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Property/Casualty Filings Made Easy Guide - Part 9 of 9

Indicates new addition since last update. Indicates new information since last update.

November 2011 Edition, Continued Part 9 of 9

List of Articles Recodified in the 78th, 79th, & 80th Legislative Sessions

SECTION III - TORT REFORM

Impact of Tort Reform Legislation

Section 2251.006, CONSIDERATION OF CERTAIN LAW, states:

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.

Current Tort Reform

The 78 th Legislature passed House Bill 4 relating to certain procedures and remedies in civil actions. Among other changes, this bill made changes to the civil justice system relating to:

  • Settlement offers
  • Proportionate responsibility and the designation of 3 rd parties
  • Products liability
  • Pre and post judgment interest
  • Healthcare liability claims, including:
    • Standards of proof in cases involving emergency medical care
    • Statute of limitations
    • Limitations on non economic damages
    • Filing of expert reports
    • Qualifications of expert witnesses
    • Payment for future losses
  • Admissibility of certain evidence relating to nursing institutions


Except for certain provisions, House Bill 4 is effective for actions filed on or after September 1, 2003.

Companies that develop rates for lines of insurance affected by House Bill 4 and subject to Chapter 2251 are expected to explicitly recognize the effects of House Bill 4 in their rate development.

Future Tort Reform

Companies will be expected to recognize in their rate development the effects of any future changes to the civil justice system enacted by the Texas Legislature or the United States Congress.

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Section IV - Credit Scoring

Use of Credit Scoring in Personal Insurance

This section applies to an insurer that writes personal insurance coverage as defined by Chapter 559, Texas Insurance Code, and that uses credit information or credit reports for the underwriting or rating of that coverage.

GENERAL INFORMATION

The following is general information regarding credit scoring model differences in rates and disclosure filings. See related sections for specific requirements.

CREDIT SCORING MODELS

This portion of the Guide is intended to assist insurers complying with 28 TAC §§5.9350 - 5.9352 (Division 8. FME - Credit Scoring Models Filing Requirements for Personal Insurance)

  • Filing Requirements

    One copy of the following documents constitute a complete filing:

    1. Typed transmittal form (Link to Adobe Reader)
    2. Credit Scoring Model Filing Form (CS - 4) (Link to Adobe Reader)
    3. Filing may apply to only one line of insurance
    4. Complete copy of credit scoring model including variable definitions except in the case of reference filings (see below).
    -----------------------------
  • Reference Filings

    A credit scoring model filing may be made referencing a credit scoring model without including a copy of the referenced credit scoring model. Note, the complete name should be included on the Credit Scoring Model Filing Form.

    -----------------------------
  • Other Filing Types

    Credit scoring model filings must be made separately from all other filing types due to distinct and separate statutes governing underwriting guidelines and credit scoring models. Do not combine with rates, forms, rules, endorsements, or underwriting guideline filings.

    -----------------------------
  • Group Filings

    Multiple companies in a group may file jointly so long as they use the same credit scoring model in the same manner.

DIFFERENCES IN RATES CHARGED DUE SOLELY TO DIFFERENCE IN CREDIT SCORES

  • Supporting Data

    Supporting data required under 28 TAC §5.9941 should be included as part of an insurer's rate filing. This data is required only when applicable changes are made rather than with every rate filing. See Section II - Rates for further instructions.

DISCLOSURE FORM REQUIRED CONCERNING THE USE OF CREDIT INFORMATION

This portion of the Guide is intended to assist insurers complying with 28 TAC §5.9940

  • General Requirements

    An insurer subject to Chapter 559 must issue Form CD-1 (Link to Adobe Reader) in accordance with 28 TAC §5.9940 subsection (d).

    As provided for in subsection (e) 28 TAC §5.9940, an insurer may use a disclosure form that:

    1. is allowed or approved for use in another state, and
    2. complies with all requirements of this section and Form CD-1.

    -----------------------------
  • Filing Requirements

    The disclosure form, unless identical to Form CD-1, must be filed prior to use with the Texas Department of Insurance.

    A typed Filing transmittal should be included. (Link to Adobe Reader)

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Credit Scoring Model Filing Form Instructions

  • Item 1. - Check the applicable box describing the credit scoring model. For reference filings, provide the exact name of the model being used. Example - ChoicePoint, Inc. "Attract Standard Auto" or Fair, Isaac and Company "Assist 2.0 TX PG 1003".

  • Item 2. - Check the applicable box describing the use of the credit scoring model. For the purposes of this form, underwriting rules are those that designate whether or not a particular insured may be written in a particular company - or the rules that designate which company within a group an insured should be written. Rating rules are those used within one company. They can be tiering rules, discounts, surcharges, etc.

  • Item 3. - An officer/designee of the company must certify that the referenced/filed credit scoring model complies with the Texas Insurance Code.

  • NOTE: - Credit Scoring MODELS should not be confused with the underwriting rules and/or rating rules that utilize these models or the resulting scores. Underwriting rules and rating rules must be filed separately. Support for the use of credit scoring models (as required under 28 TAC §5.9941) must be included in the rate filings. This information should also be kept at hand as it may be requested by TDI.

Credit Scoring Model Filing Form - Interactive PDF Credit Scoring Model Filing Form (PC361 Indicates new addition since last update.Rev. 01/16)

(Link to Adobe Reader)

Indicates new addition since last update.Interactive PDF Compliance Questionnaire - Use of Credit Information (PC404 Rev. 01/16)

(Link to Adobe Reader)

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Section V - Underwriting Guidelines


Underwriting Guideline Filing Requirements

  • Applicability

    This portion of the Guide is intended to assist insurers complying with 28 TAC §§5.9340 - 5.9342 (Division 7 - FME - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance) pursuant to Texas Insurance Code (TIC) §38.002.

    Indicates new addition since last update.Underwriting Guidelines for Workers' Compensation are required to be filed per §2053.034.

    Underwriting Guidelines for other lines subject to TIC §38.003 are required only upon request.

    -----------------------------
  • Mandatory Filing Requirements

    Each underwriting guideline filing must include a typed transmittal form. (Link to Adobe Reader). Due to the distinct and separate statutes governing underwriting guidelines, it may not be combined with any other filing type.

    -----------------------------
  • Filing Specifications

    An insurer must file with the department:

    1. at least once every three calendar years on or before March 1, beginning March 1, 2004, a written, comprehensive set of each underwriting guideline used by the insurer or the insurer's agent; and

    2. during the interval between March 1 of each third calendar year and not later than the 10th day after the underwriting guideline has changed, a written update to the underwriting guideline clearly identifying each section of the previously filed underwriting guideline that has changed.

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  • Underwriting Guidelines

    An oral or electronic underwriting guideline must be converted to written form.

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  • Group Filings

    An insurer group or group of affiliated insurers may file one set of underwriting guidelines or update to underwriting guidelines on behalf of individual insurers in the group if the group clearly identifies which underwriting guidelines apply to each insurer within the group.

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Section VI - Reduced Filing Requirements for Certain Insurers

The following is general information regarding rate filings.

  • Applicability - Section VI - Reduced Filing Requirements for Certain Insurers of the Guide is intended to assist insurers complying with 28 TAC §§5.9355 - 5.9357 (Division 9 - FME - Reduced Filing Requirements for Certain Insurers) and 28 TAC §5.5005.

    -----------------------------
  • Rate Filings - All rates, rating manuals, rating rules, fees and supplementary rating information must be filed. As defined by Chapter 2251:

    "Rate" means the cost of 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.

    "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.

    "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.

    -----------------------------
  • Fees - All policy fees, service fees, and other fees that are charged or collected by the insurer under §§4005.001 - 4005.003 or §550.001 of the Texas Insurance Code must be filed. The file type for a fee only filing is "rate" (refer to Item 8 on FT-4 or Item 4 on FT-8).

    -----------------------------
  • Underwriting Guidelines - Underwriting Guidelines must be filed separately from other types of filings. Do not include underwriting guidelines with rate, rule, form, endorsement, or credit scoring model submissions filed in accordance with this guide. See Section V - Underwriting Guidelines for further information.

    -----------------------------
  • Credit Scoring Models & Supporting Data - Supporting data for the difference in rates due to the use of credit scoring as required under 28 TAC §5.9941 should be included as part of an insurer's rate filing, when necessary.

    If this information is filed independent of a rate filing, the file type listed should still be rates. All other filing requirements are those required of a credit scoring model filing. See Section IV- Credit Scoring for further information.

    Note: Credit Scoring Models (the models that produce credit scores as opposed to the use of those credit scores) should be filed separately from other types of filings. Do not include Credit Scoring Models with rate, rule, form, endorsement, or underwriting guideline submissions filed in accordance with this guide. See Section IV- Credit Scoring for further information.

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Reduced Filing Requirement Categories and Criteria

This section specifies the reduced filing requirements for the certain insurers who meet the requirements for reduced filing requirements under the provisions of §§2251.201 - 2251.204, §2251.002 and §§2251.251 - 2251.252 or 28 TAC§5.5005. See RR-3 and RR-4 for reduced filing requirement instructions.

  • EXEMPTION CATEGORIES || §§2251.201 - 2251.204 and 28 TAC §5.9357
    (Non-standard Personal Automobile)

  • Criteria that must be met to qualify for reduced filing requirements || The insurer and the insurer's affiliated companies or group must have a market share of less than 3.5 percent and either

    1. The county mutual must issue policies only at non-standard rates as defined under §2251.204 or

    2. 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.

    -----------------------------
  • EXEMPTION CATEGORIES || §§2251.251 - 2251.252 and 28 TAC §5.9357 (Underserved Residential Property)

  • Criteria that must be met to qualify for reduced filing requirements || During the calendar year preceding the date of the filing:

    1. The insurer and the insurer's affiliated companies or group must have a market share of less than 2.0 percent,

    2. for which more than 50 percent of the policies cover property:

      1. valued at less than $100,000; and

      2. located in an underserved area as designated by the Commissioner.

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  • EXEMPTION CATEGORIES || 28 TAC §5.5005 (Commercial Multi-Peril for Lloyd's plans, reciprocals, and interinsurance exchanges)

  • Criteria that must be met to qualify for reduced filing requirements || Commercial multi-peril policies containing only the following coverages:

    1. general liability;
    2. commercial property;
    3. commercial casualty, including boiler and machinery, commercial crime, commercial glass, and professional liability; but excluding commercial automobile, fidelity, surety and guaranty bonds, financial guaranty, and workers' compensation;
    4. medical professional liability;
    5. inland marine; and
    6. garage insurance, including all coverages and endorsements included in the Texas Garage Policy, except for those coverages specifically rated on the basis of risk characteristics of the automobile or the person driving.

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Reduced Filing Requirement Instructions

  • Applicability - This portion of the Guide is intended to assist insurers complying with 28 TAC §§ 5.9355 - 5.9357 (Division 9 - FME - Reduced Filing Requirements for Certain Insurers)

    -----------------------------
  • General Filing Requirements - In addition to the rates, rating manuals, rating rules, fees or supplementary rating information being filed, one copy of the following documents constitute a complete rate filing.

    ----------------------------- -----------------------------

* Exhibit C can be found in Section II - Rates.

Personal Insurance Rate Filings may also require supporting data for territory deviations or for the use of Credit Scoring and credit information. See RATES-29 and RATES-34 for further guidance.


Reduced Filing Requirement Instructions (continued)

  • Applicability - This portion of the Guide is intended to assist insurers complying with 28 TAC §5.5005

    -----------------------------
  • General Filing Requirements - For commercial multi-peril policies described in 28 TAC §5.5005(d), a schedule of the amounts to be charged policyholders or applicants and the amount of any rate changes for all lines of insurance that are included in the commercial multi-peril policy, including commercial property and inland marine lines of insurance. The schedule shall include any amount charged, including "rates", "policy fees", "service fees", and "other fees" that are charged or collected under §550.001.

    -----------------------------
  • EXEMPTION CATEGORIES || 28 TAC §5.5005
    (Commercial Multi-Peril for Lloyd's plans, reciprocals, and interinsurance exchanges)

  • REQUIRED DOCUMENTATION || One copy of the following documents constitute a complete filing:

    1. Typed transmittal Form (Link to Adobe Reader)
    2. Rate change information ( Exhibit C*, page 1 only) (Link to Adobe Reader)

* Exhibit C can be found in Section II - Rates.

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Certification of Sections 2251.251 - 2251.252 Exemption Compliance - Interactive PDF EC-1 Form (PC340 Indicates new addition since last update.Rev. 01/16)

(Link to Adobe Reader)

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Certification of Indicates new addition since last update.Section 2251.1025 Exemption Compliance - Interactive PDF EC-2 Form (PC362 Indicates new addition since last update.Rev. 01/16)

(Link to Adobe Reader)

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