HBA-NRS H.B. 2548 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2548
By: Dutton
Insurance
4/8/2001
Introduced



BACKGROUND AND PURPOSE 

The commissioner of insurance has jurisdiction to set benchmark rates for
automobile insurance from which automobile insurers can deviate for
purposes of developing more competitive rates under the flexible rating
program for automobile insurance. Although the flexible rating program has
promoted increased competition among regulated insurers in Texas, the
process to determine and set the benchmark rates which drive the flexible
rating program has become unduly expensive, time consuming, burdensome, and
may not allow regulated automobile insurance companies which service most
of the automobile insurance market in Texas to compete more efficiently. A
review of less stringent regulatory laws in other states in which
automobile insurers are merely required to file their schedules of rates
for informational purposes revealed that automobile insurers have been able
to achieve lower automobile insurance rates without the expense of an
unduly burdensome rate regulatory system. In other states, antitrust laws
are used to enforce rate competition. House Bill 2548 requires an insurer
writing any form of motor vehicle insurance to file with the Texas
Department of Insurance a schedule of premium rates and  provides that the
program of flexible rating designed to help stabilize the rates charged for
insurance in lines of property and casualty insurance does not apply to
motor vehicle or automobile insurance. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 4 (Section 2, Article 5.03-5, Insurance Code), SECTION 5 (Article
5.05, Insurance Code), and SECTION 6 (Article 5.06, Insurance Code), of
this bill. 

ANALYSIS

House Bill 2548 amends the Insurance Code to require every insurance
company, corporation, interinsurance exchange, mutual, reciprocal,
association, Lloyd's plan insurer, or other insurer writing any form of
motor vehicle insurance to file with the Texas Department of Insurance a
schedule of premium rates charged for motor vehicle insurance and the
amount of the policy fee, membership fee, or initial charge, by whatever
name called, to be charged to a policyholder or a person applying for a
policy (Art. 5.01). The bill authorizes an insurer, rather than requiring
the commissioner of insurance (commissioner) by rule, to set the amount of
premium discounts for academic achievements and certain youth group members
(Arts. 5.033 and 5.03-5).  

The bill requires the commissioner, rather than the State Board of
Insurance (board), to promulgate rules relating to the recording and
reporting of loss experience (Art. 5.05). The bill requires the
commissioner, rather than the board, to adopt and approve policy forms and
endorsements and related law for each type of motor vehicle insurance (Art.
5.06).  

The bill provides that the commissioner, rather than the board, has
jurisdiction over hearings regarding grievances filed by policyholders or
insurers on any grievance occasioned by the commissioner's approval or
disapproval of any endorsement or policy form, or any rule or regulation
established under the terms of any endorsement or policy form (Art. 5.11).  

 The bill provides that the program of flexible rating designed to help
stabilize the rates charged for insurance in lines of property and casualty
insurance does not apply to motor vehicle or automobile insurance (Art.
5.101). 

EFFECTIVE DATE

September 1, 2001, and applies only to an insurance policy that is
delivered, issued for delivery, or renewed on or after January 1, 2002.