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You are here: Home . rules . 2004 . 0121a-059
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SUBCHAPTER M. Filing Requirements Division 4. Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings

28 TAC §5.9310 Division 5. Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings

28 TAC §5.9320 Division 6. Filings Made Easy - Rate and Rate Manual Filing Requirements

28 TAC §§5.9330 - 5.9332 Division 7. Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance

28 TAC §§5.9340 - 5.9342 Division 8. Filings Made Easy - Credit Scoring Models Filing Requirements for Personal Insurance

28 TAC §§5.9350 - 5.9352 Division 9. Filings Made Easy - Reduced Filing Requirements for Certain Insurers

28 TAC §§5.9355 - 5.9357

The Commissioner of Insurance adopts new Divisions 4 - 9, §§5.9310, 5.9320, 5.9330 - 5.9332, 5.9340 - 5.9342, 5.9350 - 5.9352, and 5.9355 - 5.9357 concerning filing requirements. Sections 5.9310, 5.9320, 5.9332, 5.9342 and 5.9357 are adopted with changes to the proposed text as published in the October 29, 2004 issue of the Texas Register (29 TexReg 10056), and §§5.9330, 5.9331, 5.9340, 5.9341, 5.9350 - 5.9352, 5.9355, and 5.9356 are adopted without changes.

Divisions 4 - 9, §§5.9310, 5.9320, 5.9330 - 5.9332, 5.9340 - 5.9342, 5.9350 - 5.9352, and 5.9355 - 5.9357, are necessary to implement and clarify the various filing requirements of insurers so that insurers will be able to make the necessary filings and be in compliance with the regulatory changes enacted by Senate Bill 14 (SB 14) and House Bill 1865 (HB 1865) which were enacted by the 78 th Legislature, Regular Session, 2003. SB 14 amended various provisions of Chapter 5 of the Insurance Code, including Articles 5.13 and 5.13-2, as well as added Article 21.49-2U and Section 38.002 relating to the use of credit scoring and underwriting guidelines for personal automobile and residential property insurance, respectively. HB 1865 added Article 5.41-3 regarding commercial group property insurance. This legislation changed the form and rate filing requirements for certain insurers, and for certain lines of insurance.

Section 5.9310 (Division 4) is necessary to specify the form and content of the filing transmittal form that each insurer is required to use for property and casualty form, rate, rule, underwriting guideline, and credit scoring model filings. The information that is required in the transmittal form is necessary for the following purposes: to identify the entity making the filing, to specify the line or lines of insurance for which the filing is being made, to provide the information that is necessary for the department to track the filing in the agency, and to provide the information that is needed to properly route the filing to the divisions that will be performing the review of the filed information.

Article 5.13-2 §8(a), as well as other statutes, mandates that an insurance policy form or endorsement may not be delivered or issued for delivery in Texas unless the forms have been filed with and approved by the Commissioner. Section 5.9320 (Division 5) concerns the filing requirements for property and casualty policy form, endorsement, and manual rule filings. The information that the department specifies in this section which must be included in the filing of new and amended policy forms and endorsements is necessary for the staff reviewing the filings to ensure that the policy forms or endorsements comply with the Insurance Code, administrative rules, and Commissioner's orders and that they do not contain provisions or titles which are unjust, encourage misrepresentation, are deceptive, or violate public policy.

Sections 5.9330 - 5.9332 (Division 6) implement Insurance Code Chapter 5 filing requirements (as amended by SB 14) and also implement new Article 5.41-3 for commercial group property insurance as those provisions relate to rates and supplementary rating information. SB 14 amended or repealed various provisions of Chapter 5 of the Insurance Code, including Articles 5.13, 5.13-2, 5.101, 5.15, and 5.53. These changes essentially streamlined rate regulation from Article 5.101 benchmark and Articles 5.15 and 5.53 prior approval methods into the file and use rate regulation system of Article 5.13-2. Due to separate and distinct articles within the Insurance Code, prior to SB 14, Lloyds plans, reciprocals and interinsurance exchanges (Lloyds and reciprocals), and county mutual insurers were not subject to rate regulation for certain lines of insurance. The SB 14 amendments provided for rate regulation of residential property and automobile insurance under Article 5.13-2 for Lloyds, reciprocals, and county mutual insurance companies. Article 5.13-2 §5A provides for a limited prior approval system for certain insurers, but the overall uniform system of rate regulation effective December 1, 2004, for all insurers of property and casualty insurance in Texas is a file and use rate filing system. The department has the duty to ensure that rates used under the Insurance Code are just, fair, reasonable, adequate, not confiscatory, not excessive, and not unfairly discriminatory for the risks to which they apply. In order to accomplish this legislative mandate, insurers must file all rates, applicable rating manuals, supplementary rating information, and all other information required by the commissioner by rule. The adopted sections set forth general rate filing requirements but do not require insurers to submit a comprehensive rate filing in each instance. The department recognizes that there will be instances where lesser documentation is sufficient. In order to accom modate these different circumstances and provide insurers with some flexibility, the department has developed a list and description of seven categories of supporting information. This supporting information will generally provide the department with sufficient documentation to determine whether a rate meets the statutory requirements. The department recognizes that documentation will vary from one rate filing to another depending on the type of filing an insurer submits. For example, a rate filing containing rates for an endorsement may not require the same extent of information as a loss cost reference filing. The department may also request additional information when necessary to determine whether a rate complies with the statutory rating standards.

Sections 5.9340 - 5.9342 (Division 7) facilitate the department's management, including updates, of underwriting guidelines required to be filed with the department by insurers writing personal automobile and residential property insurance. Sections 5.9350 - 5.9352 (Division 8) are necessary to set forth the filing requirements for credit scoring models used for certain types of personal insurance as defined in Insurance Code Article 21.49-2U. Sections 5.9355 - 5.9357 (Division 9) set forth reduced filing requirements for certain insurers in accordance with the provisions of Articles 5.13-2, §13 and 5.13-2C.

The department has made changes to some sections in response to comments received and for clarification. None of the changes result in a substantive change to the rules. Changes were made to §5.9310(b )( 7) to correctly alphabetize the list of lines of insurance and to modify a term (multi-peril) to conform to SB 14 amendments. The same modification was made in §5.9310(c )( 5) and in §5.9320. A clarification was made in §5.9332 (e) to properly identify location for expense information and a clarification was made in §5.9342 (a )( 2) to avoid confusing or redundant language. A minor change was made to §5.9357 to clarify a statutory cite.

Division 4, §5.9310, sets forth the form and content of the filing transmittal form that insurers are required to use for property and casualty form, rate, rule, underwriting guideline, and credit scoring model filings. Subsection (a) sets forth the purpose of the section. Subsection (b) defines terms and subsection (c) specifies minimum elements of required information that must be included in the transmittal form. Subsection (d) notifies insurers where they may obtain copies of the transmittal form. Subsection (e) provides that insurers may use the National Association of Insurance Commissioners transmittal form or any other transmittal form if the information included in the form contains all of the information required under subsection (c). Subsection (f) provides information to insurers on how to obtain the Filings Made Easy Guide. Subsection (g) provides information on where insurers are to submit filings within the Texas Department of Insurance.

Division 5, §5.9320, sets forth the filing requirements for property and casualty policy form, endorsement, and manual rule filings. Subsection (a) sets forth the purpose of the section. Subsection (b) defines the terms used in the section. Subsection (c)(1) contains the general filing requirements that specify that each new or amended policy form or endorsement filing that is filed for approval must contain a filing transmittal form, a copy of the proposed policy form or endorsement, and an explanatory memorandum. Subsection (c )( 2)(A) contains additional filing requirements that the department may impose that are specific to new policy forms or endorsements. If the explanatory memorandum required under subsection (c )( 1)(B)(iii) does not fully explain or describe the filed policy forms or endorsements, additional filing requirements may be imposed by the department. In subsection (c)(2)(B), there are additional filing requirements specific to amendments that are filed for previously approved or adopted policy forms or endorsements which include a coverage evaluation that contains a detailed explanation of the proposed changes to the policy form or endorsement or either a side by side comparison between the proposed form or endorsement and what has been previously approved or a copy of the previously approved or adopted policy form or endorsement with clearly identified editorial notations referencing the new and replaced language. Filers are given the option of providing these additional requirements in the explanatory memorandum required under (c )( 1)(B)(iii) in lieu of providing them in the separate documents. Subsection (c )( 3) specifies that filings shall include all provisions required by statute, administrative rule, or Commissioner's order. Subsection (d) outlines the requirements for filing manual rules with the department. Subsection (e) outlines the procedure and requirements for insurers to make reference filings for policy forms, endorsements, and manual rules. Subsection (f) provides a description of an incomplete filing, outlines the department's procedure for handling an incomplete filing, and specifies that the 60 day period for a policy form or endorsement to be deemed approved does not commence until a complete filing is received by the department.

Section 5.9330 sets forth the purpose of Division 6. Section 5.9331 defines certain terms used in the division. Section 5.9332(a) provides for maintaining current information with the department. Section 5.9332(b) - (d) sets forth specific filing requirements for rate filings made in accordance with Articles 5.13-2, 5.41-3, 5.55, and 21.50. Section 5.9332(e) requires insurers to submit sufficient supporting documentation as necessary to justify specific rates or rate changes. In accordance with Article 5.13-2 §5(a-1), subsection (e)(1) - (7) of §5.9332 sets forth categories and clear descriptions of supporting information including actuarial support, expense information, historical experience information, profit provision information, rate change information, loss cost reference information, and rate reference information. Subsection (f) of §5.9332 provides that the department may request additional information. Subsection (g) of §5.9332 describes how rate filings may be combined with form filings but may not be combined with underwriting guideline or credit scoring model filings. Subsections (h) and ( i ) of §5.9332 provide administrative information regarding the Filings Made Easy guide and the address to where the rate filings are to be submitted.

Section 5.9340 sets forth the purpose of Division 7. Section 5.9342 provides a means for the department to manage an increasing volume of filed underwriting guidelines and updates and to fulfill the purposes of Insurance Code §38.002. Section 5.9342(a) requires insurers to file with the department a comprehensive set of their underwriting guidelines at least once every three calendar years on or before March 1st. In addition, subsection (a) requires insurers to file underwriting guideline updates not later than 10 days after a change is made to an underwriting guideline. This establishes a reasonable timeline for insurers to file updates with the department in compliance with Insurance Code §38.002. Subsection (b) establishes that oral and electronic underwriting guidelines must be converted to written form for filing purposes. Subsection (c) provides that an insurer group or a group of affiliated insurers that files one set of underwriting guidelines or updates on behalf of individual insurers must clearly identify which underwriting guidelines apply to each insurer within the group. Subsections (d) and (e) provide that insurers must file a separate transmittal form with their underwriting guidelines and may not combine an underwriting guideline filing with a filing made in accordance with Divisions 5, 6 or 8 of Subchapter M.

Section 5.9350 sets forth the purpose of Division 8. Section 5.9351 references the definitions in Article 21.49-2U and defines credit scoring model or models. Section 5.9352 sets forth the filing requirements for insurers to follow when filing credit scoring models. The section also requires insurers to file all credit scoring models prior to use and requires specific information that must be filed with the department.

Section 5.9355 sets forth the purpose of Division 9. Section 5.9356 provides reference for definitions in the division. Section 5.9357(a) sets forth the informational filing requirements for an insurer of nonstandard personal automobile insurance. Section 5.9357(b) sets forth the informational filing requirements for an insurer serving the underserved market in accordance with Article 5.13-2C. Section 5.9357(c) sets forth additional provisions which apply to filings made under either subsection (a) or (b) of §5.9357.

General

Comment: A couple of commenters support the dual lists of requested information, which are a list of generally required information and an additional list of information that may be required from insurers. The commenters state that even though supporting information may not be required up front, the department may request the information as part of the rate filing. The commenters support requesting countrywide experience when necessary to determine appropriate expenses. Another commenter believes the rule goes a long way towards delivering legislative intent, providing a mainstream rating system, providing an efficient process for insurers, and protecting consumers by requiring insurers to meet statutory standards

Agency response: The department agrees with and appreciates the comments.

Comment: A commenter states that the ultimate intent of the legislature was to create a competitive marketplace and implementation of the rule will be important. The commenter feels the marketplace should be allowed sufficient time to determine rates. The commenter does not want to create a specter of dual filing or dual regulation where certain companies are provided different rate regulatory programs which would create a non-level playing field.

Agency response: The department believes the rule effectively addresses legislative intent. Moreover, the rule does not result in unfair disadvantages or interfere with speed to market initiatives. The rules reflect the statutory differences for filing among insurers and the filing requirements apply uniformly based on these statutory differences.

§5.9310: One commenter recommends, in the interest of uniformity among the states, that the rule explicitly authorize the use of System for Electronic Rate and Form Filing (SERFF) to transmit filings.

Agency response: The department does not believe that the rule must explicitly authorize the use of SERFF since SERFF is a procedural system for submitting filings. The same filing requirements that apply to other methods of submitting filings, such as filings sent by mail, are applicable to SERFF filings.

§5.9320: One commenter states that the term "policy form" should be explicitly defined to clarify that it will not be construed to require filing of, e.g., applications, bills and diary letters.

Agency Response: The department disagrees. Insurance Code Article 5.13-2 §8(a) requires insurance policies and endorsement forms for use in writing the types of insurance subject to Article 5.13-2 to be filed with and approved by the commissioner. Items not part of a policy, such as applications, bills and diary letters, do not have to be filed with or approved by the commissioner. The department believes that the rule is consistent with the statutory requirement.

§5.9332(a )( 3): A commenter opposes this paragraph because the filing of information concerning fees are not required under Articles 21.35A or 21.35B. The commenter argues that none of the statutes expressly define rates to include fees. The commenter believes no valid purpose is served to require insurers to provide actuarial support for fees or subject them to the statutory rate standard.

Agency response: The department disagrees. Article 5.13-2 §5 (a-1) authorizes the commissioner to require insurers to file information concerning fees charged or collected in accordance with Articles 21.35A and 21.35B. Without information concerning fees the department cannot determine whether the resulting rates and charges satisfy the statutory requirements.

§5.9332(e): One commenter supports the language in §5.9332(e) that links a request for additional information to the statutory rate standards of excessiveness, inadequacy, or unfair discrimination. The commenter believes all references to additional information requests should be similarly linked to statutory standards, but does not cite any specific instance to which this comment pertains.

Agency response: The department appreciates the support but believes that all references to additional information requests are appropriate.

Comment: One commenter appreciates the categories of supporting information but believes that the existence of categories will force insurers to attempt to tailor their filings to this checklist of categories to avoid further requests from the department.

Agency response: The department believes that the categories and details are necessary for companies to be aware of the kind of information that may be requested from them. The list in no way compels a company to file this information unless specifically requested by the department.

§5.9332(e )( 1): One commenter notes that this provision uses factor and relativity interchangeably and recommends using "factor" for clarity.

Agency response: The department disagrees and believes there is a difference in meaning between " factor " and "relativity" as factors are used as multipliers and relativities are a relationship between values and may or may not be factors.

§5.9332(e )( 1)(B): A commenter states this provision requires both incurred data and paid data. According to the commenter, paid data is a subset of incurred data and thus more volatile, and requiring both will require a larger filing document. The commenter notes further that most states require only incurred data and requests the paid loss filing requirement be deleted or made optional.

Agency response: The department disagrees. Paid data may be necessary to evaluate changes in reserving patterns. Furthermore, these items are required only as necessary.

§5.9332(e )( 1)(K): One commenter states this subparagraph appears to require off-balance detail on every factor change. The commenter notes that a majority of states require off-balance information on books as a whole and that this level of detail is important competitive information and provides competitors with confidential information. The commenter requests that the requirement for detail for each factor be deleted and/or modified to require only line or coverage off-balance information.

Agency response: The department disagrees. The rule does not require off-balance information on every change, rather it is required where necessary to support proposed rates. Without off-balance factors by line and/or coverage the department would not be able to determine whether the resulting rates and charges satisfy the statutory requirements.

§5.9332(e )( 2): A commenter states that §5.9332(e)(2) requires three years of historical and countrywide experience. The commenter expresses that three years of state data is a commonly accepted industry standard and makes sense. Further, the commenter notes that in another place in the rule, five years of data is required. The commenter requests to submit only state data and believes the number of years for data requested should be consistent.

Agency response: The department believes the amount and type of data requested is appropriate to the category of information being requested. The department feels it is necessary to designate time periods since "standard" time periods vary from carrier to carrier and from one type of data to another type of data. The amount of data requested reflects different purposes, and different amounts of data for one purpose may not be sufficient to establish credible information for other purposes. In the case of expense information, the department believes three years of data is necessary and sufficient. Countrywide expense information is appropriate for the types of expenses typically gathered at the countrywide level especially as state data is generally not available. Countrywide data may also be necessary to support the filing. In the case of premium and loss experience, the department believes a five year time line is necessary and appropriate.

Comment: One commenter does not believe that companies should have to file indication data when increasing or decreasing surcharges or discounts.

Agency response : The department disagrees. Rates must be reasonable, adequate, and not excessive for the risks covered under the policy. Without support underlying the surcharges or discounts, the department cannot determine whether the resulting rates and charges satisfy the statutory requirements.

§5.9332(e)(2)(C): One commenter does not believe that it is appropriate to cap expenses at 110% of the industry average as it is inconsistent with the "file and use" approach of SB 14.

Agency response : The department believes that §5.9332(e )( 2)(C) reflects legislative intent regarding capping expenses at 110% of the industry median. To the extent that the rates being filed are not subject to a statutory cap, the department believes that this rule does not impose a cap but rather calls for the evidence necessary to show that the computation of the rate does not include disallowed expenses when it is a "necessary adjustment."

§5.9332(f): A commenter believes the legislature did not intend for "file and use" to amount to a free reign for the insurance industry. The commenter notes that SB 14 gives the department the tools necessary to play an active and vigilant role in overseeing the industry on behalf of policyholders. According to the commenter, the department should have full information to identify problems early and act quickly and, by not requiring insurers to provide all supporting information up front, the department will be left to play catch up with insurers as it tries to ascertain the rates. Further, the commenter states that the lag time involved in requesting additional information and reviewing for sufficiency may place the public at risk.

Agency response : The department believes that the intent of SB 14 is to encourage competition in the marketplace without undue or burdensome filing requirements. Flexible filing requirements are designed to promote legislative intent. The rule allows the department to require additional information which will enable the department to gauge the reasonableness of the rates.

§5.9342: A commenter welcomes the idea of a periodic regular review of underwriting guidelines but questions why it is based on a three year period. Carriers should file their underwriting guideline requirements annually, unless they make changes during the year, thus necessitating another filing. Another commenter recommends that §5.9342 be deleted because it imposes unnecessary filing and tracking burdens, exceeds the statutory mandate, and does not provide any regulatory benefit. The commenter states that while the relevant statute only requires that personal auto and residential property underwriting guidelines be filed with the department (without indicating how often this must be done) and updated when changed, the proposed rule would require that the guidelines be filed at least once every third year.

Agency response: The department disagrees. Insurance Code §38.002 became effective June 11, 2003 . Under §38.002(b), each insurer is required to file with the department a copy of its underwriting guidelines for all personal automobile and residential property policies delivered, issued for delivery, or renewed on of after June 11, 2003. In addition, §38.002 requires each insurer to update its filing each time the underwriting guidelines are changed, not annually. The department believes requiring a complete set of underwriting guidelines every three years is necessary to avoid the possibility of the insurers' underwriting guidelines becoming incomprehensible as a result of infinite piecemeal filings. The department further believes that it is reasonable, necessary and within its statutory authority to require each insurer to file a complete and comprehensive set of its underwriting guidelines at least once every three years. This requirement will promote efficiency of department review, decrease the number of department inquiries to insurer, and minimize cost to insurers.

§5.9342(e): A commenter stated that §5.9342(e) may not be statutorily required but the rule requires companies to file underwriting guidelines separately. To the extent possible, the commenter would like to submit documentation or a letter specifying guidelines sent in a previous filing, rather than submit a separate filing.

Agency response: The rule is intended to assist the department in maintaining distinct statutory public disclosure requirements. For example, under Article 5.13-2 §6, each form, rate and rule filing and any supporting information is open to public inspection as of the date of filing. Under Article 21.49-2U §10, credit scoring model filings are public information not subject to any exceptions and cannot be withheld from disclosure. However, under §38.002 (f), underwriting guidelines are subject to Chapter 552, Government Code, and may be considered information excepted from public disclosure. The department believes that these separate and distinct filing requirements enable the department to expeditiously identify and distinguish between filings subject to immediate public disclosure and filings that may be excepted from public disclosure. The separate filing provisions of this rule are not intended to restrict companies from submitting items that may have otherwise been considered underwriting guidelines in a rate or form filing. Rather the department believes this requirement will promote efficiency of department review, decrease the number of department inquiries to insurers, and provide the appropriate level of protection afforded by statute.

§5.9352: A commenter believes that the provision in §5.9352 requiring filing prior to use should be deleted because it is burdensome, exceeds the statutory mandate and does not provide any regulatory benefit.

Agency response: The department disagrees. The transition section of Article 21.49-2U in SB 14 specifies that models must be filed "before using." The department believes that the provision in §5.9352 is appropriate.

For: Office of Public Interest Counsel.

For with changes: Progressive Insurance; Texas Watch.

Against: American Insurance Association.

Neither For or Against: Texas Coalition for Affordable Insurance Solutions.

The new divisions are adopted under Insurance Code Articles 5.06, 5.13, 5.13-2, 5.13-2C, 5.35, 5.41-3, 5.55, 5.57, 5.145, 21.49-2U, 21.50 and §§36.001 and 38.002. SB 14, as enacted by the 78th Legislature, Regular Session 2003, amended various provisions of Chapter 5 of the Insurance Code, added Chapter 21.49-2U relating to the use of credit scoring, and added §38.002 relating to underwriting guidelines for personal automobile and residential property insurance. Article 5.13(e) provides that the regulatory power conferred in this article is vested in the commissioner. Article 5.13-2 gives the commissioner authority to regulate policy forms, endorsements, and rates for the writing of insurance subject to this article. Article 5.13-2, §5(a) and (a-1) provide that insurers shall file with the commissioner all rates, applicable rating manuals, supplementary rating information, and additional information as required by the commissioner for risks written in this state and that the commissioner by rule shall determine the information required to be provided in the filing. Article 5.13-2, §13(f) provides that county mutual insurance companies that have a group market share of less than 3.5 percent and that issue personal auto policies only at nonstandard rates are subject to rate filing requirements as determined by the commissioner by rule. Article 5.13-2C provides that a residential property insurer that meets certain criteria related to writing more than fifty percent of its policies in underserved areas and servicing low value homes are exempt from the rate filing and approval requirements of Articles 5.142 and 5.13-2. Article 5.41-3, which concerns the writing of commercial group property insurance, provides the requirements for forming a group or association that would be eligible to be written on a commercial group property policy, the form filing and rate filing requirements for such group policies, and that an insurer shall file related information that c learly identifies the group of businesses or the as sociation to be insured. Article 5.55 provides rate standards and rate filing requirements for workers' compensation insurance. Article 5.57 requires the commissioner to prescribe a uniform policy form for workers' compensation insurance, and provides that an insurance company may not use a form other than one prescribed unless the form is an endorsement appropriate to the company's plan of operation and submitted to and approved by the department. Article 5.145, §2 provides that notwithstanding any other provision of the Insurance Code and except as provided in this section, an insurer is governed by the provisions of §8 of Article 5.13-2 relating to policy forms and endorsements for personal automobile and residential property insurance, but that an insurer may continue to use the policy forms and endorsements promulgated, approved, or adopted under Articles 5.06 and 5.35 upon notification to the commissioner in writing. Articles 5.06 and 5.35 set forth filing and approval procedures for motor vehicle insurance and residential property insurance previously not subject to Article 5.13-2. Article 5.145 provides that the commissioner may adopt reasonable and necessary rules to implement this article relating to policy forms for personal and residential property insurance. Article 21.49-2U, relating to the use of credit scoring, provides that the commissioner may adopt rules as necessary to implement this article. Article 21.50 provides the form and rate regulation provisions for mortgage guaranty insurance. Section 38.002 provides that each insurer, as defined, engaged in the business of personal automobile or residential property insurance in this state shall file with the department a copy of the insurer's underwriting guidelines. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

Division 4. Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings

§5.9310. Property and Casualty Filing Transmittal Form.

(a) Purpose. The purpose of this division is to specify the form and content of the filing transmittal form that is to be used for property and casualty form, rate, rule, underwriting guideline, and credit scoring model filings and provide information on obtaining such form.

(b) Definitions. Words and terms not defined in this division may be defined in the Insurance Code Article 5.13-2 and Subchapter D of Chapter 5 and shall have the same meaning when used in this division. The following words and terms when used in this division shall have the following meanings unless the context indicates otherwise:

(1) Department-- Texas Department of Insurance (TDI).

(2) TDI file number--The number assigned by the department to a filing submitted by an individual company.

(3) TDI link number--The number assigned by the department to link individual TDI file numbers to a filing which is submitted for more than one company within a group.

(4) Interline filing--A filing submitted for an endorsement that may be used with more than one line of insurance provided the endorsement does not have an impact on rates or a rate filing that may be used with more than one line of insurance that contains only information concerning policy fees, service fees, and other fees that are charged or collected by the insurer under Insurance Code Article 21.35A or 21.35B.

(5) Reference filing-- A filing that references the use of adopted or approved policy form(s), endorsement(s), manual rule(s), rate(s), or other acceptable policy form(s), or endorsement(s), manual rule(s), or rate(s), to which the department has assigned a TDI file number.

(6) Dual filing--A monoline filing submitted for a specific line of insurance that may also be written as part of a multi-peril policy.

(7) Line of insurance--For purposes of this section, each of the following is a line of insurance:

(A) automobile-commercial;

(B) automobile-personal;

(C) boiler and machinery;

(D) casualty (personal and commercial);

(E) credit ;

(F) credit-involuntary unemployment;

(G) crime ;

(H) crop hail;

(I) excess liability;

(J) excess umbrella;

(K) farm and ranch;

(L) farm liability;

(M) farm and ranch owners;

(N) fidelity bonds;

(O) financial guaranty bonds or insurance;

(P) guaranteed auto protection (GAP) (commercial);

(Q) guaranteed auto protection (GAP) (personal);

(R) general liability;

(S) glass ;

(T) inland marine (commercial);

(U) inland marine (personal);

(V) involuntary unemployment;

(W) miscellaneous casualty;

(X) miscellaneous liability;

(Y) mortgage guaranty;

(Z) multi-peril ;

(AA) personal liability;

(BB) professional liability;

(CC) property-commercial;

(DD) property-residential (dwelling);

(EE) property-residential (homeowners);

(FF) rain;

(GG) surety bonds (other than criminal court appearance bonds);

(HH) umbrella-commercial;

(II) umbrella-personal; and

(JJ) workers' compensation.

(c) Form and content of transmittal form. The filing transmittal form must be typed and contain, at a minimum, the following information:

(1) company name;

(2) NAIC number of the company;

(3) company group name and group NAIC number;

(4) type of filing:

(A) new filing; or

(B) revision or replacement of an existing filing. If revising or replacing an existing filing, the TDI file number or link number of the filing that is being revised or replaced must be provided.

(5) line of insurance:

(A) all filings must specify the line of insurance for which the filing is being made;

(B) interline filings must indicate all lines of insurance to which the filing is applicable;

(C) dual filings must indicate multi-peril insurance and a specific line of insurance to which the filing is applicable;

(6) basic description of the filing:

(A) rate filing, rating manual filing, and rating rule filing;

(B) policy form;

(C) endorsement ;

(D) manual rules, other than rating manual rules;

(E) reference filing - must list the TDI file number or TDI link number of the filing being referenced;

(F) credit scoring model; or

(G) underwriting guidelines;

(7) proposed effective date; and

(8) contact person, including name, telephone number, mailing address, fax number, and e-mail address (if available).

(d) Availability of transmittal form. The Filing Transmittal Form (FTF) is a form that is provided by the department for insurers who are making the filings specified in subsection (c )( 6) of this section. This form may be obtained from the TDI website at www.tdi.state.tx.us .

(e) Alternative transmittal forms. An insurer may use, as an alternative, a transmittal form published by the National Association of Insurance Commissioners (NAIC) or any other transmittal form if the information included in the transmittal form, or in an addendum to the transmittal form, contains all the information required under subsection (c) of this section.

(f) The department maintains the Filings Made Easy guide to assist insurers in submitting filings and complying with statutory requirements. This guide may be obtained from the TDI website at www.tdi.state.tx.us .

(g) Filings under Divisions 4, 5, 6, 7, 8, and 9 of this subchapter must be submitted to the Texas Department of Insurance, Property & Casualty Intake Unit, 333 Guadalupe, Austin, Texas 78701 or to the Texas Department of Insurance, Property & Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin, Texas 78714-9104.

Division 5. Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings

§5.9320. Required Information for the Preparation and Submission of Policy Form, Endorsement, or Manual Rule (other than rating manual) Filings.

(a) Purpose. The purpose of this section is to specify the filing requirements for property and casualty policy form, endorsement, and manual rule filings that are submitted pursuant to Chapter 5 or Article 21.50 of the Texas Insurance Code.

(b) Definitions. The definitions set forth in §5.9310 of this title (relating to Property and Casualty Filing Transmittal Form) apply to this division.

(c) Policy forms and endorsements. All insurer and advisory organization policy form and endorsement filings submitted pursuant to Chapter 5 or Article 21.50 of the Texas Insurance Code, shall comply with the general filing requirements, other applicable requirements set forth in paragraphs (1) - (3) of this subsection, and any other applicable rules adopted by the commissioner.

(1) General filing requirements.

(A) All filings for new and amended policy forms or endorsements shall relate to only one line of insurance except for multi-peril, dual and interline filings.

(B) All filings for new and amended policy forms or endorsements shall contain the following:

( i ) a filing transmittal form as required in Division 4 of this subchapter (relating to Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings).

(ii) a copy of the proposed policy form(s) and/or endorsement(s); and

(iii) an explanatory memorandum that contains a detailed explanation of the reason(s) for filing the new or revised policy form(s) and/or endorsement(s) or manual rule(s), a description of the policy form(s) or endorsement(s), and the application (e.g., the type of risk or risks the form(s) or endorsement(s) will be used with).

(2) Additional filing requirements.

(A) Additional filing requirements specific to new policy forms or endorsements for use with new products. If the explanatory memorandum required under paragraph(1)(B)(iii) of this section does not fully explain or describe the filed policy form(s) or endorsement(s), the department may request either:

( i ) a summary of all policy provisions that includes a detailed description and explanation of the coverages , limitations, exclusions and conditions; or

(ii) a coverage comparison to a similar policy form or endorsement that has been previously approved or adopted by the commissioner containing a detailed explanation of all the differences including any restrictions in coverage, enhancements in coverage, or clarifications to the previously approved policy form(s) or endorsement(s).

(B) Additional filing requirements specific to amending previously approved or adopted policy forms or endorsements. In addition to the general requirements outlined in paragraph(1) of this subsection, the filing shall include a coverage evaluation that contains a detailed explanation of the proposed changes including any restrictions in coverage, enhancements in coverage, or clarifications to the previously approved or adopted policy form(s) or endorsement(s). The additional requirements under this subsection may be provided in the explanatory memorandum required under paragraph (1)(B)(iii) of this subsection or by providing:

( i ) a side-by-side comparison showing any differences between the previously approved or adopted policy form(s) or endorsement(s) and the proposed policy form(s) or endorsement(s); or

(ii) a copy of the previously approved or adopted policy form(s) or endorsement(s) indicating the differences between the approved or adopted policy form(s) or endorsement(s) and the filed policy form(s) or endorsement(s) with the new language underlined and the deleted language in brackets with a strikethrough, or other clearly identified or highlighted editorial notations referencing the new and replaced language.

(3) Statutory and regulatory filing requirements.

(A) Filings for new and amended policy form(s) and/or endorsement(s) shall include all provisions required by statute, administrative rule, or commissioner's order for a specific line of insurance. The required statutory or administrative rule provisions may be added to a policy form by a Texas amendatory endorsement. The amendatory endorsement shall be included in the filing or a filing may reference an approved amendatory endorsement that is applicable to the policy form(s) contained in the filing.

(B) All policy forms and endorsements contained in personal automobile and residential property insurance filings shall meet the statutory requirements for plain language in policies as set forth by the Commissioner of Insurance by order.

(d) Filing requirements for manual rules. Manual rules are rules other than rating rules that may be filed with policy form(s) or endorsement(s) or may be submitted separately. When submitted separately, in addition to the transmittal form, the manual rule filing shall relate to only one line of insurance except for multi-peril, dual and interline filings, and include an explanatory memorandum as described in subsection (c)(1)(B)(iii) of this section.

(e) Filing requirements for reference filings. A filing may be made referencing approved or accepted policy form(s), endorsement(s), or manual rule(s) without including a copy of the referenced policy form(s), endorsement(s) or manual rule(s). All reference filings shall relate to only one line of insurance except for dual filings, interline filings, and multi-peril filings. In addition to the transmittal form, a reference filing must include the following information for policy form(s), endorsement(s), or manual rule(s):

(1) name of insurance company or advisory organization whose filing is being referenced; and

(2) TDI file number, link number, or reference number of the filing being referenced.

(f) Incomplete filing.

(1) a filing will be considered incomplete if the filing does not comply with the filing requirements contained in subsections (c), (d) and (e) of this section;

(2) a filing that is determined to be incomplete by the department will be returned to the filer with a letter or electronic notification, indicating the reason(s) for the filing being returned; and

(3) the deemer period does not commence until a complete filing is received by the department.

(g) Combining filings. Filings under this division may be combined with filings made in accordance with Division 6 or 9 of this subchapter (relating to Filings Made Easy - Rate and Rate Manual Filing Requirements and Reduced Filing Requirements for Certain Insurers). These combined filings may utilize a single transmittal form. Filings under this division may not be combined with filings made in accordance with Division 7 or 8 of this subchapter (relating to Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance and Filings Made Easy - Credit Scoring Models Filing Requirements for Personal Insurance) due to distinct and separate statutes governing underwriting guidelines and credit scoring models.

Division 6. Filings Made Easy -- Rate and Rate Manual Filing Requirements

§5.9330. Purpose. The purpose of this division is to specify requirements for the filing of rates under Insurance Code Articles 5.13-2, 5.41-3, 5.55 and 21.50 including but not limited to prospective loss costs, rating manuals, supplementary rating information and information concerning policy fees, service fees, and other fees that are charged or collected by the insurer under Insurance Code Article 21.35A or 21.35B.

§5.9331. Definitions.

(a) Words and terms not defined in this section but which are defined in Insurance Code Article 5.13-2, Subchapter D of Chapter 5 or §5.9310 of this title (relating to Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings) shall have the same meaning, as applicable, when used in this division unless the context indicates otherwise.

(b) The following words and terms when used in this division shall have the following meanings, unless the context indicates otherwise.

(1) Disallowed expenses--Applies only to filings made in accordance with Insurance Code Article 5.13-2. Payments anticipated to be made to advisory organizations, licensed to do business in Texas, for services authorized by Insurance Code Article 5.73 for the development of statistical plans, data collection and reporting, the development and distribution of prospective loss costs, supplementary rating information, policy forms and endorsements, research, and the performance of inspections, and other activities reasonably related thereto, are not disallowed expenses.

(2) Insurer--An insurer authorized to write property and casualty insurance in this state, including an insurance company, reciprocal or interinsurance exchange, mutual insurance company, capital stock company, county mutual insurance company, association, Lloyd's plan, or other entity writing insurance in this state. The term includes an affiliate, as described by §823.003 of the Insurance Code, if that affiliate is authorized to write insurance in this state. The term does not include a farm mutual insurance company, an eligible surplus lines insurer under the Insurance Code, the Texas Windstorm Insurance Association, the Texas FAIR Plan Association, or the Texas Automobile Insurance Plan Association.

§5.9332. Filing Requirements.

(a) An insurer shall keep the following information current with the department and is not required to re-file unless affected by the proposed filing or requested by the department or commissioner:

(1) All prospective loss cost multipliers, rates, and rating manuals as required by Insurance Code Articles 5.13-2, 5.41-3, 5.55, 5.171, 21.49-2U, 21.50 or other articles that impose specific filing requirements for any line of insurance;

(2) Supplementary rating information; and

(3) Information concerning all policy fees, service fees, and other fees that are charged or collected by an insurer under Insurance Code Article 21.35A or 21.35B.

(b) For rates filed pursuant to Insurance Code Article 5.13-2 or 5.41-3, a filing containing rate information must contain the information described in paragraphs (1) - (3) of this subsection:

(1) A filing transmittal form as required in Division 4 of this subchapter (relating to Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings).

(2) The filing memorandum briefly explaining the purpose of the filing, and all material background details relating to the filing including a statement on the overall impact of the filing. For example, a filing memorandum may include one or more of the following, as applicable:

(A) reasons for entry into a new market;

(B) reasons for offering additional coverages ;

(C) reasons for offering new discounts or applying new surcharges;

(D) reasons for changing rates;

(E) changes in the insurer's goals and objectives; or

(F) an explanation of changes in insurer or insurer group operations.

(3) Rating information can be any rate pages detailing information described in subsection (a) of this section or any supporting information required by §§5.9941 or 5.9960 of this title (relating to Differences in Rates Charged Due Solely to Difference in Credit Scores and Exception to Territory Rating Requirements under Insurance Code Article 5.171) or any other applicable statute or rule.

(4) In accordance with Article 5.41-3, insurers filing commercial group property rates shall clearly identify the group of businesses or the association to be insured.

(c) For rates filed pursuant to Insurance Code Article 5.55, a filing containing rating information must contain the information described in paragraphs (1) - (3) of subsection (b) of this section. An insurer may not make such filing more frequently than every six months in accordance with Insurance Code Article 5.55, §3(a).

(d) For rates filed pursuant to Insurance Code Article 21.50, a filing containing rating information must contain the information described in paragraphs (1) - (3) of subsection (b) of this section. In accordance with Article 21.50 rates must be filed at least 15 days before they are to become effective and must include a certification as described in Article 21.50, §1A(g)(4).

(e) Except as provided in Division 9 of this subchapter (relating to Filings Made Easy - Reduced Filing Requirements for Certain Insurers), insurers must provide supporting information as necessary for the department to establish that a filing produces rates which are adequate, not excessive or unfairly discriminatory for the risks to which they apply. Categories of supporting information are listed in paragraphs (1) - (7) of this subsection, but are not necessarily required for every rate filing. Insurers must only provide sufficient materials to justify specific rates or changes being proposed. To the extent the information originally submitted in a rate filing is insufficient, the department may request additional information as deemed necessary by the department or commissioner.

(1) Actuarial support. Actuarial support generally includes rate indications and support, including the data and methodologies utilized by the insurer to derive such indications. Supporting information that is submitted with a filing should include each of the following to the extent applicable:

(A) premiums at current rate level and applicable on-level factors;

(B) incurred and paid losses;

(C) loss and claim development factors;

(D) premium and loss trend factors;

(E) rate relativities (e.g., classification, territory, amount of insurance);

(F) increased limits factors;

(G) hurricane and non-hurricane catastrophe factors or loss provisions;

(H) definition of a catastrophe and how it has changed over the experience period used to calculate the provisions;

(I) deductible credits and debits;

(J) description and support for discounts and surcharges;

(K) off-balance factors if there have been changes in relativities (e.g., discounts, surcharges, territorial definitions);

(L) credibility ;

(M) expense and profit provisions; and

(N) contingency provisions.

(2) Projected and historical expense information. As applicable to the insurer's filing, the information set out in subparagraphs (A) - (C) of this paragraph should be filed. For Texas , and if applicable, country-wide experience, the insurer should provide projected and historical expense information. The loss adjustment expenses would be shown as a dollar amount as well as a ratio to incurred losses. All other expenses should be shown as a dollar amount as well as a ratio to direct written premium. All expense items should be on a direct basis.

(A) Three years of historical Texas experience for commission and brokerage expenses incurred; taxes, licenses, and fees incurred; losses incurred; and, defense and cost containment expenses incurred. These shall be the amounts, or a subset of the amounts, reported on the Exhibit of Premiums and Losses (Statutory Page 14 Data) in the insurer's Annual Statement.

(B) Three years of historical countrywide experience for commission and brokerage expenses incurred, other acquisition expenses incurred, general expenses incurred, losses incurred, defense and cost containment expenses incurred and adjusting and other loss adjustment expenses incurred. These shall be the amounts reported in the insurer's Insurance Expense Exhibit, Part III (IEE) in the insurer's Annual Statement.

(C) Three years of historical countrywide experience for each category of disallowed expenses shall be the amounts reported in the insurers' response to the annual Texas Department of Insurance Call for Disallowed Expense Data. Total other acquisition expenses and general expenses each adjusted for disallowed expenses should be listed. The total adjusted general expense percentage should reflect any necessary adjustment due to the capping of general expenses at 110% of the industry median for the line of insurance.

(D) To the extent the expense provisions that underlie the rates differ from the historical expenses, support should be provided. For filings submitted under Insurance Code Article 5.13-2, the expense provisions should be net of the disallowed expenses as defined in §5.9331 of this division (relating to Definitions). Provisions for commissions and brokerage expenses; other acquisition expenses; general expenses; taxes, licenses and fees; and profit and contingencies, should be displayed and a sum computed. In addition, a permissible loss and loss adjustment expense ratio shall be computed as unity less the sum of these expense provisions.

(3) Historical experience information. This displays an insurer's most recent five year historical experience for Texas which are the amounts, or a subset of the amounts pertinent to the subline , reported on the Exhibit of Premiums and Losses (Statutory Page 14 Data) in the insurer's Annual Statement. It also includes the most recent five year countrywide experience which are the amounts, or a subset of the amounts pertinent to the subline , reported on the insurer's IEE, part III. Direct premiums written, direct premiums earned, direct losses and defense and cost containment expenses paid, and direct losses and defense and cost containment expenses incurred are shown as well as the ratio of the incurred loss and defense and cost containment expenses incurred to direct earned premiums, for both Texas and countrywide experience.

(4) Profit provision information. A brief description of the methodology and assumptions used to arrive at the profit provisions underlying the proposed rates.

(5) Rate change information. This generally includes a rate change history, the statewide average proposed rate change for each applicable coverage, form, or classification and the total average rate change for all coverages , forms, and classifications combined, even if only the rates for some of the coverages or forms are being changed. For loss cost reference filings, rate change information would include the proposed percentage change in the underlying loss costs, the change in the insurer's loss cost multiplier, and the rate level change (i.e., the product of the change in the loss costs and the loss cost multipliers, expressed as a factor). For workers' compensation filings, change information would include the impact of the change in relativities if the filing includes adopting a new set of relativities using either the insurer's own class distribution or the industry wide distribution, the change in the insurer's deviation, and the rate level change (i.e., the product of the change in the relativities and the deviation, expressed as a factor).

(6) Loss cost reference information. This includes the following:

(A) The TDI file number, link number, or reference number of the loss costs being referenced;

(B) The derivation of the loss cost multiplier proposed including any loss cost modification factor and the following expense and profit provisions:

( i ) commission and brokerage expenses;

(ii) other acquisition expenses;

(iii) general expenses;

(iv) taxes , licenses and fees; and

(v) underwriting profit and contingencies;

(C) The loss cost multiplier to be used as of the effective date of the filing; and

(D) For rate change filings, the loss cost multiplier used immediately prior to the effective date of the filing, and the effective rate level change due to any change in loss cost multiplier.

(7) Rate reference information. Rate reference information includes:

(A) A description of the rates being referenced including the line of business and TDI file number or link number;

(B) If an insurer is developing package modification factors, proposed modification factors and supporting data; and

(C) If an insurer is referencing package modification factors, a description of the package modification factor including a TDI file number or link number.

(f) Any filings that do not fully comply with all of the filing requirements described in this division may be considered incomplete and may be returned to the filer for completion with a notice stating that the filing is not complete and shall identify the additional information that is required for completion of the filing.

(g) The department may request additional information as necessary related to a rate filing, including actuarial or other reasonable support of rates as deemed necessary by the department or commissioner.

(h) Filings under this division may be combined with filings made in accordance with Division 5 of this subchapter (relating to Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings). These combined filings may utilize a single transmittal form. Filings under this division may not be combined with filings made in accordance with Division 7 or 8 of this subchapter (relating to Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance and Filings Made Easy - Credit Scoring Models Filing Requirements for Personal Insurance) due to distinct and separate statutes governing underwriting guidelines and credit scoring models.

(I) The department maintains the Filings Made Easy guide to assist insurers with compliance of statutory requirements. Insurers may refer to the Filings Made Easy guide for rate filing forms that insurers may use to display necessary supporting information described in subsection (e) of this section. This guide may be obtained from the TDI website at www.tdi.state.tx.us .

Division 7. Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance.

§5.9340. Purpose. The purpose of this division is to specify underwriting guideline filing requirements under Insurance Code §38.002 for those insurers writing personal automobile insurance or residential property insurance in this state.

§5.9341. Definitions. The definitions set forth in Insurance Code §38.002 apply to this division.

§5.9342. Filing Requirements.

(a) 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) not later than the 10 th 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.

(b) For purposes of compliance with this section, an oral or electronic underwriting guideline must be converted to written form.

(c) 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 in accordance with the requirements of this section if the group clearly identifies which underwriting guidelines apply to each insurer within the group

(d) An insurer that files underwriting guidelines or updates to underwriting guidelines under this section must submit a filing transmittal form as required by Division 4 of this subchapter (relating to Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings) with the filing for each underwriting guideline and update.

(e) Filings under this division may not be combined with filings made in accordance with Divisions 5, 6 or 8 of this subchapter (relating to Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings, Filings Made Easy - Rate and Rate Manual Filing Requirements, and Filings Made Easy - Credit Scoring Models Filing Requirements for Personal Insurance) due to distinct and separate statutes governing underwriting guidelines and credit scoring models.

Division 8. Filings Made Easy - Credit Scoring Models

Filing Requirements for Personal Insurance

§5.9350. Purpose. The purpose of this division is to specify filing requirements for credit scoring models and to specify other regulatory requirements pursuant to Insurance Code Article 21.49-2U for those insurers that use credit scoring in the writing of personal insurance in this state.

§5.9351. Definitions.

(a) Words and terms not defined in this division may be defined in the Insurance Code Article 21.49-2U and shall have the same meaning when used in this division.

(b) The following words and terms when used in this division shall have the following meanings unless the context indicates otherwise: Credit scoring model or models--The algorithm, computer application, model, or other process that is based on credit information used to derive a credit score or insurance score.

§5.9352. Filing Requirements.

(a) All models must be filed before they may be used. Insurers referencing models that have been filed with the department by another entity on behalf of an insurer in this state shall specify the exact name of the model being referenced in lieu of filing the model itself. Insurers making independent credit scoring model filings should file the entire model, including definitions.

(b) An insurer that files a credit scoring model under this division must submit the following information with the filing:

(1) filing transmittal information as required in Division 4 of this subchapter (relating to Filings Made Easy - Filing Transmittal Form and Requirements for Property and Casualty Form, Rate, Rule, Underwriting Guideline, and Credit Scoring Model Filings); and

(2) an indication of whether the insurer uses the score resulting from the model for underwriting, rating or both.

(c) An insurer group or group of affiliated insurers may file models on behalf of the individual insurers in the group if the individual filings made by each insurer in the group would otherwise be identical.

(d) Filings under this section may not be combined with filings made in accordance with Divisions 5, 6 or 7 of this subchapter (relating to Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings, Filings Made Easy - Rate Filing Requirements, and Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance) due to the distinct and separate statutes governing underwriting guidelines and credit scoring models.

Division 9. Filings Made Easy - Reduced Filing Requirements for Certain Insurers

§5.9355. Purpose. The purpose of this division is to specify requirements for certain insurers who meet the requirements for reduced filing requirements under the provisions of Insurance Code Article 5.13-2, §13(f) or 5.13-2C.

§5.9356. Definitions. The definitions set forth in §5.9331 of this title (relating to Definitions) apply to this division.

§5.9357. Filing Requirements.

(a) Non-standard personal automobile insurance. Insurers required to file under the provisions of Insurance Code Article 5.13-2 may make rate filings for personal automobile according to the requirements described in this subsection if they issue policies only at non-standard rates as defined under Article 5.13-2, §13 and if the insurer and the insurer's affiliated companies or group have a market share of less than 3.5 percent.

(1) Insurers who qualify to file under this subsection shall file in accordance with Division 6 of this subchapter (relating to Filings Made Easy - Rate and Rate Manual Filing Requirements) with the following exceptions:

(A) Insurers must include a Certification of Article 5.13-2, §13 Exemption Compliance (EC-2) with each filing, or in lieu of submitting the EC-2, an insurer may submit a certification of compliance which certifies that the insurer writes only at non-standard rates and the market share of the insurer and the insurer's affiliated companies or group have a market share of less than 3.5 percent.

(B) In lieu of the supporting information required in §5.9332(e) of this subchapter (relating to Filing Requirements), insurers may substitute rate change information as described in §5.9332(e )( 5) of this subchapter.

(2) The Certification of Article 5.13-2, §13 Exemption Compliance (EC-2) form is provided by the department for use by insurers seeking an exemption from rate fling and approval requirements pursuant to Article 5.13-2, §13. This form may be obtained from the Texas Department of Insurance website http://www.tdi.state.tx.us or by requesting such form from the Property and Casualty Actuarial Division, Mail Code 105-5F, P. O. Box 149104 , Austin , TX 78714-9104 .

(b) Underserved residential property. In accordance with Article 5.13-2C, §3(b) insurers otherwise exempt from the rate filing requirements of Insurance Code Article 5.13-2, shall make rate filings in accordance with this subsection. Insurers who qualify to file under this subsection shall file as required in §5.9332(a) - (b) of this subchapter (relating to Filings Made Easy - Rate and Rate Manual Filing Requirements) and must:

(1) include a Certification of Article 5.13-2C Exemption Compliance (EC-1) as specified in §5.3702 of this chapter (relating to Designation of Underserved Areas for Residential Property Insurance for Purposes of the Texas Insurance Code Article 5.13-2C).

(2) submit rate change information when applicable as described in §5.9332(e)(5) of this subchapter.

(c) Additional provisions. The following provisions apply to any rate or rate manual filing made pursuant to subsections (a) or (b) of this section:

(1) The reduced filing requirements provided under this division do not affect the requirements to file supporting data under §§5.9941 and 5.9960 of this chapter (relating to Differences in Rates Charged Due Solely to Difference in Credit Scores and Exception to Territory Rating Requirements under Insurance Code Article 5.171). Insurers making a rate or rate manual filing under this division may include supporting data required under §§5.9941 and 5.9960 of this title with the filing made under this division.

(2) Any filings that do not fully comply with all of the filing requirements described in this division may be considered incomplete and may be returned to the filer for completion with a notice stating that the filing is not complete and shall identify the additional information that is required for completion of the filing.

(3) The department may request additional information related to a rate filing, including actuarial or other reasonable support of rates, as deemed necessary by the department or commissioner. The insurer shall respond by the date specified in the request.

(4) Filings under this division may be combined with filings made in accordance with Division 5 of this subchapter (relating to Filings Made Easy - Requirements for Property and Casualty Policy Form, Endorsement, and Manual Rule Filings). These combined filings may utilize a single transmittal form. Filings under this division may not be combined with filings made in accordance with Division 7 or 8 of this subchapter (relating to Filings Made Easy - Underwriting Guideline Filing Requirements for Personal Automobile and Residential Property Insurance and Filings Made Easy - Credit Scoring Models Filing Requirements for Personal Insurance) due to distinct and separate statutes governing underwriting guidelines and credit scoring models.



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