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 ACTION
The Commissioner of Insurance or his designee at a public hearing under Docket 
Number 2294, scheduled for June 24, 1997, at 10:00 a.m. in Room 100 of the 
William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin, 
Texas, will consider amendments to Part One Section I. A. 13. and Part Two 
Section I. E. and F. of the Texas Retrospective Rating Plan Manual (Manual). 
These recommended changes are necessary in order to establish the only allowable 
method for calculating the Residual Market Premium. (RMP). The proposed 
amendments to Part One Section I. A. 13. change the General Explanation of RMP 
to be consistent with the changes proposed in Part Two Section I. E. 
The proposed amendments to Part Two Section I. E. establish the only allowable 
method for calculating RMP. RMP is a proportion of either the deficit assessed 
or the surplus rebated to the member companies of the Texas Workers' 
Compensation Insurance Facility (Facility) based on its operating results. The 
Texas Workers' Compensation (WC) retrospective premium for certain 
retrospectively rated policies effective on or after May 1, 1991 through 
December 31, 1994 is the basis for determining RMP to be returned to or 
collected from policyholders. For the purposes of this rule, an assessment 
results in an additional premium charge to the policyholder and a surplus 
results in a refund to the policyholder. The Texas Department of Insurance shall 
publish a Residual Market Factor (RMF) for 1991, 1992, 1993 and 1994. Each RMF 
shall be determined by dividing the Total Assessed or Rebated Texas WC Residual 
Market Deficit or Surplus for the Accident Year by the Total Assessable Texas WC 
Voluntary Written Premium for the year to which the deficit or surplus relate. 
The insurance carriers shall then calculate each policyholder's RMP by applying 
the RMF for the appropriate year to the policyholder's Texas WC retrospective 
premium. 
The proposed amendments set forth the process to determine the proportionate 
share of the Facility's surplus for those policyholders with retrospectively 
rated policies effective from May 1, 1991 through December 31, 1991 that elected 
to pay the residual market premium as an additional elective element in addition 
to the retrospective premium and for those policyholders with retrospectively 
rated policies effective in calendar year 1992, 1993 and 1994. The proposed 
amendments provide that if the latest retrospective premium computation is the 
final adjustment, the RMP calculated on that adjustment is final and no further 
adjustment of the retrospective premium or the RMP shall be made, except as 
permitted in the Manual for clerical error. In the proposal, if the latest 
retrospective premium computation is being held open for further adjustment, the 
RMP will be recalculated after each computation of retrospective premium. If the 
RMP is different than previously calculated, the difference shall be returned to 
or collected from the policyholder accordingly. In a three-year plan or Long 
Term Construction Project plan, the RMF shall apply separately to each annual 
period as if the plan was written on one-year plans. 
The proposed amendments require each insurance carrier to calculate and return 
the appropriate RMP for each retrospectively rated policyholder no later than 
ninety days after the effective date of this rule. In addition, each insurance 
carrier is required to file with the Deputy Commissioner of WC of the TDI a 
report indicating the names of all retrospectively rated risks receiving a 
surplus refund, the amount of the surplus refund each received and the date the 
surplus refund was sent to each policyholder. 
The proposed amendments to Part Two Section I. F. are editorial in nature to 
delete unnecessary wording.
The staff requests that the proposed amendments to Part One, Section I. A. 13 
and Part Two, Section I E. and F. be adopted with an effective date of 15 days 
after notice of adoption is published in the Texas Register. 
The Commissioner has jurisdiction over this matter pursuant to Insurance Code, 
Articles 5.76-2 Section 4.04 (d) and (e), 5.77 and 5.96. 
A copy of the amendments containing the full text of the proposed amendments is 
available for review in the Office of the Chief Clerk of the Texas Department of 
Insurance, 333 Guadalupe Street, Austin, Texas 78714-9092. For further 
information or to request copies of the amendments, please contact Ms. Angie 
Arizpe (512) 322-4147, (refer to Ref. Number W-0597-14-I). 
The staff and the Commissioner request that written comments to these proposed 
amendments be submitted prior to the public hearing on June 24, 1997. The 
written comments should be directed to Caroline Scott, General Counsel and Chief 
Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 
78714-9092. An additional copy of the comments is to be submitted to Nancy 
Moore, Deputy Commissioner Workers' Compensation, Texas Department of Insurance, 
P. O. Box 149092, Austin, Texas 78714-9092. Public testimony at the hearing on 
June 24, 1997, is also invited and encouraged. 
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). 
The agency hereby certifies that the proposal has been reviewed by the legal 
counsel and found to be within the agency's authority to adopt. 
Issued in Austin, Texas, on May 14, 1997.
TRD-9706372
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: May 14, 1997