HBA-NRS H.B. 2548 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2548 By: Dutton Insurance 4/8/2001 Introduced BACKGROUND AND PURPOSE The commissioner of insurance has jurisdiction to set benchmark rates for automobile insurance from which automobile insurers can deviate for purposes of developing more competitive rates under the flexible rating program for automobile insurance. Although the flexible rating program has promoted increased competition among regulated insurers in Texas, the process to determine and set the benchmark rates which drive the flexible rating program has become unduly expensive, time consuming, burdensome, and may not allow regulated automobile insurance companies which service most of the automobile insurance market in Texas to compete more efficiently. A review of less stringent regulatory laws in other states in which automobile insurers are merely required to file their schedules of rates for informational purposes revealed that automobile insurers have been able to achieve lower automobile insurance rates without the expense of an unduly burdensome rate regulatory system. In other states, antitrust laws are used to enforce rate competition. House Bill 2548 requires an insurer writing any form of motor vehicle insurance to file with the Texas Department of Insurance a schedule of premium rates and provides that the program of flexible rating designed to help stabilize the rates charged for insurance in lines of property and casualty insurance does not apply to motor vehicle or automobile insurance. 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 4 (Section 2, Article 5.03-5, Insurance Code), SECTION 5 (Article 5.05, Insurance Code), and SECTION 6 (Article 5.06, Insurance Code), of this bill. ANALYSIS House Bill 2548 amends the Insurance Code to require every insurance company, corporation, interinsurance exchange, mutual, reciprocal, association, Lloyd's plan insurer, or other insurer writing any form of motor vehicle insurance to file with the Texas Department of Insurance a schedule of premium rates charged for motor vehicle insurance and the amount of the policy fee, membership fee, or initial charge, by whatever name called, to be charged to a policyholder or a person applying for a policy (Art. 5.01). The bill authorizes an insurer, rather than requiring the commissioner of insurance (commissioner) by rule, to set the amount of premium discounts for academic achievements and certain youth group members (Arts. 5.033 and 5.03-5). The bill requires the commissioner, rather than the State Board of Insurance (board), to promulgate rules relating to the recording and reporting of loss experience (Art. 5.05). The bill requires the commissioner, rather than the board, to adopt and approve policy forms and endorsements and related law for each type of motor vehicle insurance (Art. 5.06). The bill provides that the commissioner, rather than the board, has jurisdiction over hearings regarding grievances filed by policyholders or insurers on any grievance occasioned by the commissioner's approval or disapproval of any endorsement or policy form, or any rule or regulation established under the terms of any endorsement or policy form (Art. 5.11). The bill provides that the program of flexible rating designed to help stabilize the rates charged for insurance in lines of property and casualty insurance does not apply to motor vehicle or automobile insurance (Art. 5.101). EFFECTIVE DATE September 1, 2001, and applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2002.