SRC-CDH C.S.H.B. 1662 75(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 1662
By: Counts (Sibley)
Economic Development
5-18-97
Committee Report (Substituted)


DIGEST 

Currently, county mutual insurance companies are not subject to rate
regulation for automobile insurance.  Insurers that are subject to rate
regulation under the benchmark rate and flexibility program have
transferred business from the rate regulated company to an affiliated
county mutual insurance company, thereby removing rate regulation for
automobile insurance and eliminating assignments from the assigned risk
plan (TAIPA).  County mutual insurance companies are not subject to
assignments from TAIPA.   

C.S.H.B. 1662 eliminates the circumvention of the flexible rating program
by prohibiting any county mutual insurance company from using a rate for
an insured on a private passenger automobile after application of all
discounts, that is lower than the highest flexibility band for automobile
insurance. This prohibition only applies to a county mutual insurance
company that is directly or indirectly controlled by a holding company
that also directly or indirectly controls another insurance company
writing private passenger automobile insurance in Texas.  

PURPOSE

As proposed, C.S.H.B. 1662 establishes rates for certain lines of
insurance. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 3, Article 5.101, Insurance Code, by adding
Subsection (r), to prohibit a county mutual insurer from writing private
passenger automobile insurance for any risk at a rate, after applying all
applicable discounts and policy fees, which is lower than the highest rate
allowed under the flexibility band for that line in order to avoid the
circumvention of the flexible rating program, and notwithstanding the
provisions of Article 17.22(b).  Requires a county mutual, from the
effective date of each benchmark rate, to make any filing necessary within
60 days to comply with this subsection and its rates in effect on the
effective date of the benchmark rate shall continue in effect until such
filing.  Prohibits the limitation in this subsection from applying to
single interest insurance or insurance on mobile homes, motor homes,
travel trailers, or motorcycles. 

SECTION 2. Makes application of this Act prospective to January 1, 1998.

SECTION 3. Effective date:  September 1, 1997.

SECTION 4. Emergency clause.

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Section 3(r), Article 5.101, Insurance Code, to set forth
regulations regarding the benchmark rate.  Provides that the limitation in
this subsection does not apply to certain types of insurance.  Makes
nonsubstantive changes.