On December 18, 1997, the Insurance Commissioner, in accordance with the statutory requirement of Article 21.81 of the Texas Insurance Code, ordered changes in rates for private passenger and commercial automobile insurance obtained through the Texas Automobile Insurance Plan Association (TAIPA) -- the assigned risk plan. The Commissioner ordered private passenger TAIPA rates for bodily injury liability coverage to be 156.9% above the voluntary benchmark rates and property damage liability coverage to be 45.8% above the voluntary benchmark rates. The Commissioner also changed rates for private passenger personal injury protection to 382.6% above benchmark, UM bodily injury to 508.4% above benchmark, and UM property damage to 425.8% above benchmark. The overall rate change, after reflection of tort reform, was +3.9%. The voluntary market commercial automobile benchmark rates will apply to such vehicles written in TAIPA.
The changes in the TAIPA rates ordered by the Commissioner are effective for all policies effective on and after March 1, 1998.
Enclosed for your use are revised rates, premiums, rating factors and instructions (called the "machine letters") for companies utilizing EDP equipment to generate March 1, 1998 involuntary private passenger and commercial auto rates. Also enclosed for your use are the new involuntary private passenger and commercial auto rate tables (called the "rate bulletins"), similar in format to those that will soon appear in the Texas Automobile Rules and Rating Manual. Please note that the voluntary rates included on these pages are the same as were previously distributed in the sections entitled "Private Passenger Automobile - 1/20/98 Machine Letter (Voluntary Only)", "Private Passenger Automobile - 1/20/98 Rate Bulletin (Voluntary Only)", "Commercial Automobile - 1/20/98 Machine Letter (Voluntary Only)", and "Commercial Automobile - 1/20/98 Rate Bulletin (Voluntary Only)" of Commissioner´s Bulletin B-0044-97. The assigned risk rates were simply added to the pages previously distributed.
In addition to the new TAIPA rates, revisions to the voluntary private passenger auto and commercial auto packet of machine letters, rate bulletins, and tort reform forms that accompanied Commissioner´s Bulletin B-0044-97 dated November 20, 1997 have been made. Please follow the instructions below to update your packet:
1. In the section entitled "Private Passenger Automobile - Revised Pages of 8/1/96 Machine Letter", replace pages 1 and 3 with the attached pages 1 and 3.
2. In the section entitled "Private Passenger Automobile - Revised Pages of 8/1/96 Rate Bulletin", replace pages 4 and 5 with the attached pages 4 and 5. Also in this section, remove pages 17 through 20.
3. In the section entitled "Commercial Automobile - Revised Pages of 8/1/96 Rate Bulletin", replace pages 8 and 9 with the attached pages 8 and 9.
These three revisions (items 1-3 above) were necessary because tort reform reductions do not apply to the involuntary rates, except as provided for in Commissioner´s Order 96-0591. The original bulletin incorrectly contained involuntary rates which had been reduced for the new tort reform reductions. The revised pages indicated above show only voluntary benchmark rates that have been reduced for the new tort reform reductions.
4. In the section entitled "Commercial Automobile - 1/20/98 Machine Letter (Voluntary Only)", replace pages 21, 35 and 36 with the attached pages 21, 35 and 36. In the section entitled "Commercial Automobile - 1/20/98 Rate Bulletin (Voluntary Only)", replace pages 40 and 41 with the attached pages 40 and 41. Page 21 was revised to show the correct effective date at the bottom. Pages 35 and 36 of the machine letter and pages 40 and 41 of the rate bulletin were revised to correct typographical errors.
5. In the section entitled "Tort Reform Forms", replace Form TR-1-R and page 3 of the instructions for Form TR-1-R with the attached Form TR-1-R and page 3 of the instructions for Form TR-1-R. The formula for the "proposed average rate change" (line 3 on TR-1-R) has been corrected.
6. In the section entitled "Private Passenger Automobile - 1/20/98 Rate Bulletin (Voluntary Only)", replace page 31 with the attached page 31. The example shown on this page was revised to be consistent with the Texas Automobile Rules and Rating Manual.
We apologize for any inconvenience these revisions may cause.
Sincerely,
Philip O. Presley
Chief Property/Casualty Actuary
Technical Analysis