TEXAS DEPARTMENT OF INSURANCENotification Pursuant to the Insurance Code, Chapter 5, Subchapter LAs required by the Insurance Code, Article 5.96 and 5.97, the Texas Register publishes notice of proposed actions by the Texas Board of Insurance. Notice of action proposed under Article 5.96 must be published in the Texas Register not later than the 30th day before the board adopts the proposal. Notice of action proposed under Article 5.97 must be published in the Texas Register not later than the 10th day before the Board of Insurance adopts the proposal. The Administrative Procedure Act, the Government Code, Chapters 2001 and 2002, does not apply to board action under Articles 5.96 and 5.97. The complete text of the proposal summarized here may be examined in the offices of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714- 9104.) This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure Act. The Commissioner of Insurance, at a public hearing under Docket Number 2233 scheduled for July 25, 1996, at 9:00 a.m. in room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street, Austin, Texas, will consider a form filing by the Texas Department of Human Services (Department) for a revised surety bond form entitled "Resident Fund Surety Bond" (Bond). The Bond is a requirement of 42 U.S.C.A. sec.1396r (c) (6) (C) and 40 TAC sec.19.405(g). The Department revised sections of 40 TAC Chapter 19 resulting in a change in the section of the rule that requires the Bond. Previously the Bond had been a requirement of 40 TAC sec.19.204 (j). The Bond is now a requirement of 40 TAC sec.19.405 (g). The Bond is being revised to change the statutory cite to 40 TAC Chapter 19. The broader statutory cite will eliminate the future need for the Department to file a revision if the section of the rule that requires the Bond is revised. There are no other revisions to the Bond. Copies of the full text of the proposed bond form for the Texas Department of Human Services is available for review in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714-9104. For further information or to request copies of the text, please contact Sylvia Gutierrez at (512) 463-6326, (refer to Reference Number O-0696-23). Any written comments should be directed to Office of the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of comments is to be submitted to David Durden, Deputy Commissioner, Property and Casualty Insurance Lines, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.97, which exempts it from the requirements of the Administrative Procedures Act. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on June 25, 1996. TRD-9609111 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Filed: June 26, 1996 Notification Pursuant to the Texas Insurance Code, Chapter 5, Subchapter L, Article 5.96 The Commissioner of Insurance will hold a public hearing under Docket Number 2234 on August 8, 1996, at 9:00 a.m., in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas to consider a petition by the staff of the Texas Department of Insurance proposing the adoption of revised Texas Workers' Compensation Classification Relativities to replace those adopted by the State Board of Insurance in Board Order Number 60489, dated August 30, 1993 and the adoption of a revised table to amend the Texas Basic Manual of Rules, Classification, and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (Manual). The petition requests consideration of a schedule of the revised Texas Workers' Compensation Classification Relativities and a table amending the Manual. The revised Texas Workers' Compensation Classification Relativities schedule is proposed to replace the Texas Workers' Compensation Classification Relativities adopted by the State Board of Insurance in Board Order 60489, dated August 30, 1993 and effective January 1, 1994. The table amending the Manual concerns the Expected Loss Rates and Discount Ratios. The revised table is intended to replace Table II, pages ER-21 through ER-29 of the Manual. The petition requests that the proposed revised Texas Workers' Compensation Classification Relativities and the revised table amending the Manual be made effective for workers' compensation policies with an effective date on or after January 1, 1997. Article 5.60 (a) of the Texas Insurance Code authorizes the Commissioner to determine hazards by classes and fix classification relativities applicable to the payroll in each class for workers' compensation insurance. Article 5.60(d) provides that the Commissioner revise the classification system at least once every five years. The current Workers' Compensation Classification Relativities were based on experience data reflecting workers' compensation experience from years preceding the 71st Legislature's Workers' Compensation Reform Legislation (Reform Legislation) which became effective on January 1, 1991. The Reform Legislation has had a dramatic effect on workers' compensation experience due to the adoption of revised medical schedules, permanent and partial disability ratings, and increases in maximum weekly benefits payable to injured workers. The staff proposes the revised classification relativities to more accurately reflect the experience under the current law and the additional changes in experience that occur over time, such as technological advances and improvement in safety programs. The staff proposes to cap the changes in the classification relativities at +35% and -35% to help minimize possible rate shock due to large changes in the relativities. Modifications to the classification relativities require concurrent changes in the table concerning Expected Loss Rates and Discount Ratios. The table is contained in the Manual as part of the uniform experience rating plan. Article 5.60 (b) of the Insurance Code authorizes the Commissioner to adopt the uniform experience rating plan and Article 5.60 (d) requires that the rating plans be revised at least once every five years. Table II of the Manual concerning Expected Loss Rates and Discount Ratios was adopted on September 17, 1993 and became effective on January 1, 1994. The current expected loss rates are essentially based on the level of losses used to experience rate a policy effective on July 1, 1993. Staff proposes an adjustment to be more reflective of the level of losses that would be used to experience rate policies that would be effective in 1997. Staff proposes to cap changes in the new expected loss rates at the square root of the ratio of the indicated expected loss rate to the current expected loss rate to best minimize possible premium shock which could otherwise occur based solely on the changes in the classification relativities, the expected loss rates and the discount ratios. The Commissioner has jurisdiction of this matter pursuant to the Texas Insurance Code, Articles 5.60 and 5.96. Copies of the full text of the staff petition and the proposed revised schedule and table are available for review in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. For further information or to request copies of the petition and proposed revised schedule and table, please contact Sylvia Gutierrez at (512) 322-4147 (refer to Reference Number W-0696-24-I) Comments on the proposed changes must be submitted in writing within 30 days after publication of the proposal in the Texas Register to the Office of the Chief Clerk, P. O. Box 149104, MC 113-2A, Austin, Texas, 78714-9104. An additional copy of the comment should be submitted to Philip Presley, Chief Property and Casualty Actuary, P. O. Box 149104, MC 105-5F, Austin, Texas, 78714-9104. This notification is made pursuant to the Texas Insurance Code, Article 5.96, which exempts action taken under this article from the requirements of the Administrative Procedure Act (Government Code, Title 10, Ch. 2001). This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on June 25, 1996. TRD-9609114 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Filed: June 26, 1996