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Commissioner’s Bulletin # B-0007-05

August 22, 2005

TO: ALL INSURANCE COMPANIES, CORPORATIONS, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS LICENSED TO WRITE FIRE AND ALLIED LINES, MULTIPLE PERIL CROP, FARMOWNERS MULTIPLE PERIL, HOMEOWNERS MULTIPLE PERIL, COMMERCIAL MULTIPLE PERIL, INLAND MARINE, MEDICAL MALPRACTICE, OTHER GENERAL LIABILITY, PRODUCTS LIABILITY, PRIVATE PASSENGER AUTOMOBILE, COMMERCIAL AUTOMOBILE, FIDELITY, AND SURETY IN THE STATE OF TEXAS

RE: 2005 TEXAS DISALLOWED EXPENSE CALL FOR CALENDAR YEAR 2004 EXPERIENCE

Pursuant to the authority of Texas Insurance Code §38.001, the Texas Department of Insurance requests all companies writing property, residential, medical malpractice, other general liability, products liability, fidelity, surety, and automobile insurance in Texas to submit information relating to disallowed expenses.

Article 5.13-2, Section 5(a)(3) of the Insurance Code, prohibits the consideration of certain incurred expenses in the determination of individual company rates for lines of insurance regulated under this article. This call is designed to provide quantification of such "disallowed" expenses as defined under Article 5.13-2, Section 3(a)(1).

Please note: Section 5.9331(b)(1), Texas Administrative Code, provides that for filings made in accordance with Article 5.13-2 of the Insurance Code, the following are no longer considered disallowed expenses: payments to advisory organizations licensed to do business in Texas for services authorized by Article 5.73 of the Insurance Code for the development of statistical plans, data collection and reporting, the development and distribution of prospective loss costs, supplementary rating information, policy forms and endorsements, research, and the performance of inspections, and other reasonably related activities.

This call must be completed in accordance with the general instructions and returned no later than April 8, 2005. Underlying data, individual source documents and other information utilized in the development of your call response must be maintained in your records for a minimum of two years following the date of your submission to the department.

Please download the forms, instructions, reporting forms, and affidavit from the Department's website located at http://www.tdi.state.tx.us/bulletins/index.html. Click on the bulletin number (b-0007-05) and scroll down to and click the link to Forms and Instructions.

If you do not have internet access, have an earlier version of Excel or are otherwise unable to download the forms, please contact Michael Davis at 512-322-5029 to have the forms sent to you.

Submissions:

Upon completion, please save the Excel file as the company NAIC number DER2004 (XXXXX DER2004.xls) or for group filings, as "GRP" and the group number DER2004 (GRPXXXX DER2004.xls). Please e-mail the Excel file to michael.davis@tdi.state.tx.us, using the Excel file name as the subject, and fax the signed, notarized (ink-stamp notary seal) affidavit to 512-463-6122. If a crimp-style notary seal is used, please send the original affidavit to the address listed below. If unable to e-mail submission, please send a copy of the Excel file on diskette or CD with the signed, notarized original affidavit to the address listed below. You do not need to submit a hard copy of the report.

Mail:
Texas Department of Insurance
Attn: Michael Davis
Data Services (MC 105-5D)
P.O. Box 149104
Austin, TX 78714-9104

Courier:
Texas Department of Insurance
Attn: Michael Davis
Data Services (MC 105-5D)
333 Guadalupe
Austin, Texas 78701

Failure to comply with the requirements of this call within the time limits specified may constitute a violation or violations of the Insurance Code and may subject the insurer to the penalties provided by law.

Questions concerning this call should be directed to Michael Davis at the Texas Department of Insurance at 512-322-5029.

Sincerely,

Clare Pramuk
Director, Data Services

Forms and Instructions






Remember: TDI's Internet resources are to be used for legitimate state purposes. Occasional personal use is permitted so long as such use is incidental, is brief, does not result in additional cost to TDI or the state and does not interfere with the performance of the employee's job duties. Under no circumstances may an employee use TDI's Internet resources to access sexual, offensive, profane or otherwise inappropriate information. By using TDI computers to access Internet resources, TDI employees are consenting to the monitoring of their use of Internet resources. TDI employees do not have a privacy interest or an expectation of privacy in the use of TDI computers to access Internet resources. Refer to the TDI Operations Manual for additional information.