HBA-TYH H.B. 3099 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3099
By: Burnam
Insurance
4/5/1999
Introduced



BACKGROUND AND PURPOSE 

Although driving fewer miles per year lowers an individual's accident risk,
insurance companies do not currently offer any incentives for driving fewer
miles.  Some types of commercial insurance already base insurance premiums
on the motor vehicle's odometer reading.   H.B. 3099 provides a mile-based
rating plan for motor vehicle insurance, in which policyholders would be
given a class rate that would be multiplied by the number of miles driven,
thus producing the annual premium for the insurance policy. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Article 5.01-4, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends  Subchapter A, Chapter 5, Insurance Code, by adding
Article 5.01-4, as follows: 

Art. 5.01-4.  TIME-BASED AND MILE-BASED RATING PLANS REQUIRED.  Defines
"mile-based rating plan" and "time-based rating plan."  Requires an insurer
writing motor vehicle insurance in this state to offer each person who
purchases motor vehicle insurance coverage from that insurer a choice
between a mile-based rating plan and a time-based rating plan for coverage
for losses caused by collision or other driving-related accident.  Requires
the commissioner of insurance (commissioner) to adopt rules as necessary or
appropriate to govern the use of a mile-based rating plan, including rules
regarding the enumerated items. Provides that this article applies to
county mutual insurance companies.  

SECTION 2.  Amends Article 5.101, Insurance Code, by adding Section 6, as
follows: 

Sec. 6.  TIME-BASED AND MILE-BASED RATING PLANS FOR MOTOR VEHICLE
INSURANCE.  Defines "mile-based rating plan" and "time-based rating plan."
Requires the commissioner, for motor vehicle insurance lines that provide
coverage for losses caused by collision or other driving-related accident,
to promulgate separate benchmark rates for mile-based rating plans and
time-based rating plans.  Provides that in promulgating a rating manual for
a motor vehicle insurance line, the commissioner must use the same
classifications and territories for mile-based and time-based rating plans.
Prohibits the commissioner from approving a rating manual for a motor
vehicle insurance line if the classifications and territories used in the
manual are not the same for mile-based and time-based rating plans.  

SECTION 3.  Effective date: September 1, 1999.

SECTION 4.  (a)  Makes application of this Act prospective to January 1,
2000. 

(b)  Provides that an insurer is not required to offer a mile-based rating
plan as required under Article 5.01-4, Insurance Code, as added by this
Act, before January 1, 2002. Authorizes an insurer to only offer a
mile-based rating plan before January 1, 2002, with  the approval of the
commissioner of insurance.  

(c)  Requires the commissioner of insurance to adopt all rules necessary to
implement Article 5.01-4, Insurance Code, as added by this Act, not later
than September 1, 2001.  

SECTION 5.  Emergency clause.