From the Office of State Senator Troy Fraser
For Immediate Release
February 11, 2003
Contact: William A. Scott - (512) 463-0124
Senate Approves Fraser Legislation Calling For Insurance Companies' Data
AUSTIN -- In the first significant step toward reforming the state's insurance industry, the Texas Senate today approved legislation authored by Senator Troy Fraser that requires homeowners insurance companies to disclose detailed information about how they set rates.
Senate Bill 310 was approved by a 31-0 vote, and now goes to the Texas House of Representatives for consideration. The bill is the first piece of insurance-related legislation approved by the Legislature since Governor Rick Perry declared the issue an emergency item for state lawmakers, allowing them to take up the matter within the first 60 days of the 140-day legislative session that began January 14.
Fraser, a Horseshoe Bay Republican who chairs the Senate Business and Commerce Committee, said the bill requires all insurance companies writing homeowners policies to file supporting data for their current rates -- as well as their projected rates over the next six months -- with the Texas Department of Insurance.
The bill also specifically grants the state insurance commissioner the authority to seek information about insurance companies' credit scoring formulas and methodologies.
"This is first step toward verifying whether insurance companies have been treating consumers fairly," Fraser said. "This bill gives us the vehicle we need to collect the kind information we need about rates and credit scoring before moving forward with additional insurance reform."
The bill requires the insurance commissioner to prepare and deliver a summary of the collected data to the Legislature within 30 days after passage of the bill, including a determination of whether current rates are "just, reasonable, adequate, not excessive and not unfairly discriminatory."
The legislation applies to insurance companies, reciprocal or interinsurance exchanges, mutual, capital stock companies, county mutuals, associations or Lloyd's plan companies.
"Every insurance company that writes homeowners policies in Texas is subject to this legislation -- including those that have purposefully avoided rate regulation by becoming Lloyd's companies," Fraser said.
The insurance commissioner may require companies to file any manuals, rating schedules, plan of rules, rating rules, classification systems, territory codes and descriptions and other information that insurance companies use to determine policyholder premiums -- including credit scoring formulas and methodologies.
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