home and auto rate changes over 5% need approval

The text as introduced · 1,043 words

By: Martinez Fischer
H.B. No. 5519

A BILL TO BE ENTITLED

AN ACT

relating to rates for residential property insurance and personal

automobile insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2251.003, Insurance Code, is amended by

amending Subsection (b) and adding Subsection (d) to read as

follows:

(b) Except as provided by Section 2251.0031, this

subchapter and Subchapters B, C, and D apply to all lines of the

following kinds of insurance written under an insurance policy or

contract issued by an insurer authorized to engage in the business

of insurance in this state:

(1) general liability insurance;

(2) [ residential and ] commercial property insurance,

including farm and ranch insurance and farm and ranch owners

insurance;

(3) personal and commercial casualty insurance,

except as provided by Section 2251.004;

(4) medical professional liability insurance;

(5) fidelity, guaranty, and surety bonds other than

criminal court appearance bonds;

(6) personal umbrella insurance;

(7) personal liability insurance;

(8) guaranteed auto protection (GAP) insurance;

(9) involuntary unemployment insurance;

(10) financial guaranty insurance;

(11) inland marine insurance;

(12) rain insurance;

(13) hail insurance on farm crops;

(14) [ personal and ] commercial automobile insurance;

(15) multi-peril insurance; and

(16) identity theft insurance issued under Chapter

706.

(d) This subchapter and Subchapters B and C-1 apply to all

lines of residential property insurance and personal automobile

insurance written under an insurance policy or contract issued by

an insurer authorized to engage in the business of insurance in this

state, including a Lloyd's plan, reciprocal or interinsurance

exchange, or county mutual insurance company.

SECTION 2. Chapter 2251, Insurance Code, is amended by

adding Subchapter C-1 to read as follows:

SUBCHAPTER C-1. PRIOR APPROVAL FOR RESIDENTIAL PROPERTY AND

PERSONAL AUTOMOBILE INSURANCE

Sec. 2251.131. RATE FILINGS AND SUPPORTING INFORMATION; USE

OF FILED RATE. (a) For residential property and personal

automobile insurance policies written in this state, each insurer

shall file with the department all rates, applicable rating

manuals, supplementary rating information, and additional

information as required by the commissioner, if the insurer's rate

increased or decreased by more than 5% from the insurer's

previously filed rate that is in effect on the date of the filing.

(b) Rules adopted by the commissioner under Section

2251.101(b) apply with respect to rate filing under this section.

(c) From the date of the filing of the rate with the

department to the effective date of the new rate, the insurer's

previously filed rate that is in effect on the date of the filing

remains in effect.

(d) For purposes of this section, a rate is filed with the

department on the date the department receives the rate filing.

Sec. 2251.133. COMMISSIONER APPROVAL OF RATE INCREASE OR

DECREASE. (a) Not later than the 90th day after the date a rate is

filed with the department under Section 2251.131, the commissioner

shall approve or disapprove the rate after determining whether the

rate complies with the requirements of this subchapter.

(b) The commissioner may approve a rate that increased or

decreased by more than 5% from the insurer's previously filed rate

under Section 2251.131 only if:

(1) the commissioner finds the resulting premiums will

be just, adequate, reasonable, not excessive, and not unfairly

discriminatory, taking into consideration:

(A) the financial condition of the insurer;

(B) the method of operation and expenses of the

insurer;

(C) the actual paid and incurred loss experience

of the insurer;

(D) earnings of the insurer from investments

together with a projection of prospective earnings from investments

during the period for which the rates will be in effect; and

(E) the composite effect of the factors described

by Paragraphs (B), (C), and (D); and

(2) the application meets the conditions,

limitations, and restrictions considered necessary by the

commissioner.

(c) For good cause, the commissioner may, on the expiration

of the 90-day period described by Subsection (a), extend the period

for approval or disapproval of a rate for one additional 90-day

period. The commissioner and the insurer may not by agreement

extend the 90-day period described by Subsection (a) or this

subsection.

(d) If the commissioner disapproves a rate under this

section, the commissioner shall issue an order specifying in what

respects the rate fails to meet the requirements of this chapter.

(e) An insurer that files a rate that is disapproved under

this section is entitled to a hearing on written request made to the

commissioner not later than the 30th day after the date the order

disapproving the rate takes effect.

(f) The department shall track, compile, and routinely

analyze the factors that contribute to the disapproval of rates

under this section.

Sec. 2251.134. AMENDMENT, SUSPENSION, OR REVOCATION OF

APPROVED RATE. (a) An insurer whose rate is approved under Section

2251.133 may:

(1) apply for an amendment to the rate; or

(2) by notice to the commissioner withdraw the rate.

(b) The commissioner may, after notice and a hearing:

(1) suspend or revoke approval for a rate considered

approved under Section 2251.133(b) if the commissioner determines

that the rate filing:

(A) contains false or erroneous information; or

(B) does not meet the requirements of this

subchapter; or

(2) suspend or revoke approval for a rate approved if

the commissioner determines after examination or otherwise that:

(A) the insurer has had a change in the insurer's

financial condition since the application was approved;

(B) the actual paid and incurred losses of the

insurer have materially changed since the application was approved;

(C) there has been a material increase in

expenses of the insurer since the application was approved;

(D) there has been a material reduction in

earning from investments by the insurer since the application was

approved; or

(E) the insurer has failed or refused to provide

information required by the commissioner.

SECTION 3. The changes in law made by this Act apply only to

rates for an insurance policy that is delivered, issued for

delivery, or renewed on or after January 1, 2026. Rates for an

insurance policy that is delivered, issued for delivery, or renewed

before January 1, 2026, are governed by the law as it existed

immediately before the effective date of this Act, and that law is

continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2025.