On November 3, 1997, the Insurance Commissioner, in accordance with the statutory requirement of Article 5.101 of the Texas Insurance Code, made the following determinations as they relate to benchmark rates for voluntary private passenger and commercial automobile rates. The Commissioner ordered changes in benchmark rates for voluntary private passenger and commercial automobile insurance. The overall change for private passenger automobile insurance was -5.0%; it was -9.3% for commercial automobile. The changes in benchmark rates themselves by coverage are summarized in the attached machine letters and rate bulletins.
The changes in the benchmark rates ordered by the Commissioner are effective at 12:01 a.m. on January 20, 1998. For flex rate filings, Article 5.101, ' 3(e) of the Texas Insurance Code states that within 30 days of the effective date of the benchmark rates each insurer that proposes to write that line of insurance during the effective period of the benchmark rates shall make a rate filing with the Texas Department of Insurance.
The new rates take effect on the date specified by the insurer, but not later than the 60th day after the date of filing the rates with the Department. For policies effective on or after the effective date of the benchmark, January 20, 1998, and prior to the effective date of the new flex rate filing, the insurer´s previously filed rates based on the August 1, 1996 benchmark reflecting the tort reform reductions effective January 20, 1998 shall apply. Any policy effective on or after the effective date of the new flex rate filing must be written using the new rates.
Enclosed for your use are revised rates, premiums, rating factors and instructions (called the "machine letters") for companies utilizing EDP equipment to generate January 20, 1998 voluntary private passenger and commercial rates. Also enclosed for your use are the new voluntary private passenger and commercial rate tables (called the "rate bulletins"), similar in format to those that will soon appear in the Texas Automobile Rules and Rating Manual. The enclosed machine letters and rate bulletins include rates for risks written in the voluntary market only. The involuntary TAIPA rates will be included in a subsequent distribution.
The bodily injury liability rates in the attached machine letters and rate bulletins reflect the temporary mandatory rate reductions due to tort reform. The rate reduction factors to be used in completing TDI Forms TR-1-R and TR-RF that must accompany your flex rate filings are as follows:
Private Passenger BI .908 Commercial BI - Zone Rated .891 Commercial BI - Other than Zone Rated .890 Commercial BI - Dealers and Service Operations .894
Also enclosed are the pages of the August 1, 1996 private passenger and commercial auto machine letters and rate bulletins revised to reflect the January 20, 1998 tort reform factors. All companies who implement the January 20, 1998 benchmark rates on a date subsequent to January 20, 1998 must use these rates for all policies effective on or after January 20, 1998 and prior to the effective date of their new flex rate filing. A separate filing of these rates is not required.
The new flex rate filing that must be made within 30 days of January 20, 1998 will also satisfy the annual tort reform filing requirement for automobile liability coverage. The enclosed tort reform forms TR-1-R and TR-RF must be included in your new flex rate filing. Failure to include these forms could result in rejection of your filing. There is no need to make a separate tort reform filing for automobile if you make a flex rate filing. Companies not writing automobile business are not required to submit an auto flex rate filing and accompanying tort reform filing. Such companies must submit the enclosed TR-CF, certifying that they write no automobile business. Any company who decides to write automobile business subsequent to the 30 day period after January 20, 1998, must then submit a flex rate filing, including the accompanying form TR-1-R and all other appropriate filing forms, prior to writing such business.
All flex rate filings should be submitted to:
Texas Department of Insurance Property and Casualty Intake Unit (MC 104-3B) P.O. Box 149104 Austin, TX 78714-9104
Questions regarding private passenger automobile rate filings should be directed to Kaylie Wilson, Property and Casualty Actuarial Section, 512-322-4212. Questions regarding commercial automobile rate filings should be directed to Brian Ryder, Property and Casualty Actuarial Section, 512-322-3577.
Sincerely,
C.H. Mah
Associate Commissioner
Technical Analysis
enclosures (click to download the following files in a zipped format):
1/20/98 Private Passenger Auto Machine Letter (Voluntary Only)
1/20/98 Private Passenger Auto Rate Bulletin (Voluntary Only)
1/20/98 Commercial Auto Machine Letter (Voluntary Only)
1/20/98 Commercial Auto Rate Bulletin (Voluntary Only)
Revised pages of 8/1/96 Private Passenger Auto Machine Letter and Rate Bulletin
(revised to reflect the 1/20/98 tort reform reductions)
Revised pages of 8/1/96 Commercial Auto Machine Letter and Rate Bulletin
(revised to reflect the 1/20/98 tort reform reductions)
Tort Reform Forms TDI TR-1-R, TR-RF (Reconciliation Form), and
TR-CF (Filing Certification Form - No Direct Written Premium for Affected Lines of Insurance)