CHAPTER 5. RATING AND POLICY FORMS
INSURANCE CODE - NOT CODIFIED
TITLE 1. THE INSURANCE CODE OF 1951
CHAPTER 5. RATING AND POLICY FORMS
SUBCHAPTER A. MOTOR VEHICLE OR AUTOMOBILE INSURANCE
Art. 5.01. FIXING RATE OF AUTOMOBILE INSURANCE. (a) Every
insurance company, corporation, interinsurance exchange, mutual,
reciprocal, association, Lloyd's or other insurer, hereinafter
called insurer, writing any form of motor vehicle insurance in
this State, shall annually file with the State Board of
Insurance, hereinafter called Board, on forms prescribed by the
Board, a report showing its premiums and losses on each
classification of motor vehicle risks written in this State.
(b) The Board shall have the sole and exclusive power and
authority, and it shall be its duty to determine, fix, prescribe,
and promulgate just, reasonable and adequate rates of premiums to
be charged and collected by all insurers writing any form of
insurance on motor vehicles in this State, including fleet or
other rating plans designed to discourage losses from fire and
theft and similar hazards and any rating plans designed to
encourage the prevention of accidents. In promulgating any such
rating plans the Board shall give due consideration to the
peculiar hazards and experience of individual risks, past and
prospective, within and outside the State and to all other
relevant factors, within and outside the State. The Board shall
have the authority also to alter or amend any and all of such
rates of premiums so fixed and determined and adopted by it, and
to raise or lower the same or any part thereof.
(c) At least annually, the Board shall conduct a hearing to
review the reports of premiums earned and losses incurred in the
writing of motor vehicle insurance in this State and may fix,
determine, and adopt new rates in whole or in part or may alter
or amend rates previously fixed, determined, and adopted by the
Board to assure that those rates comply with the requirements of
this subchapter.
(d) Said Board shall have authority to employ clerical help,
inspectors, experts, and other assistants, and to incur such
other expenses as may be necessary in carrying out the provisions
of this law; provided, however, that the number of employees and
salary of each shall be fixed in the General Appropriation Bill
passed by the Legislature. The Board shall ascertain as soon as
practicable the annual insurance losses incurred under all
policies on motor vehicles in this State, make and maintain a
record thereof, and collect such data as will enable said Board
to classify the various motor vehicles of the State according to
the risk and usage made thereof, and to classify and assign the
losses according to the various classes of risks to which they
are applicable; the Board shall also ascertain the amount of
premiums on all such policies for each class of risks, and
maintain a permanent record thereof in such manner as will aid in
determining just, reasonable and adequate rates of premiums.
(e) Motor vehicle or automobile insurance as referred to in this
subchapter shall be taken and construed to mean every form of
insurance on any automobile or other vehicle hereinafter
enumerated and its operating equipment or necessitated by reason
of the liability imposed by law for damages arising out of the
ownership, operation, maintenance, or use in this State of any
automobile, motorcycle, motorbicycle, truck, truck-tractor,
tractor, traction engine, or any other self-propelled vehicle,
and including also every vehicle, trailer or semi-trailer pulled
or towed by a motor vehicle, but excluding every motor vehicle
running only upon fixed rails or tracks. Workers' Compensation
Insurance is excluded from the foregoing definition.
(f) Notwithstanding Subsections (a) through (d) of this article,
on and after the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, rates for personal automobile
insurance in this state are determined as provided by Article
5.101 of this code, and rates for commercial motor vehicle
insurance in this state are determined as provided by Article
5.13-2 of this code. On and after December 1, 2004, rates for
personal automobile insurance and commercial automobile insurance
in this state are determined as provided by Article 5.13-2 of
this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1953, 53rd Leg.,
p. 64, ch. 50, Sec. 2.
Amended by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 2.06, eff.
Sept. 2, 1987; Subsec. (f) added by Acts 1991, 72nd Leg., ch.
242, Sec. 2.02, eff. Sept. 1, 1991; Subsec. (f) amended by Acts
1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 8.04, eff. Jan. 1, 1992;
amended by Acts 1995, 74th Leg., ch. 984, Sec. 2, eff. Sept. 1,
1995; Subsec. (f) amended by Acts 2003, 78th Leg., ch. 206, Sec.
21.01, eff. June 11, 2003.
Art. 5.01B. PUBLIC INFORMATION. (a) Information filed or
otherwise provided by an insurer to the State Board of Insurance
for the purpose of determining, fixing, prescribing,
promulgating, altering, or amending commercial automobile
liability insurance rates under Article 5.01 of this code,
obtaining a rate deviation under Article 5.03 of this code, or
reporting losses under Article 5.04-1 of this code is public
information unless it is exempt under Section 3(a), Chapter 424,
Acts of the 63rd Legislature, Regular Session, 1973 (Article
6252-17a, Vernon's Texas Civil Statutes), or Section (b) of this
article.
(b) Information provided with an application under Section (d),
Article 5.03, of this code is exempt from the disclosure
requirements of this article.
Added by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 2.03, eff.
Sept. 2, 1987. Sec. (a) amended by Acts 1991, 72nd Leg., ch. 750,
Sec. 1, eff. Sept. 1, 1991.
Art. 5.03. PROMULGATED RATES AS CONTROLLING. (a) On and after
the filing and effective date of such classification of such
risks and rates, no such insurer, except as otherwise provided
herein, shall issue or renew any such insurance at premium rates
which are greater or lesser than those promulgated by the Board
as just, reasonable, adequate and not excessive for the risks to
which they respectively apply, and not confiscatory as to any
class of insurance carriers authorized by law to write such
insurance after taking into consideration the deviation
provisions of this Article. Any insurer desiring to write
insurance at rates different from those promulgated by the Board
shall make a written application to the Board for permission to
file a uniform percentage deviation for a lesser or greater rate,
on a statewide basis unless otherwise ordered by the Board, from
the class rates or classes of rates promulgated by the Board. Any
insurer desiring to write insurance under a classification plan
different from that promulgated by the Board shall make written
application to the Board for permission to do so; provided,
however, the Board shall approve the use of only such additions
or refinements in its classification plan as will produce
subclassifications which, when combined, will enable
consideration of the insurer's experience under both the Board
classification plan and its own classification plan. Such
application shall be approved in whole or in part by the Board,
provided the Board finds that the resulting premiums will be
just, adequate, reasonable, not excessive and not unfairly
discriminatory, taking into consideration the following:
(1) the financial condition of the insurer;
(2) the method of operation and expenses of such insurer;
(3) the actual paid and incurred loss experience of the insurer;
(4) earnings of the insurer from investments together with a
projection of prospective earnings from investments during the
period for which the application is made; and
(5) such application meets the reasonable conditions,
limitations, and restrictions deemed necessary by the Board.
In considering all matters set forth in such application the
Board shall give consideration to the composite effect of items
(2), (3), and (4) above and the Board shall deny such application
if it finds that the resulting premiums would be inadequate,
excessive, or unfairly discriminatory. Any original or renewal
policy of insurance issued pursuant to an approved plan of
deviation shall have attached to or imprinted on the face of such
policy the following notice: "The premium charged for this policy
is greater than the premium rates promulgated by the State Board
of Insurance." The notice shall be in 10-point or larger
prominent typesize.
Except as the Board may authorize, the deviation provisions in
this Article shall not apply to insurance written pursuant to
other provisions of this Chapter in which a deviation from
standard rates is authorized, including, but not limited to,
automobile liability experience rating and fleet rating plans.
(b) The Board shall issue its order in writing setting forth the
terms of approval or reasons for denial of each application filed
for deviation. On January 1, 1974 and thereafter if the Board has
not issued its order within 30 days after the filing of an
application, the application shall be "deemed approved" by the
Board. Provided, however, that the Board may thereafter require
the applicant insurer to furnish proof to the Board that the
matters set out in the application are true and correct and that
such application meets the requirements of this Article. If after
notice and hearing the Board determines that any application
"deemed to have been approved" by the Board contains false or
erroneous information or the Board determines that the
application does not meet the requirements of this Article the
Board may suspend or revoke the approval "deemed to have been
granted."
An insurer that has received approval, or is "deemed to have
received approval" for the use of a deviation may apply for an
amendment to such deviation or by notice to the Board withdraw
the deviation.
(c) From and after the effective date of an application approved
by the Board, or "deemed to have been approved" by the Board,
such insurer may write insurance in accordance with such
approval. Provided, however, that the right to write insurance at
a lesser or greater rate as approved may be suspended or revoked
by the Board, after notice and hearing, if upon examination or at
any time it appears to or is the opinion of the Board that such
insurer:
(1) has had a change in its financial condition since the
granting of the application; or
(2) the actual paid and incurred losses of the insurer have
materially changed since the granting of the application; or
(3) there has been a material increase in expenses of such
insurer since the granting of the application; or
(4) there has been a material reduction in earnings from
investments by the insurer since the granting of the application;
or
(5) the insurer has failed or refused to furnish information
required by the Board; or
(6) the insurer has failed to abide by or follow its rate
deviation previously approved by the Board. The Board may suspend
the right of an insurer to write insurance at the rates approved
under such application, pending hearing, provided that the Board
in or accompanying the order suspending such right, sets such
hearing within not less than 10 nor more than 30 days following
the issuance of its order. The Board shall conduct the hearing
within not less than 10 nor more than 30 days following the
issuance of its order suspending such right, unless the insurer
subject to the order requests the Board to delay the hearing
beyond 30 days. The right to write insurance at the lesser or
greater rate previously approved by the Board shall automatically
terminate, except as herein provided, upon the promulgation by
the Board of new or different rates as provided for in the first
sentence of "Section (a)" of this Article, and as further
provided in paragraphs one and two of Article 5.01, Insurance
Code, as amended. After the effective date of the Board's
promulgation or authorization of new or different rates, the
insurer may not thereafter write insurance at a lesser or greater
rate, except that an insurer may continue to write insurance at a
deviated rate by applying the percentage of the previously
approved deviation applicable to the prior rates as the
percentage of deviation applicable to the new or different rates
promulgated by the Board, limited, however, to a period of 60
days after the effective date of the new or different rates, and
not thereafter, and only if such insurer within 30 days following
promulgation by the Board of new or different rates, shall make a
written application to the Board for permission to deviate from
the new or different rates promulgated by the Board. The Board by
order may extend the use of prior approved deviations beyond the
60 day period hereinabove set out.
(d) It is expressly provided, however, that notwithstanding any
other provision of this chapter to the contrary, a rate or
premium for such insurance greater than the standard rate or
premium that has been promulgated by the Board may be used on any
specific risk if:
(1) a written application is made to the Board naming the insurer
and stating the coverage and rate proposed;
(2) the person to be insured or person authorized to act in
relation to the risk to be insured consents to such rate;
(3) the reasons for requiring such greater rate or premium are
stated in or attached to the application;
(4) the person to be insured or person authorized to act for such
person signs the application; and
(5) the Board approves the application by order or by stamping.
(e) In the administration of this Act the Board shall resolve by
rules and regulations, to the extent permitted by law, any
conflicts or ambiguities as may be necessary to accomplish the
purposes of this Act.
(f) This Article, as amended, is effective September 1, 1973.
(g) Notwithstanding Sections (a) through (e) of this article, on
and after the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, rates for personal automobile
insurance in this state are determined as provided by Article
5.101 of this code, and rates for commercial motor vehicle
insurance in this state are determined as provided by Article
5.13-2 of this code. On and after December 1, 2004, rates for
personal automobile insurance and commercial automobile insurance
in this state are determined as provided by Article 5.13-2 of
this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1971, 62nd Leg.,
p. 864, ch. 104, Sec. 1, eff. April 30, 1971; Acts 1973, 63rd
Leg., p. 1118, ch. 425, Sec. 1, eff. Sept. 1, 1973; Acts 1977,
65th Leg., p. 1981, ch. 792, Sec. 1, eff. Aug. 29, 1977.
Subsec. (g) added by Acts 1991, 72nd Leg., ch. 242, Sec. 2.04,
eff. Sept. 1, 1991; Subsec. (g) amended by Acts 1991, 72nd Leg.,
2nd C.S., ch. 12, Sec. 8.05, eff. Jan. 1, 1992; amended by Acts
1995, 74th Leg., ch. 984, Sec. 4, eff. Sept. 1, 1995; Subsec. (g)
amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.05, eff. June
11, 2003.
Art. 5.04. EXPERIENCE AS FACTOR. (a) To insure the adequacy and
reasonableness of rates the Board may take into consideration
past and prospective experience, within and outside the State,
and all other relevant factors, within and outside the State,
gathered from a territory sufficiently broad to include the
varying conditions of the risks involved and the hazards and
liabilities assumed, and over a period sufficiently long to
insure that the rates determined therefrom shall be just,
reasonable and adequate, and to that end the Board may consult
any rate making organization or association that may now or
hereafter exist.
(b) As a basis for motor vehicle rates under this subchapter, the
State Board of Insurance shall use data from within this State to
the extent that the data is credible and available.
(c) Notwithstanding Subsections (a) and (b) of this article, on
and after the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, rates for personal automobile
insurance in this state are determined as provided by Article
5.101 of this code, and rates for commercial motor vehicle
insurance in this state are determined as provided by Article
5.13-2 of this code. On and after December 1, 2004, rates for
personal automobile insurance and commercial automobile insurance
in this state are determined as provided by Article 5.13-2 of
this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1953, 53rd Leg.,
p. 64, ch. 50, Sec. 3.
Amended by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 2.01, eff.
Sept. 2, 1987; Subsec. (c) added by Acts 1991, 72nd Leg., ch.
242, Sec. 2.05, eff. Sept. 1, 1991; Subsec. (c) amended by Acts
1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 8.06, eff. Jan. 1, 1992;
amended by Acts 1995, 74th Leg., ch. 984, Sec. 5, eff. Sept. 1,
1995; Subsec. (c) amended by Acts 2003, 78th Leg., ch. 206, Sec.
21.06, eff. June 11, 2003.
Art. 5.04-1. REPORT OF BASIC LIMITS LOSSES. (a) A report filed
under Article 5.01(a) of this code must include the information
necessary to compute a Texas automobile experience modifier as
provided by this code or a rule adopted by the State Board of
Insurance. In reporting losses under Article 5.01(a) of this
code, an insurer may include only the following as basic limits
losses:
(1) indemnity losses, up to the basic limits for the losses;
(2) losses based on payments for immediate medical or surgical
treatment;
(3) fees paid to an attorney who is not an employee of the
insurer, if the fees were for services rendered in the trial of
an action arising under a covered claim;
(4) specific expenses incurred as a direct result of defending an
action in connection with which the expense is claimed;
(5) specific expenses, other than claims adjustment expenses,
incurred in connection with the settlement of a claim with
respect to which the expense is claimed;
(6) all medical payments coverage; and
(7) personal injury protection coverage losses.
(b) In reporting its basic limits losses to the State Board of
Insurance, each insurer shall disclose the specific nature of
each loss expense claimed and shall show to the Board's
satisfaction that each specific expense claimed was necessary
with respect to the specific risk involved.
Added by Acts 1991, 72nd Leg., ch. 750, Sec. 2, eff. Sept. 1,
1991.
Art. 5.06. POLICY FORMS AND ENDORSEMENTS.
(1) The Board shall adopt a policy form and endorsements for each
type of motor vehicle insurance subject to this subchapter. The
coverage provided by a policy form adopted under this subsection
is the minimum coverage that may be provided under an insurance
policy for that type of insurance in this State. Each policy form
must provide the coverages mandated under Articles 5.06-1 and
5.06-3 of this code, except that the coverages may be rejected by
the named insured as provided by those articles.
(2) Except as provided by Subsections (3) and (4) of this
article, an insurer may only use a form adopted by the Board
under this section in writing motor vehicle insurance delivered,
issued for delivery, or renewed in this State. A contract or
agreement not written into the application and policy is void and
of no effect and in violation of the provisions of this
subchapter, and is sufficient cause for revocation of license of
such insurer to write automobile insurance within this State.
(3) The Board may approve the use of a policy form adopted by a
national organization of insurance companies, or similar
organization, if the form, with any endorsement to the form
required and approved by the Board, provides coverage equivalent
to the coverage provided by the form adopted by the Board under
Subsection (1) of this section.
(4) An insurer may use an endorsement to the policy form adopted
or approved by the Board under this article if the endorsement is
approved by the Board.
(5) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
(6) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
(7) The Board may not adopt or approve a policy form for private
passenger automobile insurance or any endorsement to the policy
if the policy or endorsement is not in plain language. For the
purposes of this subsection, a policy or endorsement is written
in plain language if it achieves the minimum score established by
the commissioner on the Flesch reading ease test or an equivalent
test selected by the commissioner, or, at the option of the
commissioner, if it conforms to the language requirements in a
National Association of Insurance Commissioners model act
relating to plain language. This subsection does not apply to
policy language that is mandated by state or federal law.
(8) The Board may withdraw its approval of a policy or
endorsement form at any time, after notice and hearing.
(9) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
(10) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
(11) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
(12)(a) Notwithstanding Subsections (1)-(10) of this article,
policy forms and endorsements for automobile insurance in this
state are regulated under Article 5.13-2 of this code.
(b) Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1981, 67th Leg.,
p. 2700, ch. 736, Sec. 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.07, eff. Sept.
1, 1991; Subsecs. (9), (10) added by Acts 1993, 73rd Leg., ch.
685, Sec. 14.04, eff. Sept. 1, 1993; Subsecs. (9), (10) amended
by and (11) added by Acts 2001, 77th Leg., ch. 971, Sec. 2, eff.
Sept. 1, 2001; Subsec. (12) added by Acts 2003, 78th Leg., ch.
206, Sec. 21.07, eff. June 11, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
727, Sec. 18, eff. April 1, 2007.
Art. 5.10. RULES AND REGULATIONS. The Board is hereby empowered
to make and enforce all such reasonable rules and regulations not
inconsistent with the provisions of this subchapter as are
necessary to carry out its provisions.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.13, eff. Sept.
1, 1991.
Art. 5.11. HEARING ON GRIEVANCES. (a) Any policyholder or
insurer shall have the right to a hearing before the Board on any
grievance occasioned by the approval or disapproval by the Board
of any classification, rate, rating plan, endorsement or policy
form, or any rule or regulation established under the terms
hereof, such hearing to be held in conformity with rules
prescribed by the Board. Upon receipt of request that such
hearing is desired, the Board shall forthwith set a date for the
hearing, at the same time notifying all interested parties in
writing of the place and date thereof, which date, unless
otherwise agreed to by the parties at interest, shall not be less
than ten (10) nor more than thirty (30) days after the date of
said notice. Any party aggrieved shall have the right to apply to
any court of competent jurisdiction to obtain redress.
(b) No hearing shall suspend the operation of any classification,
rate, rating plan or policy form unless the Board shall so order.
(c) Notwithstanding Subsections (a) and (b) of this article, on
and after the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, rates for personal automobile
insurance in this state are determined as provided by Article
5.101 of this code, and rates for commercial motor vehicle
insurance in this state are determined as provided by Article
5.13-2 of this code. On and after December 1, 2004, rates for
personal automobile insurance and commercial automobile insurance
in this state are determined as provided by Article 5.13-2 of
this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1953, 53rd Leg.,
p. 64, ch. 50, Sec. 6.
Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.14, eff. Sept.
1, 1991; Subsec. (c) amended by Acts 1991, 72nd Leg., 2nd C.S.,
ch. 12, Sec. 8.08, eff. Jan. 1, 1992; amended by Acts 1995, 74th
Leg., ch. 984, Sec. 7, eff. Sept. 1, 1995; Subsec. (c) amended by
Acts 2003, 78th Leg., ch. 206, Sec. 21.11, eff. June 11, 2003.
SUBCHAPTER B. CASUALTY INSURANCE AND FIDELITY, GUARANTY AND
SURETY BONDS
Art. 5.13. SCOPE OF SUBCHAPTER. (a) This subchapter applies to
every insurance company, corporation, interinsurance exchange,
mutual, reciprocal, association, Lloyd's plan, or other
organization or insurer writing any of the characters of
insurance business herein set forth, hereinafter called
"Insurer"; provided that nothing in this entire subchapter shall
be construed to apply to any county or farm mutual insurance
company or association, as regulated under Chapters 911 and 912
of this code, except that:
(1) Article 5.13-2 of this code shall apply to a county mutual
insurance company with respect to personal automobile and
commercial automobile insurance, residential and commercial
property insurance, and inland marine insurance;
(2) Article 5.20 of this code shall apply to a county mutual
insurance company with respect to each line of insurance that a
county mutual insurance company is authorized to write under
Section 912.151; and
(3) Article 5.20 of this code shall apply to a farm mutual
insurance company with respect to each line of insurance that a
farm mutual insurance company is authorized to write under
Section 911.151.
(b) This subchapter applies to the writing of casualty insurance
and the writing of fidelity, surety, and guaranty bonds, on risks
or operations in this State except as herein stated.
(c) Except as otherwise provided by this subchapter, this
subchapter does not apply to the writing of motor vehicle, life,
health, accident, professional liability, reinsurance, aircraft,
fraternal benefit, fire, lightning, tornado, windstorm, hail,
smoke or smudge, cyclone, earthquake, volcanic eruption, rain,
frost and freeze, weather or climatic conditions, excess or
deficiency of moisture, flood, the rising of the waters of the
ocean or its tributaries, bombardment, invasion, insurrection,
riot, civil war or commotion, military or usurped power, any
order of a civil authority made to prevent the spread of a
conflagration, epidemic or catastrophe, vandalism or malicious
mischief, strike or lockout, water or other fluid or substance,
resulting from the breakage or leakage of sprinklers, pumps, or
other apparatus erected for extinguishing fires, water pipes or
other conduits or containers, or resulting from casual water
entering through leaks or opening in buildings or by seepage
through building walls, including insurance against accidental
injury of such sprinklers, pumps, fire apparatus, conduits or
container, workers' compensation, noncommercial inland marine,
ocean marine, marine, or title insurance; nor does this
subchapter apply to the writing of explosion insurance, except
insurance against loss from injury to person or property which
results accidentally from steam boilers, heaters or pressure
vessels, electrical devices, engines and all machinery and
appliances used in connection therewith or operation thereby.
(d) This subchapter shall not be construed as limiting in any
manner the types or classes of insurance which may be written by
the several types of insurers under appropriate statutes or their
charters or permits.
(e) The regulatory power herein conferred is vested in the
commissioner.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1955, 54th Leg.,
p. 359, ch. 76, Sec. 1; Acts 2003, 78th Leg., ch. 206, Sec. 5.01,
eff. June 11, 2003; Acts 2003, 78th Leg., ch. 206, Sec. 6.01,
eff. Dec. 1, 2004.
Amended by:
Acts 2005, 79th Leg., Ch.
631, Sec. 1, eff. September 1, 2005.
Art. 5.13-1. LEGAL SERVICE CONTRACTS. (a) Every insurer governed
by Subchapter B of Chapter 5 of the Insurance Code, as amended,
and every life, health, and accident insurer governed by Chapter
3 of the Insurance Code, as amended, is authorized to issue
prepaid legal services contracts. Every such insurer or rating
organization authorized under Article 5.16 of the Insurance Code
shall file with the State Board of Insurance all rules and forms
applicable to prepaid legal service contracts in a manner to be
established by the State Board of Insurance. Certification, by a
qualified actuary, to the appropriateness of the charges, rates,
or rating plans, based upon reasonable assumptions, shall
accompany the filing along with adequate supporting information.
(b) The State Board of Insurance shall, within a reasonable
period, approve any form if the requirements of this section are
met. It shall be unlawful to issue such forms until approved or
to use such schedules of charges, rates, or rating plans until
filed. If the State Board of Insurance has good cause to believe
such rates and rating plans do not comply with the standards of
this article, it shall give notice in writing to every insurer or
rating organization which filed such rates or rating plans,
stating therein in what manner and to what extent such
noncompliance is alleged to exist and specifying therein a
reasonable time, not less than 30 days thereafter, in which such
noncompliance may be corrected. If the board has not acted on any
form, rate, rating plan, or charges within 30 days after the
filing of same, they shall be deemed approved. The board may
require the submission of whatever relevant information is deemed
necessary in determining whether to approve or disapprove a
filing made pursuant to this section.
(c) The right of such insurers to issue prepaid legal services
contracts on individual, group, or franchise bases is hereby
recognized, and qualified agents of such insurers who are
licensed under Article 21.07-1 or 21.14 of this code shall be
authorized to write such coverages under such rules as the
commissioner may prescribe.
(d) The State Board of Insurance is hereby vested with power and
authority under this article to promulgate, after notice of
hearing, and to enforce, rules and regulations concerning the
application to the designated insurers of this article and for
such clarification, amplification, and augmentation as in the
discretion of the State Board of Insurance are deemed necessary
to accomplish the purposes of this article.
(e) This article shall be construed as a specific exception to
Article 3.54 of the Texas Insurance Code.
(f) All legal services contracts and related promotional material
issued pursuant to Chapter 23 and the issuance of legal services
contracts pursuant to Article 5.13-1 shall be truthful and
accurate and shall properly describe the coverage offered. Such
description should include, but not be limited to, a description
of coverage offered as either an indemnity coverage or a contract
that provides only consultation and advice on simple legal
matters, either alone or in combination with a referral service,
and that provides fee discounts for other matters. To provide for
the actuarial soundness of a prepaid legal services contract
issued under this article, the State Board of Insurance may
require that prepaid legal services contracts have rates that are
adequate to reasonably provide the benefits under the prepaid
legal services contracts. This subsection does not apply to a
prepaid legal services contract that provides only consultation
and advice on simple legal matters, either alone or in
combination with a referral service, and that provides fee
discounts for other matters.
(g) The State Board of Insurance may not determine, fix,
prescribe, set, or promulgate maximum rates or maximum amounts of
premium to be charged for a prepaid legal services contract
issued under this chapter. Nothing in this Act shall be construed
as compelling the State Board of Insurance to establish standard
or absolute rates and the board is specifically authorized, in
its discretion, to approve different rates for different insurers
for the same risk or risks on the types of insurance covered by
this article. The board shall approve such rates as filed by any
insurer unless it finds that such filing does not meet the
requirements of this article.
(h) An insurer may not issue or renew a prepaid legal service
contract under this article after March 1, 2004.
Added by Acts 1975, 64th Leg., p. 134, ch. 60, Sec. 2, eff. Sept.
1, 1975.
Subsecs. (a), (b), (f), (g) amended by Acts 1995, 74th Leg., ch.
873, Sec. 1, eff. Sept. 1, 1995; Subsec. (c) amended by Acts
2001, 77th Leg., ch. 703, Sec. 7.03, eff. Sept. 1, 2001. Subsec.
(h) added by Acts 2003, 78th Leg., ch. 1181, Sec. 2, eff. Sept.
1, 2003.
Art. 5.13-2. RATES AND FORMS FOR CERTAIN PROPERTY AND CASUALTY
INSURANCE.
Purpose
Sec. 1. This article governs the regulation of insurance
described by Section 2 of this article. The purposes of this
article are to:
(1) promote the public welfare by regulating insurance rates to
prohibit excessive, inadequate, or unfairly discriminatory rates;
(2) promote availability of insurance;
(3) promote price competition among insurers to provide rates and
premiums that are responsive to competitive market conditions;
(4) prohibit price-fixing agreements and other anticompetitive
behavior by insurers;
(5) regulate the insurance forms used for lines of insurance
subject to this article to ensure that they are not unjust,
unfair, inequitable, misleading, or deceptive; and
(6) provide regulatory procedures for the maintenance of
appropriate information reporting systems.
Sec. 2. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.071(c), eff. September 1, 2007.
Sec. 3. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 4. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 5. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 5A. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 6. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 7. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 8. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Commissioner authority
Sec. 9. If the commissioner determines at any time that the
implementation of this article or any part thereof is contrary to
the public interest and has resulted in or may result in imminent
peril to the insurance consumers of this state, the commissioner
may issue an order stating the harm to the public and shall
thereafter rely upon Subchapters A-L of this chapter, or parts
thereof, in the regulation of property and casualty insurance.
Sec. 10. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 13. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.072(b), eff. September 1, 2007.
Sec. 14. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 15. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 16. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Added by Acts 1991, 72nd Leg., ch. 242, Sec. 2.15, eff. Sept. 1,
1991. Sec. 8(e) amended by Acts 1991, 72nd Leg., 2nd C.S., ch.
12, Sec. 8.01, eff. Jan. 1, 1992; Secs. 1 and 2 amended by Acts
1993, 73rd Leg., ch. 685, Sec. 6.07, eff. Sept. 1, 1993; Sec.
3(5), (6) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 6.08,
eff. Sept. 1, 1993; Secs. 5, 7 to 9 amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 6.09, eff. Sept. 1, 1993; Sec. 1 amended by
Acts 1995, 74th Leg., ch. 984, Sec. 8, eff. Sept. 1, 1995; Sec.
3(2) amended by Acts 1995, 74th Leg., ch. 984, Sec. 9, eff. Sept.
1, 1995; Sec. 10 amended by Acts 1995, 74th Leg., ch. 984, Sec.
10, eff. Sept. 1, 1995; Sec. 1 amended by Acts 1997, 75th Leg.,
ch. 1330, Sec. 1, eff. Sept. 1, 1997; Sec. 3(2) amended by Acts
1997, 75th Leg., ch. 438, Sec. 1, eff. Sept. 1, 1997; Sec. 8(e)
amended by Acts 1997, 75th Leg., ch. 1330, Sec. 2, eff. Sept. 1,
1997; Sec. 8(f) amended by Acts 1997, 75th Leg., ch. 1426, Sec.
1, eff. Sept. 1, 1997; Section heading amended by Acts 2003, 78th
Leg., ch. 206, Sec. 5.02, 6.02, eff. June 11, 2003; Sec. 1
amended by Acts 2003, 78th Leg., ch. 206, Sec. 5.03, 6.03, eff.
June 11, 2003; Sec. 2 amended by Acts 2003, 78th Leg., ch. 206,
Sec. 5.03, 6.03, eff. June 11, 2003; Sec. 3 amended by Acts 2003,
78th Leg., ch. 206, Sec. 6.04, eff. Dec. 1, 2004; Sec. 3(2)
amended by Acts 2003, 78th Leg., ch. 206, Sec. 5.04, eff. June
11, 2003; Sec. 4(b) amended by Acts 2003, 78th Leg., ch. 206,
Sec. 6.05, eff. Dec. 1, 2004; Sec. 4(d) amended by Acts 2003,
78th Leg., ch. 206, Sec. 6.05, eff. Dec. 1, 2004; Sec. 4(f) added
by Acts 2003, 78th Leg., ch. 206, Sec. 6.05, eff. Dec. 1, 2004;
Sec. 5(a) amended by Acts 2003, 78th Leg., ch. 206, Sec. 6.06,
eff. Dec. 1, 2004; Sec. 5(a-1) added by Acts 2003, 78th Leg., ch.
206, Sec. 6.06, eff. Dec. 1, 2004; Sec. 5(a-2) added by Acts
2003, 78th Leg., ch. 206, Sec. 6.06, eff. Dec. 1, 2004; Sec. 5(b)
amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.47(3), eff.
June 11, 2003; Sec. 5A added by Acts 2003, 78th Leg., ch. 206,
Sec. 6.07, eff. Dec. 1, 2004; Sec. 13 added by Acts 2003, 78th
Leg., ch. 206, Sec. 6.08, eff. Dec. 1, 2004; Sec. 14 added by
Acts 2003, 78th Leg., ch. 206, Sec. 6.09, eff. June 11, 2003;
Sec. 15 added by Acts 2003, 78th Leg., ch. 206, Sec. 6.10, eff.
June 11, 2003; Sec. 16 added by Acts 2003, 78th Leg., ch. 206,
Sec. 6.11, eff. Dec. 1, 2004.
Amended by:
Acts 2005, 79th Leg., Ch.
70, Sec. 1, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
71, Sec. 1, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
102, Sec. 4, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
727, Sec. 18, eff. April 1, 2007.
Acts 2005, 79th Leg., Ch.
1118, Sec. 1, eff. June 18, 2005.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.071(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.072(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.071(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.072(b), eff. September 1, 2007.
Art. 5.15-1. PROFESSIONAL LIABILITY INSURANCE FOR PHYSICIANS AND
HEALTH CARE PROVIDERS.
Sec. 1. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 2. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 4. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 4A. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 6.12,
eff. Sept. 1, 1993.
Sec. 4B. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 5. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 6. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 7. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 8. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 9. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Premium Discount Recoupment
Sec. 10. (a) Eligibility. Effective January 1, 1999, each insurer
that has filed and issued premium discounts to health care
professionals pursuant to Article 5.15-4 of this code shall be
eligible to elect to receive a premium tax credit in lieu of
indemnification for claims filed with the Attorney General under
Chapter 110, Civil Practice and Remedies Code.
(b) Amount of Tax Credit. An eligible company may elect to recoup
premium discounts issued to eligible health care professionals in
lieu of indemnification from the State of Texas for claims filed
under Chapter 110, Civil Practice and Remedies Code. Such
election shall be made as a credit that is part of the annual
premium tax return filed on or before March 1, 1999. An insurer
may credit the total amount of any discounts issued less any
reimbursements received prior to January 1, 1999, by the insurer
for claims filed under Chapter 110, Civil Practice and Remedies
Code, against its premium tax under Article 4.10 of this code.
The tax credit herein authorized shall be allowed at a rate not
to exceed 20 percent of the credit per year for five or more
successive years following the initial election made in March
1999. The balance of payments due the insurer and not claimed as
a tax credit may be reflected in the books and records of the
insurer as an admitted asset for all purposes, including
exhibition in annual statements pursuant to Article 6.12 of this
code. The tax credit allowed in any one year may not exceed the
premium tax due in that year.
(c) An eligible insurer that elects to receive tax credits shall
not be eligible to file claims for indemnity under Chapter 110,
Civil Practice and Remedies Code after January 1, 1999. Any
claims of an eligible insurer filed with the Attorney General
prior to January 1, 1999, that have not been reimbursed shall
also be deemed to have been waived by the insurer by making its
election. An insurer that elects not to recoup its discount
through tax credit will continue to remain eligible for
indemnification of eligible claims under Chapter 110, Civil
Practice and Remedies Code.
(d) The elections provided herein shall not affect the right of a
self-insurance trust created under Article 21.49-4 of this code
from seeking indemnification for eligible claims.
(e) The provisions of Article 21.46 of this code shall not apply
to the credits authorized herein.
Sec. 11. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 12. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.035(c), eff. September 1, 2007.
Sec. 12. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.036(b), eff. September 1, 2007.
Sec. 13. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.035(c), eff. September 1, 2007.
Added by Acts 1977, 65th Leg., p. 2054, ch. 817, Sec. 31.01, eff.
Aug. 29. 1977.
Sec. 2(2) amended by Acts 1987, 70th Leg., ch. 718, Sec. 1, eff.
Sept. 1, 1987; Sec. 4A added by Acts 1987, 70th Leg., 1st C.S.,
ch. 1, Sec. 2.05, eff. Sept. 2, 1987; Sec. 8 amended by Acts
1987, 70th Leg., 1st C.S., ch. 1, Sec. 7.01, eff. Sept. 2, 1987;
Sec. 3 amended by Acts 1989, 71st Leg., ch. 1027, Sec. 15, eff.
Sept. 1, 1989; Sec. 4B added by Acts 1989, 71st Leg., ch. 1027,
Sec. 16, eff. Sept. 1 1989; Sec. 2(3) amended by Acts 1991, 72nd
Leg., ch. 14, Sec. 284(15), eff. Sept. 1, 1991; Sec. 3 amended by
Acts 1991, 72nd Leg., ch. 606, Sec. 1, eff. Sept. 1, 1991; Sec.
4A amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.17D, eff.
Sept. 1, 1991; Sec. 4B(b) amended by Acts 1991, 72nd Leg., ch.
606, Sec. 2, eff. Sept. 1, 1991; Sec. 4(a) amended by Acts 1993,
73rd Leg., ch. 685, Sec. 6.11, eff. Sept. 1, 1993; Sec. 4A
repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 6.12, eff. Sept.
1, 1993; Sec. 8 amended by Acts 1997, 75th., ch. 746, Sec. 1,
eff. Sept. 1, 1997; Sec. 10 added by Acts 1997, 75th Leg., ch.
991, Sec. 1, eff. Sept. 1, 1997; Sec. 2(2) amended by Acts 2001,
77th Leg., ch. 1284, Sec. 5.01, eff. June 15, 2001; Sec. 8
amended by Acts 2001, 77th Leg., ch. 1284, Sec. 5.02, eff. June
15, 2001; Sec. 2(2) amended by Acts 2003, 78th Leg., ch. 141,
Sec. 1, eff. Sept. 1, 2003; Sec. 8 amended by Acts 2003, 78th
Leg., ch. 141, Sec. 2, eff. Sept. 1, 2003; Sec. 11 added by Acts
2003, 78th Leg., ch. 204, Sec. 10.08, eff. Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
184, Sec. 1, eff. May 27, 2005.
Acts 2005, 79th Leg., Ch.
727, Sec. 18, eff. April 1, 2007.
Acts 2005, 79th Leg., Ch.
1135, Sec. 1, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
1135, Sec. 2, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.034(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.035(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.036(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.034(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.035(c), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.036(b), eff. September 1, 2007.
Art. 5.22. PENALTIES. (a) The Board may suspend the license of
any advisory organization licensed under Article 5.73 of this
code, insurer or agent which fails to comply with an order of the
Board within the time limited by such order, or any extension
thereof which the Board may grant. The Board shall not suspend
the license of any advisory organization, agent or insurer for
failure to comply with an order until the time prescribed for an
appeal therefrom has expired or, if an appeal has been taken,
until such order has been affirmed. The Board may determine when
a suspension of license shall become effective and it shall
remain in effect for the period fixed by it, unless it modifies
or rescinds such suspension or until the order upon which such
suspension is based is modified, rescinded or reversed.
(b) No license shall be suspended except upon a written order of
the Board, stating its findings, made after a hearing held upon
not less than ten (10) days' notice to such person or
organization specifying the alleged violation.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.22, eff. Sept.
1, 1991.
Art. 5.23. JUDICIAL REVIEW. Any order or decision of the Board
shall be subject to review, which shall be on the basis of the
record of the proceedings before the Board and shall not be
limited to questions of law, by direct action in the District
Court of Travis County, instituted by any party aggrieved by any
action taken under this subchapter.
Pending final disposition of any proceedings which attack the
correctness of a rate, any insurer affected by such order may
continue to charge the rate which obtained prior to such order of
decrease or may charge the rate resulting from such order of
increase, on condition that the difference in the premiums be
deposited in a special account by said insurer, to be held in
trust by said insurer, and to be retained by said insurer or paid
to the holders of policies issued after the order of the Board,
as the court may determine.
In all other cases, the court shall determine whether the filing
of the appeal shall operate as a stay. The court may, in
disposing of the issue before it, modify, affirm or reverse the
order or decision of the Board in whole or in part.
Acts 1951, 52nd Leg., ch. 491.
SUBCHAPTER C. FIRE INSURANCE AND ALLIED LINES
Art. 5.25. BOARD SHALL FIX RATES. (a) The State Board of
Insurance shall have the sole and exclusive power and authority
and it shall be its duty to prescribe, fix, determine and
promulgate the rates of premiums to be charged and collected by
fire insurance companies transacting business in this State.
Said Board shall also have authority to alter or amend any and
all such rates of premiums so fixed and determined and adopted by
it, and to raise or lower the same, or any part thereof, as
herein provided.
(b) Notwithstanding Subsection (a) of this article, on and after
the effective date of S.B. No. 14, Acts of the 78th Legislature,
Regular Session, 2003, rates for homeowners and residential fire
and residential allied lines insurance coverage under this
subchapter are determined as provided by Subchapter Q of this
chapter, and rates for other lines of insurance subject to this
subchapter are determined as provided by Article 5.13-2 of this
code, except that on and after December 1, 2004, rates for all
lines of insurance subject to this subchapter are determined as
provided by Article 5.13-2 of this code.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1985, 69th Leg., ch. 861, Sec. 1, eff. June 15,
1985; Acts 1991, 72nd Leg., ch. 242, Sec. 2.23, eff. Sept. 1,
1991; Acts 1991, 72nd Leg., ch. 628, Sec. 10, eff. Sept. 1, 1991;
Subsec. (b) amended by Acts 1991, 72nd Leg., 2nd C.S., ch. 12,
Sec. 8.10, eff. Jan. 1, 1992; amended by Acts 1995, 74th Leg.,
ch. 984, Sec. 13, eff. Sept. 1, 1995; Subsec. (b) amended by Acts
1997, 75th Leg., ch. 1330, Sec. 3, eff. Sept. 1, 1997; Subsec.
(b) amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.12, eff.
June 11, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
727, Sec. 5, eff. April 1, 2007.
Art. 5.25A. RATES APPLICABLE TO CERTAIN LOCATIONS. (a) The State
Board of Insurance in adopting fire insurance and homeowners
insurance rates under this subchapter shall authorize a fringe
area rating as defined under its general basis rating schedule
for any dwelling located within five miles of the outer boundary
of a platted subdivision classified by the board under board
criteria as a first key town.
(b) Notwithstanding Subsection (a) of this article, on and after
the effective date of S.B. No. 14, Acts of the 78th Legislature,
Regular Session, 2003, rates for homeowners and residential fire
and residential allied lines insurance coverage under this
subchapter are determined as provided by Subchapter Q of this
chapter, and rates for other lines of insurance subject to this
subchapter are determined as provided by Article 5.13-2 of this
code, except that on and after December 1, 2004, rates for all
lines of insurance subject to this subchapter are determined as
provided by Article 5.13-2 of this code.
Added by Acts 1989, 71st Leg., ch. 481, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1991, 72nd Leg., ch. 242, Sec. 2.24, eff.
Sept. 1, 1991; Subsec. (b) amended by Acts 1991, 72nd Leg., 2nd
C.S., ch. 12, Sec. 8.11, eff. Jan. 1, 1992; amended by Acts 1995,
74th Leg., ch. 984, Sec. 14, eff. Sept. 1, 1995; Subsec. (b)
amended by Acts 1997, 75th Leg., ch. 1330, Sec. 4, eff. Sept. 1,
1997; Subsec. (b) amended by Acts 2003, 78th Leg., ch. 206, Sec.
21.13, eff. June 11, 2003.
Art. 5.25-3. FIRE INSURANCE RATES AND FIRE SUPPRESSION RATINGS
FOR BORDER MUNICIPALITY. The commissioner, in adopting fire
insurance rates for a municipality at or near the border between
this state and another state or the United Mexican States, shall
take into account the existence and capabilities of a fire
department or volunteer fire department that serves an adjoining
or nearby municipality in the other state or the United Mexican
States and that by agreement or by long-standing practice
provides fire suppression services to the Texas municipality.
Added by Acts 1997, 75th Leg., ch. 1413, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
727, Sec. 6, eff. April 1, 2007.
Art. 5.26. MAXIMUM RATE FIXED, AND DEVIATIONS THEREFROM. (a) A
maximum rate of premiums to be charged or collected by all
companies transacting in this state the business of fire
insurance, as herein defined, shall be exclusively fixed and
determined and promulgated by the Board, and no such fire
insurance company shall charge or collect any premium or other
compensation for or on account of any policy or contract of fire
insurance as herein defined in excess of the maximum rate as
herein provided for; provided, however, upon the written
application of the insured stating his reasons therefor, filed
with and approved by the Board, a rate in excess of the maximum
rate promulgated by the Board may be used on any specific risk.
(b) Any insurer desiring to write insurance at a less rate than
the maximum rate provided for in paragraph (a) above shall make a
written application to the Board for permission to file a uniform
percentage deviation for a lesser rate than the maximum rate, on
a state-wide basis or by reasonable territories as approved by
the Board, from the class rates or schedules or rating plans
respecting fire insurance and its allied lines of insurance or
class of risk within such kind of insurance or a combination
thereof promulgated by the Board. Such application shall specify
the basis of the deviation, and shall be accompanied by the data
upon which the applicant relies; provided, however, such
application, data and all other information filed in connection
with such deviation shall be public records open to inspection at
any reasonable time. The provisions of this paragraph shall not
be construed to prohibit the application of a uniform scale of
percentage deviations from the maximum rate provided the general
standards fixed in paragraph (d) hereof are met.
(c) Provided further, that any insurer desiring to write
insurance at a lesser net rate than the maximum rate provided for
in paragraph (a) above, either individually or as a member of a
group or association, said lesser net rate being obtained by the
application of a rating plan or procedure in use by it or by a
group or association of which it is a member, which said rating
plan or procedure shall apply only to special types or classes of
risk in connection with which an inspection or engineering
service and set of standards all acceptable to the Board are
used, and which inspection or engineering services and set of
standards have been and will continue to be maintained, shall
make a written application to the Board for permission to file
its said rating plan or procedure, the application of which would
produce such lesser net rate. Said application shall specify the
basis of the modification and shall be accompanied by the data on
which applicant relies. Every insurer or group or association
which avails itself of the provisions of this paragraph shall
thereafter follow in the conduct of its business as to such
classes or types of risks, only such rating plan or procedure
ordered as permitted by the Board for its use as to said special
types or classes of risks. If the Board shall issue an order
permitting such deviation, such insurer or such group or
association for it shall file with the Board all rates of premium
or deposit for individual risks underwritten by it, which rates
shall be considered as deviations from the rates that would have
been promulgated by the Board on such risks.
(d) In considering any application provided for in (b) or (c)
above, the Board shall give consideration to the factors applied
by insurers in determining the bases for rates; the financial
condition of the insurer; the method of operation and expenses of
such insurer; the loss experience of the insurer, past and
prospective, including where pertinent the conflagration and
catastrophe hazards, if any, both within and without this state;
to all factors reasonably related to the kind of insurance
involved; to a reasonable margin for an underwriting profit for
the insurer, and, in the case of participating insurers, to
policyholders' dividends. The Board shall issue an order
permitting the deviation for such insurer to be filed if it is
found to be justified upon the applicant's showing that the
resulting premiums would be adequate and not unfairly
discriminatory. The Board shall issue an order denying such
application if it finds that the resulting premiums would be
inadequate or unfairly discriminatory. As soon as reasonably
possible after such application has been made the Board shall in
writing permit or deny the same; provided, that any such
application shall be deemed permitted unless denied within thirty
(30) days; provided, that the Board may by official order
postpone action for one additional period not exceeding thirty
(30) days if deemed necessary for proper consideration; except
that deviations in effect at the time this Act becomes effective
shall be controlled by subdivision (f) hereof. Each deviation
permitted to be filed shall be effective for a period of one (1)
year from the date of final granting of such permission whether
by the Board in the first instance or upon direction of the
court. However, a deviation may be withdrawn at any time with the
approval of the Board or terminated by order of the Board, which
order must specify the reasons for such termination. All
deviations from maximum rates shall be governed by this Article.
(e) No policy of insurance in force prior to the taking effect of
any changes in rate that result from the provisions of this Act
shall be affected thereby, unless there shall be a change in the
hazard of the risk necessitating a change in the rate applicable
to such risk, in which event such policy shall be subject to new
rates developed under the provisions hereof.
(f) Any deviations from maximum rates on file with the Board and
in effect until the effective time of this Act shall remain in
effect for a period of thirty (30) days after such effective
time, and if during such thirty (30) day period a written
application to the Board is made for permission to file such
deviations under this Act, same shall remain in effect until the
Board has entered its order either permitting or denying the
application and during the full course of any hearings on and
appeal from any such order.
(g) The Board may call a public hearing on any application for
permission to file a deviation or a hearing on a permitted
deviation and shall call a hearing upon the request of any
aggrieved policyholder of the company filing the deviation made
within thirty (30) days after the granting or denying of any
deviation. The Board shall give reasonable notice of such
hearings and shall hear witnesses respecting such matters. Any
applicant dissatisfied with any order of the Board made without a
hearing under this Article may within thirty (30) days after
entry of such order make written request of the Board for a
hearing thereon. The Board shall hear such applicant within
twenty (20) days after receiving such request and shall give not
less than ten (10) days written notice of the time and place of
the hearing. Within fifteen (15) days after such hearing the
Board shall affirm, reverse or modify by order its previous
action, specifying in such order its reasons therefor. Any
applicant who may be dissatisfied with any order of the Board
respecting its application may appeal in accordance with Article
1.04 of this code. The judgment of the District Court shall be
appealable as in any other civil case. Such action shall have
precedence over other civil cases on the dockets of the appellate
courts. Should the Board terminate or refuse to renew a permitted
deviation or refuse permission for filing of a deviation under
subdivision (f) hereof, then such deviation shall remain in
effect during the course of any hearing thereon and thirty (30)
days thereafter, and during the course of any appeal taken from
such order and until final judgment of the courts.
(h) Repealed by Acts 2003, 78th Leg., ch. 206, Sec. 21.47(2).
(i) Notwithstanding Subsections (a)-(h) of this article, on and
after the effective date of S.B. No. 14, Acts of the 78th
Legislature, Regular Session, 2003, rates for homeowners and
residential fire and residential allied lines insurance coverage
under this subchapter are determined as provided by Subchapter Q
of this chapter, and rates for other lines of insurance subject
to this subchapter are determined as provided by Article 5.13-2
of this code, except that on and after December 1, 2004, rates
for all lines of insurance subject to this subchapter are
determined as provided by Article 5.13-2 of this code.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1957, 55th Leg.,
p. 1443, ch. 497, Sec. 1; Acts 1981, 67th Leg., p. 2637, ch. 707,
Sec. 4(23), eff. Aug. 31, 1981.
Subsec. (d) amended by and Subsec. (i) added by Acts 1991, 72nd
Leg., ch. 242, Sec. 2.26, eff. Sept. 1, 1991; Subsec. (i) amended
by Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 8.12, eff. Jan.
1, 1992; Subsec. (g) amended by Acts 1993, 7