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. PROPOSED The Commissioner of Insurance will hold a public hearing under Docket Number 2276 on January 22, 1997, 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 amendments to the Homeowners, Dwelling, Farm and Ranch Owners, and Farm and Ranch sections of the Texas Personal Lines Manual to establish an optional premium credit for residential property insurance policies for the installation of an acceptable dry hydrant within 1000 feet of a residential risk which is located in an unprotected area. The rules proposed for adoption in the staff petition are necessary to implement the recommendations of the Residential Property Insurance Loss Mitigation Advisory Committee. The petition requests consideration of the adoption of amendments to four rules in the Texas Personal Lines Manual. (1) In the Homeowners Section, Manual Rule VI-C is amended to add new item 7 "Water Supply Points (Dry Hydrants)." (2) In the Dwelling Section, Manual Rule VI-C is amended to add new item 5 "Optional Dwelling Credits." (3) In the Farm and Ranch Owners Section, Manual Rule VI-C is amended to add new item 7 "Water Supply Points (Dry Hydrants)." (4) In the Farm and Ranch Section, Manual Rule VI-D is amended to add new item 4 "Optional Farm and Ranch Credits." These rules specify the following standards that dry hydrants must meet to qualify for the credit: (1) Water supply points must be designed and certified by a registered engineer, hydrologist, geologist, or soil conservationist to provide a minimum of 30,000 gallons of water during a drought with an average 50 year cycle or an insurer may accept a less stringent standard. (2) The risk must be located in an unprotected area and within 1,000 feet of the supply point and within 5 miles of the responding fire station. (3) The responding fire apparatus must have drafting capability. (4) The responding department must verify on an annual basis that the supply point is operational, maintained, and accessible to fire apparatus at all times. The rules provide optional premium credits of up to 10% for Homeowners, Dwelling, Farm and Ranch Owners, and Farm and Ranch policies for the installation of a dry hydrant that meets the specifications. Commissioner's Order Number 94-1029 created the Residential Property Insurance Loss Mitigation Advisory Committee (Advisory Committee). The purpose of the Advisory Committee is to advise and make recommendations to the Commissioner of Insurance on reducing residential property insurance losses. The amount of losses paid are a vital factor in determining insurance rates. A significant reduction in the amount of losses paid will ultimately reduce residential property rates in Texas. In many instances, some of the losses that occur could be prevented through efforts to improve factors that have a direct bearing on losses. Prior to the establishment of the Advisory Committee, public hearings were held regarding the increasing losses from wind and hail, crime and freezing pipes. The purpose of the hearings was to allow public testimony concerning methods that could be used to help reduce the increasing losses in these areas. As a follow-up to the public hearings, the Advisory Committee was appointed to review the various methods suggested for reducing losses, as well as any other methods, and to make appropriate recommendations to the Commissioner for the implementation of such recommendations. One of the Advisory Committee's recommendations concerns a credit for the installation of a dry hydrant for fire protection in rural or unprotected areas. The Advisory Committee noted that a large number of Texans are migrating from urban population centers into unprotected small subdivisions and rural communities. With this population movement into unprotected rural areas, wildfires which once burned only brush and grass have the potential to destroy homes and property with increasing frequency. The Advisory Committee recommended that dry hydrants be considered as an acceptable means of offering fire protection to unprotected and rural residential property and that the installation of a dry hydrant be offered a credit under the rating of residential property, provided the installation meets certain standards and specifications. A dry hydrant consists of a supply pipe connected to the hydrant and to a nearby body of water for the purpose of allowing a pumper truck to draft water directly from the water supply through the hydrant in order to fight a residential fire. Although a dry hydrant does not provide as much protection as a fire hydrant connected to a water distribution system, the availability of a dry hydrant near residential property affords fire protection. Currently, dry hydrants are not recognized in Texas as an acceptable means of fire protection for the purposes of reducing the cost of insurance in rural or unprotected areas. It was recommended that the Homeowners, Dwelling, Farm and Ranch Owners and Farm and Ranch sections of the Texas Personal Lines Manual be amended to provide an optional credit of up to (10%) for the installation of an acceptable dry hydrant within 1000 feet of a residential risk which is located in an unprotected area. The Advisory Committee reasoned that the credit for installation of a dry hydrant would create an incentive for property owners to install dry hydrants in fire-prone unprotected areas. By bolstering fire protection in these unprotected areas, losses from wildfires could be reduced thus allowing for a decrease in residential property insurance rates. The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.101, 5.96, and 5.98. Copies of the full text of the staff petition and the proposed Manual rules 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 amendments, please contact Angie Arizpe at (512) 322-4147 (refer to reference Number P-1196-52-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 David Durden, Deputy Commissioner for Property and Casualty Lines, P. O. Box 149104, MC 104-5A, Austin, Texas 78714-9104. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts action taken under this article from the requirements of the Administrative Procedure Act (Government Code, Title 10, chapter 2001). Issued in Austin, Texas, on December 12, 1996. TRD-9618113 Caroline Scott Assistant General Counsel Texas Department of Insurance Filed: December 12, 1996 ADOPTED ADOPTION OF NEW AND/OR ADJUSTED 1997 MODEL PRIVATE PASSENGER AUTOMOBILE PHYSICAL DAMAGE RATING SYMBOLS FOR THE TEXAS AUTOMOBILE RULES AND RATING MANUAL The Commissioner of Insurance, at a public hearing under Docket Number 2264 held at 9:00 a.m., November 26, 1996, in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas, adopted amendments proposed by staff to the Texas Automobile Rules and Rating Manual (the Manual). The amendments consist of new and/or adjusted 1997 model Private Passenger Automobile Physical Damage Rating Symbols and revised identification information. Staff's petition (Ref. Number A-0996-48-I) was published in the October 25, 1996, issue of the Texas Register (21 TexReg 10537). The new and/or adjusted symbols for the Manual's Symbols and Identification Section reflect data compiled on damageability, repairability, and other relevant loss factors for the 1997 model year of the listed vehicles. The amendments as adopted by the Commissioner of Insurance are shown in exhibits on file with the Chief Clerk under Ref. Number A-0996-48-I, which are incorporated by reference into Commissioner's Order Number 96-1434 The Commissioner of Insurance has jurisdiction over this matter pursuant to the Insurance Code, Articles 5.10, 5.96, 5.98, and 5.101. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act). Consistent with the Insurance Code, Article 5.96(h), the Department will notify all insurers writing automobile insurance of this adoption by letter summarizing the commissioner's action. Issued in Austin, Texas, on December 12, 1996. TRD-9618112 Caroline Scott Assistant General Counsel Texas Department of Insurance Filed: February 18, 1997