Art. 1.02. RATING. (a) In this article, "insurer" means an insurance company, reciprocal or interinsurance exchange, mutual insurance company, farm mutual insurance company, capital stock company, county mutual insurance company, Lloyd's plan, a surplus lines insurer, or other legal entity engaged in the business of insurance in this state. The term includes: (1) an affiliate as described by Section 2, Article 21.49-1 of this code, or Section 823.003(a) of this code; (2) the Texas Windstorm Insurance Association created and operated under Article 21.49 of this code; (3) the FAIR Plan Association under Article 21.49A of this code; and (4) the Texas Automobile Insurance Plan Association under Article 21.81 of this code. (b) Rates used under this code must be just, fair, reasonable, adequate, not confiscatory and not excessive for the risks to which they apply, and not unfairly discriminatory. An insurer may not use rates that violate this article. (c) For purposes of this article, a rate is: (1) excessive if the rate is likely to produce a long-term profit that is unreasonably high in relation to the insurance coverage provided; (2) inadequate if the rate is insufficient to sustain projected losses and expenses to which the rate applies, and continued use of the rate: (A) endangers the solvency of an insurer using the rate; or (B) has the effect of substantially lessening competition or creating a monopoly within any market; or (3) unfairly discriminatory if the rate: (A) is not based on sound actuarial principles; (B) does not bear a reasonable relationship to the expected loss and expense experience among risks; or (C) is based in whole or in part on the race, creed, color, ethnicity, or national origin of the policyholder or an insured. Added by Acts 2003, 78th Leg., ch. 206, Sec. 13.01, eff. June 11, 2003.

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Last modified: August 10, 2007