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Texas Department of Insurance
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EXEMPT FILING NOTIFICATION PURSUANT TO THE INSURANCE CODE, CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

The Commissioner of Insurance will consider amendments proposed by the staff of the Workers' Compensation Classification, Premium Calculation and Research Division of the Property and Casualty Insurance Program at the Texas Department of Insurance (Department) to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance (Manual). The purpose of these amendments to Manual Rule V (Premium Basis) and Rule IX (Special Conditions or Operations Affecting Coverage and Premium) is to clarify that for workers' compensation premium calculation purposes "partners" includes general artners and limited partners.

Staff's petition (Ref. No. W-0206-02-I) was filed on February 14, 2006.

A public hearing on this matter will not be held unless a separate request for a hearing is submitted to the Office of the Chief Clerk during the comment period as specified herein.

The proposed amendments to the Manual are filed pursuant to Texas Insurance Code Article 5.96, which authorizes the Commissioner to prescribe, promulgate, adopt, approve, amend or repeal standard and uniform manual rules, rating plans, classifications plans, statistical plans and policy and endorsement forms for workers' compensation insurance.

The Department staff has proposed amendments to the Manual as follows:

1. Amend Rule V F.3.b., relating to Miscellaneous Values - Payroll Limitation, to include clarifying language indicating that for the purposes of this rule "partners" includes general partners and limited partners.

2. Amend Rule IX B., relating to Partners and Sole Proprietors, to include clarifying language indicating that for the purposes of this rule and the endorsements used to implement this rule "partners" includes general partners and limited partners.

Texas Labor Code 406.097(a) provides that "A sole proprietor, partner, or corporate executive officer of a business entity that elects to provide workers' compensation insurance coverage is entitled to benefits under that coverage as an employee unless the sole proprietor, partner, or corporate executive officer is specifically excluded from coverage through an endorsement to the insurance policy." The statute does not make a distinction between types of partnerships or between general partners and limited partners. The proposed amendments state that for purposes of Manual Rule V and Rule IX "partner" includes general partners and limited partners. These amendments are needed to clarify that general partners and limited partners are entitled to be covered under a workers' compensation policy and that general partners and limited partners can be excluded from coverage under a workers' compensation policy if the policy is endorsed accordingly. If general partners and/or limited partners are covered under the workers' compensation policy, then the basis of premium for each partner covered is calculated in accordance with Rule V F.3.b. of the Manual.

The staff requests that the proposed amendments to the Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance be adopted effective 15 days after notice of adoption is published in the Texas Register.

The Commissioner has jurisdiction over this matter pursuant to the Insurance Code Article 5.96.

A copy of the full text of the proposed amendments is available for review in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714-9104. For further information or to request copies of the amendments, please contact Ms. Sylvia Gutierrez at 512-463-6327 (refer to Ref. No. W-0206-02-I).

Written comments to these proposed amendments may be submitted no later than 5:00 p.m. on March 27, 2006 to Gene Jarmon, General Counsel and Chief Clerk, Texas Department of Insurance, P. O. Box 149104, MC 113-2A, Austin, Texas 78714-9104. An additional copy of the comments must be submitted to Nancy Moore, Deputy Commissioner, WC Classification, Premium Calculation and Research Division, Texas Department of Insurance, P. O. Box 149104, MC 105-2A, Austin, Texas 78714-9104.

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

The agency hereby certifies that the proposal has been reviewed by the legal counsel and found to be within the agency's authority to adopt.

For more information, contact: ChiefClerk@tdi.texas.gov