published in the May 26, 2006, issue of the
Texas Register
(31 TexReg 4357) to update statutory references changed
as a result of the enactment of the Texas Legislative Council's non-substantive
Insurance Code revision by the 78th Texas Legislature, Regular Session, 2003,
and 79th Texas Legislature, Regular Session, 2005. The amendments to §5.9357
are adopted with changes to correct minor typographical errors in the proposed
text published in the May 26, 2006, issue of the
Texas Register
(31 TexReg 4357). The amendments to §5.9340 and §5.9341
are adopted without changes to the proposed text.
The adopted amendments are necessary to conform filings made by certain
property and casualty insurers pursuant to Insurance Code Articles 5.13-2,
5.55, and 5.55A to legislative amendments that were enacted by the 79th Legislature,
Regular Session, in SB 99, HB 7, and HB 2437, and by the 78th Legislature,
Regular Session, in SB 14. SB 99 added Chapter 706 to the Insurance Code which
authorizes property and casualty insurers to offer insurance coverage for
a loss suffered by a policyholder who is a victim of identity theft or attempted
identity theft and also amended Insurance Code Article 5.13-2 to add identity
theft insurance coverage as a line of insurance subject to Article 5.13-2.
Thus, amendments are necessary to §5.9310(b)(7) to add identity theft
insurance as a commercial and a personal line of insurance, each of which
is subject to the filing requirements of §5.9310. SB 14 amended Insurance
Code Article 5.13-2, §4 (Rate Standards) to remove consideration of contingencies
in an insurer's setting of rates under Article 5.13-2, but Insurance Code
Articles 5.55, §2(b)(4) and 21.50, §1A(g)(1) were not amended to
remove contingencies from factors to be considered by insurers in setting
rates under these two statutes. Therefore, workers' compensation insurers
and mortgage guaranty insurers, which are regulated under these two statutes,
must continue to submit supporting information on a reasonable margin for
profit and contingencies with rate filings; and the amendment to §5.9332(e)(1)(N)
is necessary to reflect this statutory requirement. Amendments are also necessary
for consistency with provisions enacted in HB 7. One of these provisions requires
that rates filed in accordance with Article 5.55 consider the effect on premiums
of individual risk variations based on loss or expense considerations; and
accordingly, a new subparagraph (O) has been added to §5.9332(e)(1).
Under HB 7, which added Article 5.55A to the Insurance Code, insurers of workers'
compensation insurance are required to file their underwriting guidelines
with the Department; prior to this enactment, workers' compensation insurers
were only required to provide underwriting guidelines to the Department upon
request pursuant to the Insurance Code §38.003. Thus, amendments to §5.9340
and §5.9341 are necessary to conform these sections to the statutory
underwriting guideline filing requirements of new Article 5.55A. HB 2437 amended
Insurance Code Article 5.13-2, §13(h) to provide for reduced filing requirements
for certain insurers writing personal automobile insurance and, therefore,
it is necessary to amend §5.9357(a) to clarify that subsection §5.9357(a)
applies to county mutual insurers writing non-standard personal automobile
insurance and to add a new subsection (b) to specify reduced filing requirements
for all insurers writing personal automobile insurance that meet the criteria
described in Insurance Code Article 5.13-2, §13(h). It is necessary to
re-designate the remaining subsections of §5.9357 as subsections (c)
and (d) to properly incorporate new §5.9357(b) and to conform the application
of re-designated §5.9357(d) to the insurers who qualify for reduced filing
requirements specified in subsections (a), (b), or (c) of §5.9357.
The Department has adopted changes to §5.9310 and §5.9332 to
delete obsolete statutory citations. Insurance Code Articles 21.35A and 21.35B,
which are referenced in the §5.9310(b)(4) definition of Interline filing
and also referenced in the §5.9332(a)(3) filing requirements, were repealed
in the non-substantive Insurance Code revision, Acts 2003, 78th Legislature,
Chapter 1274, §26(a)(1), effective April 1, 2005. Article 21.35A was
re-adopted as §§4005.001 - 4005.003 in the same non-substantive
Insurance Code revision, and Article 21.35B was re-adopted as §550.001
in the same non-substantive Insurance Code revision. Therefore, the references
to the repealed statutes in §5.9310(b)(4) and §5.9332(a)(3) are
deleted; and the updated and correct references are substituted. Insurance
Code Article 21.49-2U, which is referenced in the §5.9332(a)(1) filing
requirements, was repealed in the non-substantive Insurance Code revision,
Acts 2005, 79th Legislature, Chapter 728, §11.020(b), effective September
1, 2005. Article 21.49-2U was re-adopted as Chapter 559 in the same non-substantive
Insurance Code revision. Therefore, the reference to the repealed statute
in §5.9332(a)(1) is deleted; and the updated and correct reference is
substituted. Minor changes were also made to §5.9357(b) as proposed in
the text published in the May 26, 2006, issue of the
Texas Register
(31 TexReg 4357) to correct typographical errors of
capitalization of the term insurer and the term insurance.
Amended §5.9310(b)(7) adds identity theft insurance as a commercial
and a personal line of insurance in accordance with Chapter 706, each of which
is subject to the filing requirements of §5.9310. Section 5.9310 specifies
the form and content of the filing transmittal form that is to be used with
form, rate, rule, underwriting guideline, and credit scoring model filings.
Amended §5.9332(e)(1)(N) provides that profit and contingency provisions
should be included in the actuarial supporting information that is submitted
with a rate filing made in accordance with the Insurance Code Article 5.55
(Workers' Compensation Rates) or Article 21.50 (Mortgage Guaranty Insurance).
Amended §5.9332(e)(1) adds subparagraph (O) to require that rates filed
in accordance with Article 5.55 consider the effect on premiums of individual
risk variations based on loss or expense considerations. Amendments to §5.9340
and §5.9341 regarding underwriting guideline filing requirements for
workers' compensation insurance apply the underwriting guideline filing requirements
in those sections to workers' compensation insurers. Amended §5.9340
amends the purpose of Division 7, which regulates underwriting guideline filing
requirements, to include workers' compensation insurance. Amended §5.9341
provides that the definitions set forth in Insurance Code Article 5.55A apply
to insurers filing underwriting guidelines for workers' compensation insurance.
Amended §5.9357(a) clarifies that the reduced filing requirements of
this subsection apply to county mutual insurers that meet certain criteria,
and new subsection (b) specifies reduced filing requirements for all insurers
writing personal automobile insurance that meet the criteria described in
Insurance Code Article 5.13-2, §13(h). The remaining subsections of §5.9357
are re-designated as subsections (c) and (d).
SUMMARY OF COMMENTS AND AGENCY RESPONSE TO COMMENTS.
Comment: One commenter expresses support of the adoption of the proposed
amendments to 28 TAC §5.9340 and §5.9341.
Agency Response: The Department appreciates the support.
NAMES OF THOSE COMMENTING FOR AND AGAINST THE SECTIONS.
For: Insurance Council of Texas.
Against: None.
4.
FILINGS MADE EASY--FILING TRANSMITTAL FORM AND REQUIREMENTS FOR PROPERTY AND CASUALTY FORM, RATE, RULE, UNDERWRITING GUIDELINE, AND CREDIT SCORING MODEL FILINGS
28 TAC §5.9310
The amendments are adopted under Insurance Code Articles 5.13-2,
5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003, and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2, §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and, therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2 §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates, and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A, §3,
Article 5.55A may be enforced in the manner provided by §38.003(g). Chapter
706 was enacted; and Article 5.13-2, §2 was amended in SB 99 by the 79th
Legislature, Regular Session, to add specific regulations for identity theft
as a commercial insurance product and as a personal insurance product. 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.
§5.9310.Property and Casualty Filing Transmittal Form.
(a)
Purpose. The purpose of this division is to specify the
form and content of the filing transmittal form that is to be used for property
and casualty form, rate, rule, underwriting guideline, and credit scoring
model filings and provide information on obtaining such form.
(b)
Definitions. Words and terms not defined in this division
may be defined in the Insurance Code Article 5.13-2 and Subchapter D of Chapter
5 and shall have the same meaning when used in this division. The following
words and terms when used in this division shall have the following meanings
unless the context indicates otherwise:
(1)
Department--Texas Department of Insurance (TDI).
(2)
TDI file number--The number assigned by the department
to a filing submitted by an individual company.
(3)
TDI link number--The number assigned by the department
to link individual TDI file numbers to a filing which is submitted for more
than one company within a group.
(4)
Interline filing--A filing submitted for an endorsement
that may be used with more than one line of insurance provided the endorsement
does not have an impact on rates or a rate filing that may be used with more
than one line of insurance that contains only information concerning policy
fees, service fees, and other fees that are charged or collected by the insurer
under Insurance Code §§4005.001 - 4005.003 or §550.001.
(5)
Reference filing--A filing that references the use of adopted
or approved policy form(s), endorsement(s), manual rule(s), rate(s), or other
acceptable policy form(s), or endorsement(s), manual rule(s), or rate(s),
to which the department has assigned a TDI file number.
(6)
Dual filing--A monoline filing submitted for a specific
line of insurance that may also be written as part of a multi-peril policy.
(7)
Line of insurance--For purposes of this section, each of
the following is a line of insurance:
(A)
automobile-commercial;
(B)
automobile-personal;
(C)
boiler and machinery;
(D)
casualty (personal and commercial);
(E)
credit;
(F)
credit-involuntary unemployment;
(G)
crime;
(H)
crop hail;
(I)
excess liability;
(J)
excess umbrella;
(K)
farm and ranch;
(L)
farm liability;
(M)
farm and ranch owners;
(N)
fidelity bonds;
(O)
financial guaranty bonds or insurance;
(P)
guaranteed auto protection (GAP) (commercial);
(Q)
guaranteed auto protection (GAP) (personal);
(R)
general liability;
(S)
glass;
(T)
identity theft (commercial);
(U)
identity theft (personal);
(V)
inland marine (commercial);
(W)
inland marine (personal);
(X)
involuntary unemployment;
(Y)
miscellaneous casualty;
(Z)
miscellaneous liability;
(AA)
mortgage guaranty;
(BB)
multi-peril;
(CC)
personal liability;
(DD)
professional liability;
(EE)
property-commercial;
(FF)
property-residential (dwelling);
(GG)
property-residential (homeowners);
(HH)
rain;
(II)
surety bonds (other than criminal court appearance bonds);
(JJ)
umbrella-commercial;
(KK)
umbrella-personal; and
(LL)
workers' compensation.
(c)
Form and content of transmittal form. The filing transmittal
form must be typed and contain, at a minimum, the following information:
(1)
company name;
(2)
NAIC number of the company;
(3)
company group name and group NAIC number;
(4)
type of filing:
(A)
new filing; or
(B)
revision or replacement of an existing filing. If revising
or replacing an existing filing, the TDI file number or link number of the
filing that is being revised or replaced must be provided.
(5)
line of insurance:
(A)
all filings must specify the line of insurance for which
the filing is being made;
(B)
interline filings must indicate all lines of insurance
to which the filing is applicable;
(C)
dual filings must indicate multi-peril insurance and a
specific line of insurance to which the filing is applicable;
(6)
basic description of the filing:
(A)
rate filing, rating manual filing, and rating rule filing;
(B)
policy form;
(C)
endorsement;
(D)
manual rules, other than rating manual rules;
(E)
reference filing--must list the TDI file number or TDI
link number of the filing being referenced;
(F)
credit scoring model; or
(G)
underwriting guidelines;
(7)
proposed effective date; and
(8)
contact person, including name, telephone number, mailing
address, fax number, and e-mail address (if available).
(d)
Availability of transmittal form. The Filing Transmittal
Form (FTF) is a form that is provided by the department for insurers who are
making the filings specified in subsection (c)(6) of this section. This form
may be obtained from the TDI website at www.tdi.state.tx.us.
(e)
Alternative transmittal forms. An insurer may use, as an
alternative, a transmittal form published by the National Association of Insurance
Commissioners (NAIC) or any other transmittal form if the information included
in the transmittal form, or in an addendum to the transmittal form, contains
all the information required under subsection (c) of this section.
(f)
The department maintains the Filings Made Easy guide to
assist insurers in submitting filings and complying with statutory requirements.
This guide may be obtained from the TDI website at www.tdi.state.tx.us.
(g)
Filings under Divisions 4, 5, 6, 7, 8, and 9 of this subchapter
must be submitted to the Texas Department of Insurance, Property & Casualty
Intake Unit, 333 Guadalupe, Austin, Texas 78701 or to the Texas Department
of Insurance, Property & Casualty Intake Unit, Mail Code 104-3B, P.O.
Box 149104, Austin, Texas 78714-9104.
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 July 24, 2006.
TRD-200603897
Brenda Caldwell
Assistant General Counsel
Texas Department of Insurance
Effective date: August 13, 2006
Proposal publication date: May 26, 2006
For further information, please call: (512) 463-6327
28 TAC §5.9332
The amendments are adopted under Insurance Code Articles 5.13-2,
5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003, and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2, §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and, therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2, §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates; and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A, §3,
Article 5.55A may be enforced in the manner provided by §38.003(g). Chapter
706 was enacted and Article 5.13-2 §2 was amended in SB 99 by the 79th
Legislature, Regular Session, to add specific regulations for identity theft
as a commercial insurance product and as a personal insurance product. 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.
§5.9332.Filing Requirements.
(a)
An insurer shall keep the following information current
with the department and is not required to re-file unless affected by the
proposed filing or requested by the department or commissioner:
(1)
All prospective loss cost multipliers, rates, and rating
manuals as required by Insurance Code Articles 5.13-2, 5.41-3, 5.55, 5.171,
21.50, and Chapter 559 or other articles that impose specific filing requirements
for any line of insurance;
(2)
Supplementary rating information; and
(3)
Information concerning all policy fees, service fees, and
other fees that are charged or collected by an insurer under Insurance Code §§4005.001
- 4005.003 or §550.001.
(b)
For rates filed pursuant to Insurance Code Article 5.13-2
or 5.41-3, a filing containing rate information must contain the information
described in paragraphs (1) - (3) of this subsection:
(1)
A filing transmittal form as required in Division 4 of
this subchapter (relating to Filings Made Easy--Filing Transmittal Form and
Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline,
and Credit Scoring Model Filings).
(2)
The filing memorandum briefly explaining the purpose of
the filing, and all material background details relating to the filing including
a statement on the overall impact of the filing. For example, a filing memorandum
may include one or more of the following, as applicable:
(A)
reasons for entry into a new market;
(B)
reasons for offering additional coverages;
(C)
reasons for offering new discounts or applying new surcharges;
(D)
reasons for changing rates;
(E)
changes in the insurer's goals and objectives; or
(F)
an explanation of changes in insurer or insurer group operations.
(3)
Rating information can be any rate pages detailing information
described in subsection (a) of this section or any supporting information
required by §5.9941 or §5.9960 of this title (relating to Differences
in Rates Charged Due Solely to Difference in Credit Scores and Exception to
Territory Rating Requirements under Insurance Code Article 5.171) or any other
applicable statute or rule.
(4)
In accordance with Article 5.41-3, insurers filing commercial
group property rates shall clearly identify the group of businesses or the
association to be insured.
(c)
For rates filed pursuant to Insurance Code Article 5.55,
a filing containing rating information must contain the information described
in paragraphs (1) - (3) of subsection (b) of this section. An insurer may
not make such filing more frequently than every six months in accordance with
Insurance Code Article 5.55, §3(a).
(d)
For rates filed pursuant to Insurance Code Article 21.50,
a filing containing rating information must contain the information described
in paragraphs (1) - (3) of subsection (b) of this section. In accordance with
Article 21.50 rates must be filed at least 15 days before they are to become
effective and must include a certification as described in Article 21.50, §1A(g)(4).
(e)
Except as provided in Division 9 of this subchapter (relating
to Filings Made Easy--Reduced Filing Requirements for Certain Insurers), insurers
must provide supporting information as necessary for the department to establish
that a filing produces rates which are adequate, not excessive or unfairly
discriminatory for the risks to which they apply. Categories of supporting
information are listed in paragraphs (1) - (7) of this subsection, but are
not necessarily required for every rate filing. Insurers must only provide
sufficient materials to justify specific rates or changes being proposed.
To the extent the information originally submitted in a rate filing is insufficient,
the department may request additional information as deemed necessary by the
department or commissioner.
(1)
Actuarial support. Actuarial support generally includes
rate indications and support, including the data and methodologies utilized
by the insurer to derive such indications. Supporting information that is
submitted with a filing should include each of the following to the extent
applicable:
(A)
premiums at current rate level and applicable on-level
factors;
(B)
incurred and paid losses;
(C)
loss and claim development factors;
(D)
premium and loss trend factors;
(E)
rate relativities (e.g., classification, territory, amount
of insurance);
(F)
increased limits factors;
(G)
hurricane and non-hurricane catastrophe factors or loss
provisions;
(H)
definition of a catastrophe and how it has changed over
the experience period used to calculate the provisions;
(I)
deductible credits and debits;
(J)
description and support for discounts and surcharges;
(K)
off-balance factors if there have been changes in relativities
(e.g., discounts, surcharges, territorial definitions);
(L)
credibility;
(M)
expense and profit provisions;
(N)
for rates filed in accordance with Articles 5.55 or 21.50,
profit and contingency provisions; and
(O)
for rates filed in accordance with Article 5.55, the effect
on premiums of individual risk variations based on loss or expense considerations.
(2)
Projected and historical expense information. As applicable
to the insurer's filing, the information set out in subparagraphs (A) - (C)
of this paragraph should be filed. For Texas, and if applicable, country-wide
experience, the insurer should provide projected and historical expense information.
The loss adjustment expenses would be shown as a dollar amount as well as
a ratio to incurred losses. All other expenses should be shown as a dollar
amount as well as a ratio to direct written premium. All expense items should
be on a direct basis.
(A)
Three years of historical Texas experience for commission
and brokerage expenses incurred; taxes, licenses, and fees incurred; losses
incurred; and, defense and cost containment expenses incurred. These shall
be the amounts, or a subset of the amounts, reported on the Exhibit of Premiums
and Losses (Statutory Page 14 Data) in the insurer's Annual Statement.
(B)
Three years of historical countrywide experience for commission
and brokerage expenses incurred, other acquisition expenses incurred, general
expenses incurred, losses incurred, defense and cost containment expenses
incurred and adjusting and other loss adjustment expenses incurred. These
shall be the amounts reported in the insurer's Insurance Expense Exhibit,
Part III (IEE) in the insurer's Annual Statement.
(C)
Three years of historical countrywide experience for each
category of disallowed expenses shall be the amounts reported in the insurers'
response to the annual Texas Department of Insurance Call for Disallowed Expense
Data. Total other acquisition expenses and general expenses each adjusted
for disallowed expenses should be listed. The total adjusted general expense
percentage should reflect any necessary adjustment due to the capping of general
expenses at 110% of the industry median for the line of insurance.
(D)
To the extent the expense provisions that underlie the
rates differ from the historical expenses, support should be provided. For
filings submitted under Insurance Code Article 5.13-2, the expense provisions
should be net of the disallowed expenses as defined in §5.9331 of this
division (relating to Definitions). Provisions for commissions and brokerage
expenses; other acquisition expenses; general expenses; taxes, licenses and
fees; and profit and contingencies, should be displayed and a sum computed.
In addition, a permissible loss and loss adjustment expense ratio shall be
computed as unity less the sum of these expense provisions.
(3)
Historical experience information. This displays an insurer's
most recent five year historical experience for Texas which are the amounts,
or a subset of the amounts pertinent to the subline, reported on the Exhibit
of Premiums and Losses (Statutory Page 14 Data) in the insurer's Annual Statement.
It also includes the most recent five year countrywide experience which are
the amounts, or a subset of the amounts pertinent to the subline, reported
on the insurer's IEE, part III. Direct premiums written, direct premiums earned,
direct losses and defense and cost containment expenses paid, and direct losses
and defense and cost containment expenses incurred are shown as well as the
ratio of the incurred loss and defense and cost containment expenses incurred
to direct earned premiums, for both Texas and countrywide experience.
(4)
Profit provision information. A brief description of the
methodology and assumptions used to arrive at the profit provisions underlying
the proposed rates.
(5)
Rate change information. This generally includes a rate
change history, the statewide average proposed rate change for each applicable
coverage, form, or classification and the total average rate change for all
coverages, forms, and classifications combined, even if only the rates for
some of the coverages or forms are being changed. For loss cost reference
filings, rate change information would include the proposed percentage change
in the underlying loss costs, the change in the insurer's loss cost multiplier,
and the rate level change (i.e., the product of the change in the loss costs
and the loss cost multipliers, expressed as a factor). For workers' compensation
filings, change information would include the impact of the change in relativities
if the filing includes adopting a new set of relativities using either the
insurer's own class distribution or the industry wide distribution, the change
in the insurer's deviation, and the rate level change (i.e., the product of
the change in the relativities and the deviation, expressed as a factor).
(6)
Loss cost reference information. This includes the following:
(A)
The TDI file number, link number, or reference number of
the loss costs being referenced;
(B)
The derivation of the loss cost multiplier proposed including
any loss cost modification factor and the following expense and profit provisions:
(i)
commission and brokerage expenses;
(ii)
other acquisition expenses;
(iii)
general expenses;
(iv)
taxes, licenses and fees; and
(v)
underwriting profit and contingencies;
(C)
The loss cost multiplier to be used as of the effective
date of the filing; and
(D)
For rate change filings, the loss cost multiplier used
immediately prior to the effective date of the filing, and the effective rate
level change due to any change in loss cost multiplier.
(7)
Rate reference information. Rate reference information
includes:
(A)
A description of the rates being referenced including the
line of business and TDI file number or link number;
(B)
If an insurer is developing package modification factors,
proposed modification factors and supporting data; and
(C)
If an insurer is referencing package modification factors,
a description of the package modification factor including a TDI file number
or link number.
(f)
Any filings that do not fully comply with all of the filing
requirements described in this division may be considered incomplete and may
be returned to the filer for completion with a notice stating that the filing
is not complete and shall identify the additional information that is required
for completion of the filing.
(g)
The department may request additional information as necessary
related to a rate filing, including actuarial or other reasonable support
of rates as deemed necessary by the department or commissioner.
(h)
Filings under this division may be combined with filings
made in accordance with Division 5 of this subchapter (relating to Filings
Made Easy--Requirements for Property and Casualty Policy Form, Endorsement,
and Manual Rule Filings). These combined filings may utilize a single transmittal
form. Filings under this division may not be combined with filings made in
accordance with Division 7 or 8 of this subchapter (relating to Filings Made
Easy--Underwriting Guideline Filing Requirements for Personal Automobile,
Residential Property, and Workers' Compensation Insurance and Filings Made
Easy--Credit Scoring Models Filing Requirements for Personal Insurance) due
to distinct and separate statutes governing underwriting guidelines and credit
scoring models.
(i)
The department maintains the Filings Made Easy guide to
assist insurers with compliance of statutory requirements. Insurers may refer
to the Filings Made Easy guide for rate filing forms that insurers may use
to display necessary supporting information described in subsection (e) of
this section. This guide may be obtained from the TDI website at www.tdi.state.tx.us.
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 July 24, 2006.
TRD-200603898
Brenda Caldwell
Assistant General Counsel
Texas Department of Insurance
Effective date: August 13, 2006
Proposal publication date: May 26, 2006
For further information, please call: (512) 463-6327
28 TAC §5.9340, §5.9341
The amendments are adopted under Insurance Code Articles 5.13-2,
5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003 and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2 §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and, therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2, §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates; and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A §3,
Article 5.55A may be enforced in the manner provided by §38.003(g). Chapter
706 was enacted and Article 5.13-2 §2 was amended in SB 99 by the 79th
Legislature, Regular Session, to add specific regulations for identity theft
as a commercial insurance product and as a personal insurance product. 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.
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 July 24, 2006.
TRD-200603899
Brenda Caldwell
Assistant General Counsel
Texas Department of Insurance
Effective date: August 13, 2006
Proposal publication date: May 26, 2006
For further information, please call: (512) 463-6327
28 TAC §5.9357
The amendments are adopted under Insurance Code Articles 5.13-2,
5.55, 5.55A, 5.98, and 21.50, Chapter 706, and §38.003 and §36.001.
Article 5.13-2 governs rates and forms for certain property and casualty insurance
lines and the respective filing requirements in this state. Article 5.13-2 §4(b)(7)
was amended by the 78th Legislature, Regular Session, in SB 14 to delete "contingency
provisions" from the factors to be considered by insurers in setting rates
under Article 5.13-2 and, therefore, from supporting information that insurers
must submit with rate filings under Article 5.13-2. Article 5.13-2, §13
was amended by HB 2437, 79th Legislature, Regular Session, to provide for
reduced filing requirements for personal automobile insurers that meet the
statutorily specified criteria. Article 5.55 governs workers' compensation
rates, and §2(b)(4) of Article 5.55 provides that an insurer in setting
rates must consider a reasonable margin for profit and contingencies. Article
5.98 authorizes the Commissioner to adopt reasonable rules that are appropriate
to accomplish the purposes of Chapter 5. Article 21.50 governs mortgage guaranty
insurance rates; and §1A(g)(1) of Article 21.50 requires insurers to
file, with any rate filing, adequate supporting data, including information
on a reasonable margin for profit and contingencies. HB 7, 79th Legislature,
Regular Session, amended various provisions of the workers' compensation regulatory
statutes, including adding subdivision (2-a) to Article 5.55 to define "premium"
to mean the amount charged for a workers' compensation insurance policy, including
any endorsements, after the application of individual risk variations based
on loss or expense considerations. HB 7 also added Article 5.55A to the Insurance
Code to require that workers' compensation insurers file their underwriting
guidelines with the Department. In accordance with Article 5.55A §3,
Article 5.55A may be enforced in the manner provided by §38.003(g). Chapter
706 was enacted and Article 5.13-2, §2 was amended in SB 99 by the 79th
Legislature, Regular Session, to add specific regulations for identity theft
as a commercial insurance product and as a personal insurance product. 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.
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 July 24, 2006.
TRD-200603900
Brenda Caldwell
Assistant General Counsel
Texas Department of Insurance
Effective date: August 13, 2006
Proposal publication date: May 26, 2006
For further information, please call: (512) 463-6327
Subchapter J. PROHIBITED TRADE PRACTICES
28 TAC §21.1007
The Commissioner of Insurance adopts amendments to §21.1007,
concerning prohibitions on the use of unfair underwriting guidelines involving
water damage claims, previous mold damage, or mold damage claims. The amendments
are adopted with changes to the statutory citations in proposed text published
in the February 10, 2006, issue of the
Texas Register
(31 TexReg 792). The Department has made changes to the text of the
rule to update statutory references changed as a result of the enactment of
the Texas Legislative Council's nonsubstantive Insurance Code revision by
the 78th Texas Legislature, Regular Session, 2003 and the 79th Texas Legislature,
Regular Session, 2005.
The amendments include a new definition of the term appliance, a mold remediation
certification standard consistent with the Occupations Code and the Insurance
Code, and updated references to statutory citations and agency nomenclature.
The adopted amendments are necessary to implement changes enacted by the 79th
Legislature, Regular Session, in HB 941, effective September 1, 2005 and HB
1328, effective May 24, 2005. HB 941 amended Insurance Code Article 5.35-4 §2
by adding a definition of appliance in subdivision (4). HB 1328 amended the
Insurance Code Article 21.21-11 §3(4)(A) to be consistent with the Occupations
Code §1958.154 by providing that a certificate of mold remediation issued
to the property owner must establish with reasonable certainty that the underlying
cause of the mold at the property has been remediated.
The new statutory definition of appliance in Insurance Code Article 5.35-4 §2(4)
requires amendment of the definition of appliance-related claim in current §21.1007(b)(5).
Prior to the enactment of HB 941, the Department's rule excluded the failure
of external attachments like hoses from the definition of appliance-related
claims. Article 5.35-4 §2(4) defines an appliance as "a household device
operated by gas or electric current, including hoses directly attached to
the device. The term includes air conditioning units, heating units, refrigerators,
dishwashers, icemakers, clothes washers, water heaters, and disposals." Therefore,
current §21.1007(b)(5) is amended, in accordance with the new statutory
definition of appliance, to provide that the term appliance as defined within
the definition of appliance-related claim means a household device operated
by gas or electric current, including hoses directly attached to the device.
HB 1328 enacts a consistent standard for evaluating whether or not the
underlying cause of mold has been remediated. Under the Occupations Code §1958.154,
an assessor must establish with reasonable certainty that the underlying cause
of mold has been remediated. Prior to the enactment of HB 1328, under the
Insurance Code Article 21.21-11 §3(4)(A), an assessor was required to
establish that the underlying cause of mold had been remediated; there was
no with reasonable certainty provision. Insurance Code Article 21.21-11 §3(4)(A)
was amended in HB 1328 to add the with reasonable certainty provision for
consistency with the Occupations Code §1958.154. Therefore, it is necessary
to amend §21.1007(e)(1)(D)(i) to incorporate the reasonable certainty
standard into the rule.
The adopted amendments also delete obsolete statutory citations and outdated
references to state agencies. Section 2, Article 21.49-1, which is referenced
in the §21.1007(b)(4) definition of insurer, was repealed by Acts 2001,
77th Legislature, Chapter 1419, §31(a), effective June 1, 2003; therefore,
the reference to the repealed statute is deleted, thereby updating the rule
to reflect the correct reference to the nonsubstantive revised Insurance Code
enacted by the 77th Legislature, effective June 1, 2003. Additional changes
are adopted throughout the text of the rule to change the references to the
Texas Board of Health and Texas Department of Health to the Department of
State Health Services. These changes are necessary because the former Texas
Department of Health became part of the Department of State Health Services
on September 1, 2004.
Amended §21.1007(b)(5) provides a more expansive definition of the
term appliance as defined within the definition of appliance-related claim;
as amended, an appliance-related claim pertains to a household device operated
by gas or electric current, including hoses directly attached to the device.
Amended §21.1007(e)(1)(D)(i) incorporates a standard consistent with
the language in the Insurance Code Article 21.21-11 §3(4)(A); it provides
that a certificate of mold remediation is issued when it is determined with
reasonable certainty that the underlying cause or causes of the mold at the
property have been remediated. Amended §21.1007(a)(4), which defines
the term insurer, deletes the reference to the obsolete statutory citation
for Section 2, Article 21.49-1 of the Insurance Code. Amended §§21.1007(d)(3)(C),
21.1007(e)(1)(d)(i)-(ii), and 21.1007(e)(2) reference the new agency name
Department of State Health Services in lieu of the former agency name the
Texas Department of Health.
SUMMARY OF COMMENTS AND AGENCY RESPONSE TO COMMENTS.
Comment: One commenter expressed support for the proposed amendments to §21.1007
because it implements statutory changes made by HB 941 and HB 1328. According
to the commenter, the specific amendments make the protections afforded by §21.1007
stronger.
Agency Response: The Department agrees and appreciates the supportive comment.
NAMES OF THOSE COMMENTING FOR AND AGAINST THE SECTION.
For: Office of Public Insurance Counsel.
The amendments are adopted pursuant to the Insurance Code Article
5.35-4, Article 21.21-11, and §36.001. Article 5.35-4 §2(4) includes
a definition of appliance. Under Article 5.35-4 §4 (enacted as §544.354
as part of the nonsubstantive revision of the Insurance Code by Acts 2005,
79th Legislature, Chapter 728, §11.015(a), effective September 1, 2005),
the Commissioner is specifically charged with adopting rules to accomplish
the purpose of this subchapter as defined by Article 5.35-4 §1 (enacted
as §544.351 as part of the nonsubstantive revision of the Insurance Code
by Acts 2005, 79th Legislature, Chapter 728, §11.015(a) effective September
1, 2005). The purpose of §544.351 is to protect people and property from
being unfairly stigmatized in obtaining residential property insurance by
the filing of a water damage claim or claims under a residential property
insurance policy. Article 21.21-11 §3(4) provides that a certificate
of mold remediation is evidence of remediation if it has been established
with reasonable certainty that the underlying cause of the mold at the property
has been remediated. Under Article 21.21-11 §4 (enacted as §544.304
as part of the nonsubstantive revision of the Insurance Code by Acts 2005,
79th Legislature, Chapter 728, §11.014(a) effective September 1, 2005),
the Commissioner has specific authority to adopt rules as necessary to implement
Chapter 544 Subchapter G relating to Mold Claim or Damage. 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.
§21.1007.Restrictions on the Use of Underwriting Guidelines Based On a Water Damage Claim(s), Previous Mold Damage or a Mold Damage Claim(s).
(a)
Purpose. The purpose of this section is to protect persons
and property from being unfairly stigmatized in obtaining residential property
insurance by previous mold damage or by the filing of mold damage claims,
a water damage claim, or certain appliance-related claims, under a residential
property insurance policy.
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Residential property insurance--Insurance against loss
to residential real property at a fixed location or tangible personal property
provided in a homeowners policy, including a tenant policy, a condominium
owners policy, or a residential fire and allied lines policy.
(2)
Underwriting guideline--A rule, standard, guideline, or
practice; whether written, oral, or electronic; that is used by an insurer
or an agent of an insurer to decide whether to accept or reject an application
for a residential property insurance policy or to determine how to classify
the risks that are accepted for the purpose of determining a rate.
(3)
Consumer--The person making the application to insure a
property and includes both existing insureds and applicants for insurance.
(4)
Insurer--An insurance company, reciprocal or interinsurance
exchange, mutual, capital stock company, county mutual insurance company,
farm mutual insurance company, association, Lloyd's plan company, or other
entity writing residential property insurance in this state. The term includes
an affiliate as described by §823.003 of the Insurance Code if that affiliate
is authorized to write and is writing residential property insurance in this
state. The term does not include the Texas Windstorm Insurance Association,
the FAIR Plan, or an eligible surplus lines insurer regulated under Chapter
981.
(5)
Appliance-related claim--A request by an insured for indemnification
from an insurer for a loss arising from the discharge or leakage of water
or steam from an appliance that is the direct result of the failure of the
appliance. An appliance means a household device operated by gas or electric
current, including hoses directly attached to the device. The term includes
air conditioning units, heating units, refrigerators, dishwashers, icemakers,
clothes washers, water heaters, and disposals.
(6)
Water damage claim--A request by an insured for indemnification
from an insurer for a loss arising from the discharge or leakage of water
or steam that is the direct result of the failure of a plumbing system or
other system that contains water or steam.
(c)
Restrictions on the use of a water damage claim in underwriting.
An insurer shall not use an underwriting guideline based solely upon a single
prior water damage claim either filed by the applicant or on the covered property.
Nothing contained herein shall preclude an insurer from the surcharge and
renewal provisions of §551.107.
(d)
Restrictions on underwriting and rating and the inspection
and certification process of appliance-related claims.
(1)
Except as provided in §544.353(e) of the Insurance
Code an insurer shall not use a prior appliance-related claim as a basis for
determining a rate to be paid or for determining whether to issue, renew,
or cancel a residential property insurance policy if the consumer complies
with the requirements specified in §544.353(c) and §544.353(d) of
the Insurance Code. It is the consumer's option whether to have the appliance-related
claim inspected and certified, however, it is the consumer's responsibility
to bear the cost of such inspection and certification. An appliance-related
claim that is not inspected and certified shall be subject to the provisions
contained in subsection (c) of this section.
(2)
Nothing contained in subsection (d) of this section shall
exempt an insurer from the notice provisions contained in §551.107(e).
However, appliance-related losses are a special class of non-weather related
losses and the notice must be specific to the insured's appliance-related
loss history.
(3)
The following individuals who hold one or more of the following
licenses are inspectors that may have the knowledge and experience in the
remediation of water damage to inspect and certify the proper remediation
of an appliance-related claim:
(A)
inspectors licensed or certified through the Voluntary
Inspection Program pursuant to Article 5.33B of the Insurance Code;
(B)
persons licensed to perform real estate property inspections
under the Real Estate Licensing Act;
(C)
persons licensed as assessors or remediators by the Department
of State Health Services pursuant to Chapter 1958 of the Occupations Code;
(D)
licensed Texas Professional Engineers.
(4)
If the consumer has an inspection and certification performed
by an inspector under paragraph (3) of this subsection who is not on a list
provided by the insurer, the insurer may not reject or challenge the certification
unless the insurer re-inspects the property and specifies in writing the areas
of deficiency to the consumer. An insurer that re-inspects the property shall
maintain all documentation, including documentation that supports the areas
of deficiency identified by the inspection and specified in writing to the
consumer.
(5)
Inspectors shall also include persons who are authorized
by insurers to perform appliance-related water damage remediation inspections.
An insurer who provides a list of inspectors authorized by the insurer must
give verbal notice to any claimant at the time of the claimant's phone call
reporting the claim and written notice to the claimant within 15 days of receiving
notice of the claim that the claimant has the right to select the inspector
including the right to choose an inspector who is not on the insurer's list
who will perform the inspection of the appliance-related water damage remediation.
If the consumer has the inspection and certification performed by an inspector
from the list of inspectors authorized by the insurer then the insurer does
not have the right to reject or challenge the certification.
(6)
If the inspector determines by a physical inspection of
the residential property that the appliance-related water damage has been
properly remediated, the inspector shall issue within 10 days of the completion
of the inspection a Certificate of Appliance-Related Water Damage Remediation
(WDR-1).
(7)
The Certificate of Appliance-Related Water Damage Remediation
(WDR-1) is a form that is prescribed by the Department for use by inspectors
who will provide certifications. This form may be obtained from the Texas
Department of Insurance website http://www.tdi.state.tx.us or by requesting
such form from the Automobile/Homeowners Section, MC 104-PC, Texas Department
of Insurance, P.O. Box 149104, Austin, Texas, 78714-9104.
(8)
Information regarding inspectors that may have the knowledge
and experience in the remediation of water damage to inspect and certify the
proper remediation of an appliance-related claim may be obtained from the
Texas Department of Insurance website or by requesting such information from
the Automobile/Homeowners Section.
(e)
Restrictions on the use of previous mold damage or a claim
for mold damage in underwriting residential property insurance.
(1)
An insurer shall not use an underwriting guideline regarding
a residential property insurance policy based upon previous mold damage or
a prior mold damage claim filed either by the applicant or on the covered
property if:
(A)
the applicant for insurance has property that is eligible
for residential property insurance coverage;
(B)
the property has had mold damage;
(C)
mold remediation has been performed on the property; and
(D)
the property was:
(i)
remediated in accordance with the requirements specified
in Chapter 1958, Subchapter D of the Occupations Code, and any applicable
rules promulgated by the Department of State Health Services pursuant to Chapter
1958 of the Occupations Code; and a Certificate of Mold Damage Remediation
(MDR-1) is issued to the property owner under Section 1958.154 of the Occupations
Code which certifies with reasonable certainty that the underlying cause or
causes of the mold at the property have been remediated; or
(ii)
inspected by an independent mold assessor or adjuster,
who is licensed to perform mold assessment in accordance with rules promulgated
by the Department of State Health Services under Chapter 1958 of the Occupations
Code and the independent mold assessor or adjuster provides to the property
owner written certification on a Certificate of Mold Damage Remediation (MDR-1)
that based on the mold assessment inspection, the property does not contain
evidence of mold damage.
(2)
The Certificate of Mold Damage Remediation (MDR-1) is a
form that is prescribed by the Department for use by mold remediators, assessors,
and adjusters who will provide certifications. This form may be obtained from
the Texas Department of Insurance website http://www.tdi.state.tx.us or by
requesting such form from the Automobile/Homeowners Section or from the Department
of State Health Services.
(3)
Nothing contained herein shall preclude an insurer from
the surcharge and renewal provisions of §551.107.
(f)
Filing requirements for underwriting guidelines relating
to water damage claims, previous mold damage, or mold damage claims.
(1)
All underwriting guidelines relating to water damage claims,
previous mold damage, or mold damage claims shall be filed with the Department
and shall comply with the requirements contained in this section and with
any rules relating to underwriting guidelines that may be adopted by the Commissioner.
(2)
Underwriting guidelines relating to water damage claims,
previous mold damage, or mold damage claims shall be submitted to the Texas
Department of Insurance, Property and Casualty Intake Unit, Mail Code 104-3B,
P.O. Box 149104, Austin, Texas, 78714-9104 or to the Texas Department of Insurance,
Property and Casualty Intake Unit, 333 Guadalupe Street, Austin, Texas 78701.
(g)
Subsection (c) of this section applies only to a residential
property insurance policy that is delivered or issued for delivery based on
an application that is submitted on or after the effective date of this section.
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 July 24, 2006.
TRD-200603901
Brenda Caldwell
Assistant General Counsel
Texas Department of Insurance
Effective date: August 13, 2006
Proposal publication date: February 10, 2006
For further information, please call: (512) 463-6327
Chapter 133.
GENERAL MEDICAL PROVISIONS
Subchapter G. ELECTRONIC MEDICAL BILLING, REIMBURSEMENT, AND DOCUMENTATION
6.
FILINGS MADE EASY--RATE AND RATE MANUAL FILING REQUIREMENTS
7.
FILINGS MADE EASY--UNDERWRITING GUIDELINE FILING REQUIREMENTS FOR PERSONAL AUTOMOBILE, RESIDENTIAL PROPERTY, AND WORKERS' COMPENSATION INSURANCE
9.
FILINGS MADE EASY--REDUCED FILING REQUIREMENTS FOR CERTAIN INSURERS
Chapter 21.
TRADE PRACTICES
Part 2.
TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION