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. ADOPTED The Commissioner of Insurance has adopted amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (the Manual). The amendments were proposed in a petition proposed by the staff of the Workers' Compensation Division of the Texas Department of Insurance on October 16, 1996. Notice of the proposal (Reference Number W-1096-44-I) was published in the October 22, 1996, issue of the Texas Register (21 TexReg 10441). The amendments were considered at a public hearing held on November 26, 1996, at 9:00 a.m. under Docket Number 2260 in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas. The purpose of these amendments to the Manual is to eliminate conflicting language within the Manual and to provide clarification to rules, classifications, endorsements and forms by amending the language. The adopted changes are summarized as follows: 1. Clarify the rules to reflect that (1) the effective date of the policy determines the rules and rates applicable to the policy; (2) the anniversary rating date determines the date the experience modifier applies and the date the Experience Rating Plan rules are applicable to the policy. 2. Amend the language in the rules to reflect the language of the standard workers' compensation policy as amended in November, 1995. 3. Show the order of calculation of workers' compensation policy costs in a rule and delete all other examples in the rules of how the policy costs are determined in order to eliminate conflicts. 4. Clarify the rules to reflect that the payroll limitations for executive officers apply regardless of the classification applicable to that executive officer. 5 .Clarify the rules to reflect that business allowances, such as automobile, housing, etc., per diem expenses in excess of IRS guidelines, and automobile mileage reimbursements in excess of IRS guidelines are included in the definition of remuneration. 6. Amend the maximum minimum premium from $500 to $250. 7. State in the rules that "test modifiers" cannot be applied to the policy and cannot be negotiated. 8. Add a rule to define Schedule Rating. 9. Amend the language concerning premium discount as it applies to workers' compensation policies written through the group purchase program and allow the insurance company and the group administrator to agree on how to determine the final premium discount for the group even though not all of the policies have been audited. 10. Delete obsolete language from Rule IX. E. Employee Leasing Arrangements and allow the completion of the Employee Provider Form EP-1, Employee Provider Form EP-1A and the Employee Provider/Client Company Endorsement to be optional with the insuring company, which includes the Texas Workers' Compensation Insurance Fund. 11. Amend Rule IX Deductible Programs to discontinue the filing of the Deductible Notice of Election form with the Texas Department of Insurance, but require the insuring company to have the completed Deductible Notice of Election form in the file for each insured so that it is available to the Department upon specific request. 12. Amend Section I A. of the Experience Rating Plan to clarify which insurance company is responsible for calculating the experience modifier for a risk when there are multiple insurers writing the risk. 13. Amend Section I A. of the Experience Rating Plan to require that upon receipt of a written request, an insurance company is to provide unit statistical data to the insurance company responsible for calculating the experience modifier for an insured or to the entity calculating experience modifiers on behalf of that insurance company. In addition, upon request, an insurance company must provide a copy of the modifier calculation of an insured to another insurance company. All requests must include either the current policy information page for the insured or a letter of authority signed by the insured. 14. Amend Section 1 C. 4. of the Experience Rating Plan to clarify how the anniversary rating date is established when there are multiple policies for the same risk. 15. Amend Section I C. of the Experience Rating Plan to set forth ways to establish a different anniversary rating date. 16. Clarify Section III A. of the Experience Rating Plan so that only experience developed under a workers' compensation policy or as a certified self-insurer can be used to determine eligibility for experience rating and to actually calculate the experience modifier. 17. Amend Section V E. of the Experience Rating Plan to indicate what experience modifier applies when there is no modifier calculated at the time the policy is issued; to indicate that whenever there is a decrease in the premium as a result of an experience modifier being added to the policy, the decrease in premium is always applicable to the effective date of the policy or to the anniversary rating date, if different than effective date of the policy and to indicate when an increase in premium as a result of adding the experience modifier is applicable to the policy. 18. Amend Section V F. of the Experience Rating Plan to clarify that when the unit statistical data is received by the insuring company, the experience modifier will be recalculated and the application of the revised modifier is governed by Section G. of the Experience Rating Plan. 19. Amend the Introduction to the Endorsements & Forms Section to require insurance companies to either show an endorsement issue date or a sequential number on each endorsement in order to determine the order of issuance. 20. Amend the Texas Amendatory Endorsement WC 42 03 01 to delete the reference to the short rate cancellation penalty being applied at the time of final payroll audit since short rate cancellations are no longer applicable. 21. Delete the following endorsements as they are no longer applicable: Texas Assigned Risk Pool--Maritime Coverage Endorsement (Limited Coverage for Masters or Members of the Crews of Vessels) WC 42 02 01; Texas Workers' Compensation Insurance Fund -Other States Endorsement (Reimbursement for Temporary Operations Only) WC 42 03 07; and S.B. 1 Litigation Surcharge Endorsement WC 42 04 05; 22. Amend Employee Provider/Client Company Endorsement WC 42 04 06A to substitute the Fund for the Facility in the wording of the endorsement and to delete Section 12 of the endorsement in its entirety since it is in conflict with the Statute. 23. Amend the language in form DNE-1 to track the language in the rule and the endorsements pertaining to the deductible to eliminate the conflicts. 24. Amend the timing of the filing requirements for the filing of form GPP-2 for groups participating in the group purchase program. 25. Eliminate the Workers' Compensation Negotiated Experience Modifier form. 26. Editorial changes throughout the Manual to correct punctuation, typographical errors, reference to the Statutes, and reference to rules contained in the Manual. 27. Editorial changes to the footnotes and classification wordings in the Classification Section of the Manual. 28. Addition of several classification wordings that were inadvertently left out when then classifications were reduced and combined effective January 1, 1994. 29. Divide the Wrecking Classification Code 5701 into the following classifications: Concrete or Concrete Encased Steel & Drivers-Code 5213; Iron or Steel & Drivers-Code 5057; Masonry & Drivers-Code 5022 and Wooden - including dwellings & Drivers-Code 5403. 30. Changes in the following classifications to classifications with lower relativities: Appraisers - Tax from Code 4511 to Code 8742; Breakwater or Jetty Construction from Code 6219 to Code 6045; Dike or Revetment Construction & Drivers from Code 6219 to Code 6045; Kennel Employees & Drivers from Code 0113 to Code 8831; Forestry Personnel-Planting & Supervision of Timber Forest from Code 0042 to Code 0005; Inspection of Risks for Insurance or Valuation Purposes from Code 4511 to Code 8742; Plant Rental or Maintenance from Code 0035 to Code 8017; Satellite Dish Installation from Code 5l90 to Code 7600; and Service Station Wash Pit Cleaning from Code 9402 to Code 7219. The Commissioner adopted, with several changes to the proposal as noticed in the Texas Register, the amendments to the rules, endorsements and forms set forth above. Based on written comments on the proposal, the Commissioner adopted editorial changes to the footnotes of several classifications. In addition, Section D. 4. of the Procedures Section of the Appendix of the Manual was amended to reflect the same language as adopted in Section 1 A. 5th paragraph of the Texas Experience Rating Plan; Rule VI J. Schedule Rating was amended to delete the last phrase "nor must application be uniform between risks"; and the proposed changes to endorsement WC 42 03 04 were withdrawn by the staff at this time. The amendments as adopted by the Commissioner of Insurance are shown in exhibits on file with the Chief Clerk under Reference Number W-1096-44-I, which are incorporated by reference into Commissioner's Order Number 96-1471. The Commissioner has jurisdiction over this matter pursuant to the Insurance Code, Articles 5.56, 5.57. 5.60 and 5.96. 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). IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance , which are attached and incorporated hereto are hereby adopted to be effective for workers' compensation policies written with an effective date on and after March 1, 1997. Issued in Austin, Texas, on December 23, 1996. TRD-9618646 Caroline Scott Assistant General Counsel Texas Department of Insurance Filed: December 23, 1996