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You are here: Home . rules . 2003 . 1001-059
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EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE

CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

The Commissioner of Insurance, at a public hearing under Docket No. 2576 on November 6, 2003 , at 9:30 in Room 100 of the William P. Hobby Jr. State Office Building , 333 Guadalupe Street in Austin , Texas , will consider a proposal made in a staff petition. Staff´s petition seeks adoption of an amendment to the Texas Automobile Rules and Rating Manual (the Manual), which will add Section L. Rating Tier Classifications to Rule 74 of the Manual. Staff´s petition (Ref. No. A-1003-20-I) was filed on October 1, 2003 .

The purpose of this amendment is to allow for a further refinement to the rating classifications currently provided in the Manual. Currently, insurance groups utilize underwriting guidelines to assign insureds among multiple companies based on risk characteristics not recognized as classifications in the Manual. The addition of Section L. to the Manual would create equity among insurers that offer insurance to insureds with different risk characteristics in multiple companies, and companies that wish to offer insurance to insureds with different risk characteristics in a single company. Nothing in this rule should be construed to affect the regulatory rate standards under Texas Insurance Code Article 5.101 (e.g. rates outside the flexibility band would be subject to prior approval). Texas Insurance Code Articles 5.06, 5.10, 5.96, and 5.98 authorize the filing of this petition and the action requested of the Commissioner.

Staff proposes the consideration and adoption of amendments to the Manual as follows:

L. Rating Tier Classifications

1. This rule shall be applicable to personal automobile coverage.

2. This rule does not apply to autos that are:

a. subject to experience or composite rating; or

b. assigned through the Texas Automobile Insurance Plan Association.

3. An insurer may use rating tier classifications for the reflection of risk characteristics not otherwise recognized as a classification in the manual subject to the following:

a. Rules for assignment to each rating tier classification must be filed with the department as part of a company´s rate filing.

b. Rules for assignment must be defined uniformly across all coverages.

c. Criteria for assignment to rating tier classifications must be objective and mutually exclusive. "Mutually exclusive" means that rules for rating tier classification assignment must be clearly and unambiguously stated so that an applicant can qualify for only one such rating tier classification.

d. Tiering must be based on sound actuarial principles.

4. The applicable rating tier classification must be shown on the declarations page of the policy.

5. The methods used for rating tier classifications must not result in unfair discrimination.

6. Rating tier classification rates are subject to the flexible rating program of the Texas Insurance Code Article 5.101.

A copy of the petition, including an exhibit with the full text of the proposed amendment to the Manual, is available for review in the office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street , Austin , Texas . For further information or to request copies of the petition, please contact Angie Arizpe at (512) 463-6326; refer to (Ref. No.A-1003-20-I).

Comments on the proposed changes must be submitted in writing no later than 5:00 p.m. on November 10, 2003 to the Office of the Chief Clerk, Texas Department of Insurance, P. O. Box 149104 , MC 113-2A, Austin , Texas 78714-9104 . An additional copy of comments is to be simultaneously submitted to Philip Presley, Chief Actuary, Property and Casualty Actuarial Division, Texas Department of Insurance, P. O. Box 149104 , MC 105-5F, Austin , Texas 78714-9104 .

This notification is made pursuant to Insurance Code Article 5.96, which exempts it from the requirements of the Government Code, Chapter 2001 (Administrative Procedure Act).



Exhibit A

L. Rating Tier Classifications

1. This rule shall be applicable to personal automobile coverage.

2. This rule does not apply to autos that are:

a. subject to experience or composite rating; or

b. assigned through the Texas Automobile Insurance Plan Association.

3. An insurer may use rating tier classifications for the reflection of risk characteristics not otherwise recognized as a classification in the manual subject to the following:

a. Rules for assignment to each rating tier classification must be filed with the department as part of a company´s rate filing.

b. Rules for assignment must be defined uniformly across all coverages.

c. Criteria for assignment to rating tier classifications must be objective and mutually exclusive. "Mutually exclusive" means that rules for rating tier classification assignment must be clearly and unambiguously stated so that an applicant can qualify for only one rating tier classification.

d. Tiering must be based on sound actuarial principles.

4. The applicable rating tier classification must be shown on the declarations page of the policy.

5. The methods used for rating tier classifications must not result in unfair discrimination.

6. Rating tier classification rates are subject to the flexible rating program of the Texas Insurance Code Article 5.101.



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