CHAPTER 2251. RATES
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE H. RATEMAKING IN GENERAL
CHAPTER 2251. RATES
SUBCHAPTER A. GENERAL PROVISIONS FOR RATES
Sec. 2251.001. PURPOSE. The purposes of this subchapter and
Subchapters B, C, D, and E are to:
(1) promote the public welfare by regulating insurance rates to
prohibit excessive, inadequate, or unfairly discriminatory rates;
(2) promote the 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; and
(5) provide regulatory procedures for the maintenance of
appropriate information reporting systems.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.002. DEFINITIONS. In this chapter:
(1) "Disallowed expenses" includes:
(A) administrative expenses, other than acquisition, loss
control, and safety engineering expenses, that exceed 110 percent
of the industry median for those expenses;
(B) lobbying expenses;
(C) advertising expenses, other than for advertising:
(i) directly related to the services or products provided by the
insurer; or
(ii) designed and directed at loss prevention;
(D) amounts paid by an insurer:
(i) as damages in an action brought against the insurer for bad
faith, fraud, or any matters other than payment under the
insurance contract; or
(ii) as fees, fines, penalties, or exemplary damages for a civil
or criminal violation of law;
(E) contributions to:
(i) social, religious, political, or fraternal organizations; or
(ii) organizations engaged in legislative advocacy;
(F) except as authorized by commissioner rule, fees and
assessments paid to advisory organizations;
(G) any amount determined by the commissioner to be excess
premiums charged by the insurer; and
(H) any unreasonably incurred expenses, as determined by the
commissioner after notice and hearing.
(2) "Filer" means an insurer that files rates, prospective loss
costs, or supplementary rating information under this chapter.
(3) "Prospective loss cost" means that portion of a rate that:
(A) does not include a provision for expenses or profit, other
than loss adjustment expenses; and
(B) is based on historical aggregate losses and loss adjustment
expenses projected by development to the ultimate value of those
losses and expenses and projected through trending to a future
point in time.
(4) "Rate" means the cost of insurance per exposure unit,
whether expressed as a single number or as a prospective loss
cost, adjusted to account for the treatment of expenses, profit,
and individual insurer variation in loss experience, before
applying individual risk variations based on loss or expense
considerations.
(5) "Rating manual" means a publication or schedule that lists
rules, classifications, territory codes and descriptions, rates,
premiums, and other similar information used by an insurer to
determine the applicable premium charged an insured.
(6) "Residential property insurance" means insurance coverage
against loss to real or tangible personal property at a fixed
location that is provided through a homeowners insurance policy,
including a tenants insurance policy, a condominium owners
insurance policy, or a residential fire and allied lines
insurance policy.
(7) "Supplementary rating information" means any manual, rating
schedule, plan of rules, rating rules, classification systems,
territory codes and descriptions, rating plans, and other similar
information used by the insurer to determine the applicable
premium for an insured. The term includes factors and
relativities, including increased limits factors, classification
relativities, deductible relativities, premium discount, and
other similar factors and rating plans such as experience,
schedule, and retrospective rating.
(8) "Supporting information" means:
(A) the experience and judgment of the filer and the experience
or information of other insurers or advisory organizations on
which the filer relied;
(B) the interpretation of any other information on which the
filer relied;
(C) a description of methods used in making a rate; and
(D) any other information the department requires to be filed.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.003. APPLICABILITY OF CERTAIN SUBCHAPTERS. (a) This
subchapter and Subchapters B, C, D, and E apply to:
(1) an insurer to which Article 5.13 applies, other than the
Texas Windstorm Insurance Association, the FAIR Plan Association,
and the Texas Automobile Insurance Plan Association; and
(2) except as provided by Subsection (c), a Lloyd's plan,
reciprocal or interinsurance exchange, and county mutual
insurance company with respect to the lines of insurance
described by Subsection (b).
(b) This subchapter and Subchapters B, C, D, and E apply to all
lines of the following kinds of insurance written under an
insurance policy or contract issued by an insurer authorized to
engage in the business of insurance in this state:
(1) general liability insurance;
(2) residential and commercial property insurance, including
farm and ranch insurance and farm and ranch owners insurance;
(3) personal and commercial casualty insurance, except as
provided by Section 2251.004;
(4) medical professional liability insurance;
(5) fidelity, guaranty, and surety bonds other than criminal
court appearance bonds;
(6) personal umbrella insurance;
(7) personal liability insurance;
(8) guaranteed auto protection (GAP) insurance;
(9) involuntary unemployment insurance;
(10) financial guaranty insurance;
(11) inland marine insurance;
(12) rain insurance;
(13) hail insurance on farm crops;
(14) personal and commercial automobile insurance;
(15) multi-peril insurance; and
(16) identity theft insurance issued under Chapter 706.
(c) Sections 2251.008, 2251.052, 2251.101, 2251.102, 2251.103,
2251.104, 2251.105, and 2251.107 do not apply to a Lloyd's plan
or a reciprocal or interinsurance exchange with respect to
commercial property insurance, inland marine insurance, rain
insurance, or hail insurance on farm crops.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.071(a), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.071(a), eff. September 1, 2007.
Sec. 2251.004. REGULATION OF INLAND MARINE RATES. The
commissioner shall adopt rules governing the manner in which
rates for the various classifications of risks insured under
inland marine insurance, as determined by the commissioner, are
regulated.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.005. NOTICE OF RATE INCREASE FOR RESIDENTIAL PROPERTY
INSURANCE POLICIES. (a) An insurer shall notify a policyholder
of a residential property insurance policy issued by the insurer
of a rate increase scheduled to take effect on the policy's
renewal that will result in a premium amount to be paid by the
policyholder that is at least 10 percent greater than the lesser
of:
(1) the premium amount paid by the policyholder for coverage
under the policy during the 12-month period preceding the
policy's renewal date; or
(2) the premium amount paid by the policyholder for coverage
under the policy during the policy period preceding the policy's
renewal date.
(b) An insurer shall send the notice required by Subsection (a)
before the renewal date and not later than the 30th day before
the date the rate increase is scheduled to take effect.
(c) An insurer may send the notice described by Subsection (a)
to any policyholder of a residential property insurance policy
issued by the insurer, regardless of whether the policyholder's
premium amount will increase as a result of the scheduled rate
change.
(d) The commissioner by rule may exempt an insurer from the
notice requirements of this section for a short-term policy, as
defined by the commissioner, that is written by the insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.006. CONSIDERATION OF CERTAIN OTHER LAW. In reviewing
rates under this chapter, the commissioner shall consider any
state or federal law that may affect rates for liability coverage
included in an insurance policy subject to this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.007. ADMINISTRATIVE PROCEDURE ACT APPLICABLE. Chapter
2001, Government Code, applies to all rate hearings conducted
under this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.008. QUARTERLY REPORT OF INSURER; LEGISLATIVE REPORT.
(a) The commissioner shall require each insurer subject to this
subchapter to quarterly file with the commissioner information
relating to changes in losses, premiums, and market share since
January 1, 1993. The commissioner may require an insurer subject
to this subchapter to report to the commissioner, in the form and
in the time required by the commissioner, any other information
the commissioner determines is necessary to comply with this
section.
(b) Quarterly, the commissioner shall report to the governor,
the lieutenant governor, the speaker of the house of
representatives, the legislature, and the public regarding:
(1) the information provided to the commissioner, other than
information made confidential by law, in the insurers' reports
under Subsection (a); and
(2) market conduct, especially rates and consumer complaints.
(c) The report required by this section must cover a calendar
quarter and:
(1) for each insurer that writes a line of insurance subject to
this subchapter, must state the insurer's:
(A) market share;
(B) profits and losses;
(C) average loss ratio; and
(D) whether the insurer submitted a rate filing during the
quarter covered in the report; and
(2) for each rate filing submitted under Subdivision (1)(D),
must indicate any significant impact on policyholders, the
overall rate change from the rate previously used by the insurer
stated as a percentage, and any rate changes for the previous 12,
24, and 36 months.
(d) Except as provided by Subsection (e), the quarterly report
required by this section must be made available to the governor,
lieutenant governor, speaker of the house of representatives,
legislature, and public not later than the 90th day after the
last day of the calendar quarter covered by the report.
(e) If the commissioner determines that it is not feasible to
provide the report required by this section within the period
specified by Subsection (d) for all lines of insurance subject to
this subchapter, the department:
(1) shall make the quarterly report, as applicable to lines of
residential property insurance and personal automobile insurance,
available within the period specified by Subsection (d); and
(2) may delay publication of the quarterly report as it relates
to other lines of insurance subject to this subchapter until a
date specified by the commissioner.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
151, Sec. 2, eff. May 21, 2007.
SUBCHAPTER B. RATE STANDARDS
Sec. 2251.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY
DISCRIMINATORY RATES. (a) A rate is excessive, inadequate, or
unfairly discriminatory for purposes of this chapter as provided
by this section.
(b) A rate is excessive if the rate is likely to produce a
long-term profit that is unreasonably high in relation to the
insurance coverage provided.
(c) A rate is inadequate if:
(1) the rate is insufficient to sustain projected losses and
expenses to which the rate applies; and
(2) continued use of the rate:
(A) endangers the solvency of an insurer using the rate; or
(B) has the effect of substantially lessening competition or
creating a monopoly in a market.
(d) A rate is unfairly discriminatory if the rate:
(1) is not based on sound actuarial principles;
(2) does not bear a reasonable relationship to the expected loss
and expense experience among risks; or
(3) is based wholly or partly on the race, creed, color,
ethnicity, or national origin of the policyholder or an insured.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.052. RATE STANDARDS. (a) In setting rates, an
insurer shall consider:
(1) past and prospective loss experience:
(A) inside this state; and
(B) outside this state if the data from this state are not
credible;
(2) the peculiar hazards and experiences of individual risks,
past and prospective, inside and outside this state;
(3) the insurer's actuarially credible historical premium,
exposure, loss, and expense experience;
(4) catastrophe hazards in this state;
(5) operating expenses, excluding disallowed expenses;
(6) investment income;
(7) a reasonable margin for profit; and
(8) any other factors inside and outside this state:
(A) determined to be relevant by the insurer; and
(B) not disallowed by the commissioner.
(b) A rate may not be excessive, inadequate, unreasonable, or
unfairly discriminatory for the risks to which the rate applies.
(c) The insurer may:
(1) group risks by classification to establish rates and minimum
premiums; and
(2) modify classification rates to produce rates for individual
risks in accordance with rating plans that establish standards
for measuring variations in those risks on the basis of any
factor listed in Subsection (a).
(d) In setting rates that apply only to policyholders in this
state, an insurer shall use available premium, loss, claim, and
exposure information from this state to the full extent of the
actuarial credibility of that information. The insurer may use
experience from outside this state as necessary to supplement
information from this state that is not actuarially credible.
(e) In determining rating territories and territorial rates, an
insurer shall use methods based on sound actuarial principles.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. RATE FILINGS
Sec. 2251.101. RATE FILINGS AND SUPPORTING INFORMATION. (a)
Except as provided by Subchapter D, for risks written in this
state, each insurer shall file with the commissioner all rates,
applicable rating manuals, supplementary rating information, and
additional information as required by the commissioner.
(b) The commissioner by rule shall determine the information
required to be included in the filing, including:
(1) categories of supporting information and supplementary
rating information;
(2) statistics or other information to support the rates to be
used by the insurer, including information necessary to evidence
that the computation of the rate does not include disallowed
expenses; and
(3) information concerning policy fees, service fees, and other
fees that are charged or collected by the insurer under Section
550.001 or 4005.003.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.102. FILING REQUIREMENTS FOR INSURERS WITH LESS THAN
FIVE PERCENT OF MARKET. In determining filing requirements under
Section 2251.101 for an insurer with less than five percent of
the market, the commissioner shall consider insurer and
market-specific attributes, as applicable. The commissioner
shall determine filing requirements for those insurers
accordingly to accommodate premium volume and loss experience,
targeted markets, limitations on coverage, and any potential
barriers to market entry or growth.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.103. DISAPPROVAL OF RATE IN RATE FILING; HEARING. (a)
The commissioner shall disapprove a rate if the commissioner
determines that the rate filing made under this chapter does not
meet the standards established under Subchapter B.
(b) If the commissioner disapproves a filing, the commissioner
shall issue an order specifying in what respects the filing fails
to meet the requirements of this chapter.
(c) The filer is entitled to a hearing on written request made
to the commissioner not later than the 30th day after the date
the order disapproving the rate filing takes effect.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.104. DISAPPROVAL OF RATE IN EFFECT; HEARING. (a) The
commissioner may disapprove a rate that is in effect only after a
hearing. The commissioner shall provide the filer at least 20
days' written notice.
(b) The commissioner must issue an order disapproving a rate
under Subsection (a) not later than the 15th day after the close
of the hearing. The order must:
(1) specify in what respects the rate fails to meet the
requirements of this chapter; and
(2) state the date on which further use of the rate is
prohibited, which may not be earlier than the 45th day after the
close of the hearing under this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.105. GRIEVANCE. (a) An insured who is aggrieved with
respect to any filing under this chapter that is in effect, or
the public insurance counsel, may apply to the commissioner in
writing for a hearing on the filing. The application must
specify the grounds for the applicant's grievance.
(b) The commissioner shall hold a hearing on an application
filed under Subsection (a) not later than the 30th day after the
date the commissioner receives the application if the
commissioner determines that:
(1) the application is made in good faith;
(2) the applicant would be aggrieved as alleged if the grounds
specified in the application were established; and
(3) the grounds specified in the application otherwise justify
holding the hearing.
(c) The commissioner shall provide written notice of a hearing
under Subsection (b) to the applicant and each insurer that made
the filing not later than the 10th day before the date of the
hearing.
(d) If, after the hearing, the commissioner determines that the
filing does not meet the requirements of this chapter, the
commissioner shall issue an order:
(1) specifying in what respects the filing fails to meet those
requirements; and
(2) stating the date on which the filing is no longer in effect,
which must be within a reasonable period after the order date.
(e) The commissioner shall send copies of the order issued under
Subsection (d) to the applicant and each affected insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.106. ROLE OF PUBLIC INSURANCE COUNSEL. (a) On
request to the commissioner, the public insurance counsel may
review all rate filings and additional information provided by an
insurer under this chapter. Confidential information reviewed
under this subsection remains confidential.
(b) The public insurance counsel, not later than the 30th day
after the date of a rate filing under this chapter, may file with
the commissioner a written objection to:
(1) an insurer's rate filing; or
(2) the criteria on which the insurer relied to determine the
rate.
(c) A written objection filed under Subsection (b) must contain
the reasons for the objection.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.107. PUBLIC INSPECTION OF INFORMATION. Each filing
made, and any supporting information filed, under this chapter is
open to public inspection as of the date of the filing.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. PRIOR APPROVAL OF RATES UNDER
CERTAIN CIRCUMSTANCES
Sec. 2251.151. REQUIREMENT TO FILE RATES FOR PRIOR APPROVAL
UNDER CERTAIN CIRCUMSTANCES. (a) The commissioner by order may
require an insurer to file with the department for the
commissioner's approval all rates, supplementary rating
information, and any supporting information in accordance with
this subchapter if the commissioner determines that:
(1) the insurer's rates require supervision because of the
insurer's financial condition or rating practices; or
(2) a statewide insurance emergency exists.
(a-1) If an insurer files a petition under Subchapter D, Chapter
36, for judicial review of an order disapproving a rate under
this chapter, the insurer must use the rates in effect for the
insurer at the time the petition is filed and may not file and
use any higher rate for the same line of insurance subject to
this chapter before the matter subject to judicial review is
finally resolved unless the insurer, in accordance with this
subchapter, files the new rate with the department, along with
any applicable supplementary rating information and supporting
information, and obtains the commissioner's approval of the rate.
(b) From the date of the filing of the rate with the department
to the effective date of the new rate, the insurer's previously
filed rate that is in effect on the date of the filing remains in
effect.
(c) The commissioner may require an insurer to file the
insurer's rates under this section until the commissioner
determines that the conditions described by Subsection (a) no
longer exist.
(d) For purposes of this section, a rate is filed with the
department on the date the department receives the rate filing.
(e) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall issue
an order specifying the commissioner's reasons for requiring the
rate filing. An affected insurer is entitled to a hearing on
written request made to the commissioner not later than the 30th
day after the date the order is issued.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1096, Sec. 1, eff. September 1, 2007.
Sec. 2251.152. RATE APPROVAL REQUIRED; EXCEPTION. (a) An
insurer subject to this subchapter may not use a rate until the
rate has been filed with the department and approved by the
commissioner in accordance with this subchapter.
(b) Notwithstanding Subsection (a), after a rate filing is
approved under this subchapter, an insurer, without prior
approval of the commissioner, may use any rate subsequently filed
by the insurer if the subsequently filed rate does not exceed the
lesser of:
(1) 107.5 percent of the rate approved by the commissioner; or
(2) 110 percent of any rate used by the insurer in the previous
12-month period.
(c) Filed rates under Subsection (b) take effect on the date
specified by the insurer.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.153. COMMISSIONER ACTION. (a) Not later than the
30th day after the date a rate is filed with the department under
this subchapter, the commissioner shall:
(1) approve the rate if the commissioner determines that the
rate complies with the requirements of this chapter; or
(2) disapprove the rate if the commissioner determines that the
rate does not comply with the requirements of this chapter.
(b) Except as provided by Subsection (c), if a rate has not been
approved or disapproved by the commissioner before the expiration
of the 30-day period described by Subsection (a), the rate is
considered approved and the insurer may use the rate unless the
rate proposed in the filing represents an increase of 12.5
percent or more from the insurer's previously filed rate.
(c) For good cause, the commissioner may, on the expiration of
the 30-day period described by Subsection (a), extend the period
for approval or disapproval of a rate for one additional 30-day
period. The commissioner and the insurer may not by agreement
extend the 30-day period described by Subsection (a).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.154. ADDITIONAL INFORMATION. (a) If the department
determines that the information filed by an insurer under this
chapter is incomplete or otherwise deficient, the department may
request additional information from the insurer. If the
department requests additional information from the insurer
during the 30-day period provided by Section 2251.153(a) or under
a second 30-day period provided under Section 2251.153(c), the
time between the date the department submits the request to the
insurer and the date the department receives the information
requested is not included in the computation of the first 30-day
period or the second 30-day period, as applicable.
(b) For purposes of this section, the date of the department's
submission of a request for additional information is:
(1) the date of the department's electronic mailing or telephone
call relating to the request for additional information; or
(2) the postmarked date on the department's letter relating to
the request for additional information.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.155. RATE FILING APPROVAL BY COMMISSIONER; USE OF
RATE. (a) The commissioner shall approve a rate filing under
this subchapter if the proposed rate is adequate, not excessive,
and not unfairly discriminatory.
(b) If the commissioner approves a rate filing under this
section, the commissioner shall provide the insurer with a
written or electronic notification of the approval. The insurer
may use the rate on receipt of the approval notice.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER; HEARING.
(a) If the commissioner disapproves a rate filing under Section
2251.153(a)(2), the commissioner shall issue an order
disapproving the filing in accordance with Section 2251.103(b).
(b) An insurer whose rate filing is disapproved is entitled to a
hearing in accordance with Section 2251.103(c).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER E. STANDARD RATE INDEX FOR PERSONAL AUTOMOBILE
INSURANCE
Sec. 2251.201. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter governs rate regulation of personal automobile
insurance issued by a county mutual insurance company as
prescribed by this subchapter.
(b) The commissioner by rule may designate other types of
insurers that, historically and as of June 11, 2003, have served
exclusively or are serving exclusively the high-risk, nonstandard
market and meet capitalization and solvency requirements set by
the commissioner. An insurer designated by the commissioner
under this subsection is governed by this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.202. STATEWIDE STANDARD RATE INDEX FOR PERSONAL
AUTOMOBILE INSURANCE. (a) Using standard and generally accepted
actuarial techniques, the commissioner shall annually compute and
publish a statewide standard rate index that accurately reflects
the average statewide rates for classifications for each of the
following coverages under a personal automobile insurance policy:
(1) bodily injury liability;
(2) property damage liability;
(3) personal injury protection;
(4) medical payments;
(5) uninsured and underinsured motorist;
(6) physical damage--collision; and
(7) physical damage--other than collision.
(b) The commissioner shall compute the rate index using the
benchmark rate in effect for personal automobile insurance under
former Article 5.101 on June 11, 2003. The commissioner shall
adjust the rate index annually to reflect average changes in
claims costs in the personal automobile insurance market in this
state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.203. ESTABLISHMENT OF OTHER STANDARD RATE INDEXES.
The commissioner may compute and establish standard rate indexes
other than the rate index required under Section 2251.202(a) for
any of the personal automobile insurance coverages listed under
that subsection as necessary to implement this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.204. APPLICATION TO CERTAIN COUNTY MUTUAL INSURANCE
COMPANIES. (a) For purposes of this subsection, a "nonstandard
rate" is a rate that is 30 percent or more above the standard
rate index as determined by the commissioner under this
subchapter. A county mutual insurance company that issues
personal automobile insurance policies only at nonstandard rates
is subject to filing requirements, as determined by the
commissioner by rule, if the insurance company and the company's
affiliated companies or group has a market share of less than 3.5
percent.
(b) In setting rates, a county mutual insurance company subject
to this section must comply with the rating standards established
under Subchapter B. The commissioner may inspect the books and
records of the company at any time to ensure compliance with the
rating standards.
(c) Not later than the first day any change in the rates of a
county mutual insurance company subject to this section takes
effect, the company shall file for informational purposes those
rates and any additional information required by the department.
The commissioner by rule shall determine the information required
to be provided in the filing under this subsection.
(d) A county mutual insurance company described by Subsection
(a) is subject to Chapter 2254. A county mutual insurance
company not described by Subsection (a) is:
(1) subject to Chapter 2151; and
(2) required to comply with the other filing requirements of
this chapter and any other provision of this code applicable to a
county mutual insurance company.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.205. APPLICATION OF FILING REQUIREMENTS TO OTHER
INSURERS. An insurer is subject to the filing requirements
determined by the commissioner by rule under Section 2251.204 if:
(1) the insurer, along with the insurer's affiliated companies
or group, issues personal automobile liability insurance policies
only below 101 percent of the minimum limits required by Chapter
601, Transportation Code; and
(2) the insurer, along with the insurer's affiliated companies
or group, has a market share of less than 3.5 percent of the
personal automobile insurance market in this state.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.072(a), eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.072(a), eff. September 1, 2007.
SUBCHAPTER F. EXEMPTIONS FOR CERTAIN INSURERS FROM RATE FILING
AND APPROVAL REQUIREMENTS
Sec. 2251.251. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to:
(1) an insurer, including an insurance company, a reciprocal or
interinsurance exchange, a mutual insurance company, a capital
stock insurance company, a county mutual insurance company, a
Lloyd's plan, or any other legal entity authorized to write
residential property insurance in this state; and
(2) an insurer's affiliate, as described by this code, if the
affiliate is authorized to write residential property insurance.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2251.252. EXEMPTION FROM CERTAIN OTHER LAW. (a) Except as
provided by Subsections (b) and (c), an insurer is exempt from
the rate filing and approval requirements of this chapter if the
insurer, during the calendar year preceding the date filing is
otherwise required under this chapter, issued residential
property insurance policies in this state that accounted for less
than two percent of the total amount of premiums collected by
insurers for residential property insurance policies issued in
this state, more than 50 percent of which cover property:
(1) valued at less than $100,000; and
(2) located in an area designated by the commissioner as
underserved for residential property insurance under Chapter
2004.
(b) If an insurer described by Subsection (a) is a member of an
affiliated insurance group, this subchapter applies to the
insurer only if the total aggregate premium collected by the
group accounts for less than two percent of the total amount of
premiums collected by insurers for residential property insurance
policies issued in this state.
(c) An insurer described by Subsection (a) that proposes to
increase the premium rates charged policyholders for a
residential property insurance product by an amount that is 10
percent or more over the amount the insurer charged policyholders
for the same or an equivalent residential property insurance
product during the preceding calendar year must file the
insurer's proposed rates in accordance with this chapter and, if
applicable, obtain approval of the proposed rates as provided by
this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.