Many changes were mandated by the Insurance Reform Act (HB-2) enacted into law by the 72nd Texas Legislature. One of these changes moved commercial property insurance from a state promulgated system to a "file and use" system. The Texas Department of Insurance continued the inspection of commercial properties and promulgation of property insurance rates based on the schedules in the Texas Commercial Property Rating Manual (old GBS) until the inspection function was privatized effective August, 31, 1994. Since September 1, 1994, the Insurance Services Office (ISO) has been developing and publishing specific property prospective loss costs for commercial property insurance in Texas using the schedules developed and promulgated by the Department.
On June 27, 1996, the Department accepted ISO's submissions for their multistate commercial property class rating program, contingent upon the adoption of ISO's Fire Suppression Rating Schedule. Effective January 1, 1997, Commissioner Bomer approved the use of the Fire Suppression Rating Schedule and ISO's Public Protection Classifications (PPC's) for use in conjunction with commercial class rating. At this time all existing key rates were frozen. To coincide with class rating in Texas, ISO developed a "hybrid system" to offer ISO specific property prospective loss costs derived from the Texas Commercial Property Rating Manual to Texas users January 1, 1997.
ISO has continued to make available specific schedule rates previously promulgated by the Department using the Texas Commercial Property Rating Manual.
On October 20, 1997, the Department accepted ISO's submission for their multistate Specific Commercial Property Evaluation Schedule (SCOPES) for the development of specific property loss costs.
A four-year transition rule with annual caps for specifically rated risks using SCOPES was also approved.
Beginning January 1, 1998, ISO will provide surveys and rating quotations based on either SCOPES or the Texas Commercial Property Rating Manual.
Effective July 1, 1998, the ISO will discontinue use of the Texas Commercial Property Rating Manual (formerly known as the Texas General Basis Schedules or GBS) for calculation of Group I specific property loss costs. In addition, the Department will no longer accept rate filings referencing this schedule. All rating quotations for specifically rated property risks surveyed by ISO on or after July 1, 1998, will be based on the Specific Commercial Property Evaluation Schedule (SCOPES). Property and Casualty Companies writing commercial property insurance and intending to use the Specific Commercial Property Evaluation Schedule ( SCOPES) must reference file the schedule on or before July 1, 1998. The TDI reference number is TDI-97-200-ISO-SCOPES-PLC.
The Texas Commercial Property Rating Manual will continue in use for calculation of Group II extended coverage classifications until the Department accepts ISO's countrywide Group II filing.
If you have any questions concerning the contents of this bulletin, please contact Richard Baker, Inspections and Fire Safety at 512-322-2259.
ISO's customer service Dallas office maybe contacted at 972-737-0798.
Lyndon Anderson
Associate Commissioner
Property and Casualty Division, MC103-1A