HBA-NRS H.B. 2102 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2102
By: Eiland
Insurance
4/1/2001
Introduced



BACKGROUND AND PURPOSE 

Current law requires the commissioner of insurance to conduct hearings to
determine benchmark rates under the flexible rating program. The average
time span between the initial notice of a hearing until a rate is set is
more than one year and, since rates are based on data from years prior to
the start of this process, the rates may not reflect current market
conditions. Allowing the commissioner of insurance to exercise rulemaking
authority in setting benchmark rates and to determine and prescribe Texas
Automobile Insurance Plan Association (TAIPA) rates would reduce the number
of steps involved in the rate setting process. This would help reduce the
gap between the effective date of new rates and the time period represented
by the data used to set the rates. House Bill 2102 allows the commissioner
of insurance to exercise rulemaking authority in setting benchmark rates
and to prescribe TAIPA rates. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Section 3, Article 5.101, Insurance Code). 

ANALYSIS

House Bill 2102 requires the commissioner of insurance (commissioner) to
promulgate by rule a benchmark rate for each insurance line subject to the
flexible rating program after a notice and hearing and to have each
flexibility band based on a benchmark rate promulgated by rule by the
commissioner. The bill requires the commissioner to request recommendations
regarding changes to the benchmark rates before each annual hearing. Notice
of each hearing involving benchmark rates must be published in the Texas
Register and the bill requires the commissioner to receive public comment
for at least 30 days after the notice of a hearing is published or at the
hearing. After the hearing, the bill requires the commissioner to adopt a
rule promulgating the benchmark rate (Sec. 3, Art. 5.101). 

The bill  provides that the adoption of rules under agency actions
affecting small businesses do not apply to a benchmark rate hearing. The
bill removes provisions relating to discovery and evidence presented at a
benchmark rate hearing (Sec. 5, Art. 5.101). The bill provides that
judicial review of an order promulgating benchmark rates is under the
substantial evidence rule (Sec. 6, Art. 5.101).    
The bill requires the commissioner to determine and prescribe appropriate
rates to be charged for insurance provided through the Texas Automobile
Insurance Plan Association (TAIPA). The bill removes the provision
requiring the commissioner to conduct a hearing on rates for insurance
provided through TAIPA. The bill requires TAIPA to file its rates to be
charged with the Texas Department of Insurance (department) for the
commissioner's approval and prohibits TAIPA from filing more than once in
any 12 month period. Before approving, disapproving, or modifying a filing,
the bill requires the commissioner to provide all interested persons a
reasonable opportunity to review and comment on the filing (Sec. 5, Art.
21.81).  

H.B. 2102 requires the commissioner to schedule a hearing on the filing not
later than the 45th day after the date on which the department receives the
filing. The bill requires the department to file with the Texas Register a
notice that a filing has been made no later than the seventh day after the
date the filing is received by the department and specifies content the
notification must contain. After conclusion of the hearing, the  bill
requires the commissioner to approve, disapprove, or modify the filing in
writing. If the commissioner disapproves a filing, the bill requires the
commissioner to state in writing the reasons for the disapproval and the
criteria to be met by TAIPA to obtain approval. The bill authorizes  TAIPA
to file with the commissioner an amended filing for compliance not later
than the 10th day after the date on which TAIPA receives the commissioner's
disapproval. The bill sets forth provisions relating to an amended filing
(Sec. 5, Art. 21.81).  

EFFECTIVE DATE

September 1, 2001. The Act applies only to premium rates for an insurance
policy delivered, issued for delivery, or renewed on or after January 1,
2002.