CHAPTER 2254. PREMIUM REFUND FOR CERTAIN PERSONAL LINES
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE H. RATEMAKING IN GENERAL
CHAPTER 2254. PREMIUM REFUND FOR CERTAIN PERSONAL LINES
Sec. 2254.001. DEFINITIONS. In this chapter:
(1) "Insurer" means an insurance company, reciprocal or
interinsurance exchange, mutual insurance company, capital stock
company, county mutual insurance company, Lloyd's plan, or other
legal entity authorized to write residential property insurance
or personal automobile insurance in this state. The term
includes an affiliate, as described by this code, that is
authorized to write residential property insurance. The term
does not include:
(A) the Texas Windstorm Insurance Association under Chapter
2210; or
(B) the FAIR Plan Association under Chapter 2211.
(2) "Personal automobile insurance" means motor vehicle
insurance coverage for the ownership, maintenance, or use of a
private passenger, utility, or miscellaneous type motor vehicle,
including a motor home, trailer, or recreational vehicle, that
is:
(A) owned or leased by one or more individuals; and
(B) not used primarily for the delivery of goods, materials, or
services, other than for use in farm or ranch operations.
(3) "Residential property insurance" means insurance coverage
against loss to real or tangible personal property at a fixed
location that is provided through:
(A) a homeowners policy, including a tenants policy;
(B) a condominium owners policy; or
(C) a residential fire and allied lines policy.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2254.002. INAPPLICABILITY OF CHAPTER. This chapter does
not apply to rates for personal automobile insurance or
residential property insurance for which an insurer obtains prior
rate approval under Subchapter D, Chapter 2251.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2254.003. REFUND OR DISCOUNT BASED ON EXCESSIVE OR UNFAIRLY
DISCRIMINATORY PREMIUM RATES. (a) This section applies to a
rate filed on or after the effective date of Chapter 206, Acts of
the 78th Legislature, Regular Session, 2003.
(b) Except as provided by Section 2254.004(c), if the
commissioner determines that an insurer has charged a rate for
personal automobile insurance or residential property insurance
that is excessive or unfairly discriminatory, as described by
Section 2251.051, the commissioner may:
(1) order the insurer to refund directly to each affected
policyholder the portion of the premium, plus interest on that
amount, that is excessive or unfairly discriminatory, if that
portion of the premium is at least 7.5 percent of the total
premium charged for the coverage; or
(2) if that portion of the premium is less than 7.5 percent of
the total premium, order the insurer to provide, to each affected
policyholder:
(A) who renews the policy, a future premium discount equal to
the amount of the excessive or unfairly discriminatory portion of
the premium, plus interest on that amount; and
(B) who does not renew or whose coverage is otherwise
terminated, a refund in the amount described by Subdivision (1).
(c) The rate for interest assessed under Subsection (b) is the
lesser of 18 percent or the sum of six percent and the prime rate
for the calendar year in which the commissioner's order finding
that the rate is excessive or unfairly discriminatory is issued.
For purposes of this subsection, the prime rate is the prime rate
as published in The Wall Street Journal for the first day of the
calendar year that is not a Saturday, Sunday, or legal holiday.
The period for the refund and interest begins on the date the
department first provides the insurer with formal written notice
that the insurer's filed rate is excessive or unfairly
discriminatory, and interest continues to accrue until the refund
is paid. An insurer may not be required to pay any interest
penalty if the insurer prevails in an appeal of the
commissioner's order under Subchapter D, Chapter 36.
(d) An insurer may not claim a premium tax credit to which the
insurer is otherwise entitled unless the insurer complies with
Subsection (b).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
484, Sec. 1, eff. June 16, 2007.
Sec. 2254.004. RATE HEARING BY STATE OFFICE OF ADMINISTRATIVE
HEARINGS. (a) Not later than the 20th day after the date of an
order under Section 2254.003, the insurer may request that the
State Office of Administrative Hearings conduct a rate hearing to
determine whether the rate that is subject to the order is
excessive or unfairly discriminatory.
(b) The office of public insurance counsel may participate in
and present evidence at the hearing.
(c) After completion of the hearing, the administrative law
judge shall:
(1) prepare a proposal for decision under Section 40.058; and
(2) remand the matter to the commissioner recommending that the
commissioner affirm the order or that:
(A) the commissioner complete an additional review of the order
not later than the 10th day after the date the commissioner
receives the proposal;
(B) the parties enter into negotiations; or
(C) the commissioner take within a period specified by the
administrative law judge other appropriate action with respect to
the order.
(d) The commissioner's action or failure to act on a proposal or
recommendation under Subsection (c) is subject to judicial review
under Subchapter D, Chapter 36.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.