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