Texas Insurance Codes 5.55

Sec. 1. In this article:

(1) "Filer" means an insurer that files rates, prospective loss costs, or supplementary rating information under this article.

(2) "Insurer" means a person authorized and admitted by the Texas Department of Insurance to do insurance business in this state under a certificate of authority that includes authorization to write workers' compensation insurance. The term includes the Texas Mutual Insurance Company.

(3) "Prospective loss cost" means that portion of a rate that does not include provisions for expenses or profit, other than loss adjustment expenses, and that is based on historical aggregate losses and loss adjustment expenses projected by development to their ultimate value and through trending to a future point in time.

(4) "Rate" means the cost of workers' compensation insurance per exposure unit, whether expressed as a single number or as a prospective loss cost, with an adjustment to account for the treatment of expenses, profit, and individual insurer variation in loss experience, before any application of individual risk variations based on loss or expense considerations. The term does not include a minimum premium.

(5) "Rate change date" means the later of March 1, 1992, or the 60th day after the date of issuance of the first insurance policy by the Texas Workers' Compensation Insurance Fund under Article 5.76-3 of this code. The department shall publish notice of the rate change date in the Texas Register.

(6) "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 required to determine the applicable premium for an insured. The term includes factors and relativities, such as increased limits factors, classification relativities, deductible relativities, or other similar factors.

(7) "Supporting information" means:

(A) the experience and judgment of the filer and the experience or information of other insurers;

(B) the interpretation of any other information relied on by the filer;

(C) descriptions of methods used in making the rates; and

(D) any other information required by the department to be filed.

Rate standards

Sec. 2. (a) Rates under this article shall be made in accordance with the provisions of this section.

(b) In setting rates, an insurer shall consider:

(1) past and prospective loss cost experience;

(2) operation expenses;

(3) investment income;

(4) a reasonable margin for profit and contingencies; and

(5) any other relevant factors.

(c) The insurer may group risks by classifications for the establishment of rates and minimum premiums and may 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 (b) of this section.

(d) Rates may not be excessive, inadequate, or unfairly discriminatory.

(e) In setting rates applicable solely 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.

(f) Premium rates promulgated by the State Board of Insurance for 1991 continue to apply to all workers' compensation insurance policies issued before the rate change date.

(g) Expired July 1, 1993.

(h) Expired January 1, 1994.

Rate filings

Sec. 3. (a) Each insurer shall file with the Texas Department of Insurance all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state. An insurer may not make such filing more frequently than every six months. Subject to Subsection (b) of this section, a rate proposed in a filing made under this subsection does not take effect until all necessary information required for the filing is received by the department.

(b) A filer shall designate the date on which the filing is to take effect. The filing takes effect on the designated date unless the board, not later than the 30th day after the date of the receipt of the filing, advises the filer of what specific information that is required for the filing has not been included in the filing. The filer must provide the missing information not later than the 30th day after the date on which the filer is notified by the board of the missing information. If the filer in good faith believes that the requested information has already been provided, the filer may request a hearing. The board shall hold the hearing not later than the 30th day after the receipt of the hearing request from the filer. The board shall issue a decision not later than the 30th day after the date of the hearing. If the board determines that necessary information is still missing, the board shall specify in the decision the information that was not included in the filing.

(c) An insured that is aggrieved with respect to any filing in effect or the office of public insurance counsel may make a written application to the board for a hearing on the filing. The application must specify the grounds on which the applicant bases the grievance. If the board finds that the application is made in good faith, that the applicant would be so aggrieved if the grounds in the application are established, and that those grounds otherwise justify holding the hearing, the board shall hold a hearing not later than the 30th day after the date of receipt of the application. The board must give at least 10 days' written notice to the applicant and to each insurer that made the filing in question. The notice must specify which of the grounds in the application are in question and whether the hearing is limited to consideration of the specific application of the aggrieved insured or to the entire filing.

(d) If, after the hearing, the board finds that the filing does not meet the requirements of this article, the board shall issue an order specifying how the filing fails to meet the requirements of this article and stating the date on which, within a reasonable period of not less than 60 days after the order date, the filing is no longer in effect. The board order must specify whether the order applies only to the applicant or to all insureds affected by the filing. The board shall send copies of the order to the applicant and to each affected insurer. An order issued under this subsection does not affect a contract or policy made or issued before the expiration of the period established in the order.

Public information

Sec. 4. Each filing and any supporting information filed under this article is open to public inspection as of the date of the filing.

Disapproval of filing

Sec. 5. (a) The State Board of Insurance shall disapprove a rate filing if the board determines that the rate filing made under Section 3 of this article does not meet the standards established under this article.

(b) If the board disapproves a rate filing, the board shall issue an order specifying in what respects the rate filing fails to meet the requirements of this article. The filer is entitled to a hearing on written request made to the board not later than the 30th day after the effective date of the disapproval order.

Disapproval of rate

Sec. 6. (a) The State Board of Insurance may issue a disapproval order only after notice and hearing. The board must provide at least 10 days' written notice to the insurer that made the rate filing.

(b) The disapproval order must be issued not later than the 15th day after the close of a hearing and must specify how the rate fails to meet the requirements of this article. The disapproval order must state the date on which the further use of that rate is prohibited. A disapproval order does not affect a policy made or issued in accordance with this code before the expiration of the period established in the order.

Effect of disapproval; penalty

Sec. 7. (a) If a policy is issued and the board subsequently disapproves the rate or filing that governs the premium charged on the policy:

(1) the policyholder may continue the policy at the original rate;

(2) the policyholder may cancel the policy without penalty; or

(3) the policyholder and the insurer may agree to amend the policy to reflect the premium that would have been charged based on the insurer's most recently approved rate; the amendment may not take effect before the date on which further use of the rate is prohibited under the disapproval order.

(b) If the board determines, based on a pattern of charges for premiums, that an insurer is consistently overcharging or undercharging, the board may assess an administrative penalty. The penalty shall be assessed in accordance with Article 10, Texas Workers' Compensation Act (Article 8308-10.01 et seq., Vernon's Texas Civil Statutes), and set by the board in an amount reasonable and necessary to deter the overcharging or undercharging of policyholders.

Acts 1951, 52nd Leg., p. 868, ch. 491. Amended by Acts 1953, 53rd Leg., p. 64, ch. 50, Sec. 7.

Amended by Acts 1989, 71st Leg., 2nd C.S., ch. 1, Sec. 13.04, eff. Jan. 1, 1991; Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 18.01, eff. April 1, 1992; Sec. 1(2) amended by Acts 2001, 77th Leg., ch. 1195, Sec. 2.03, eff. Sept. 1, 2001.