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Texas Insurance Code - Not Codified - Article 5.26. Maximum Rate Fixed, And Deviations Therefrom

Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 5.26. Maximum Rate Fixed, And Deviations Therefrom

Art. 5.26. MAXIMUM RATE FIXED, AND DEVIATIONS 
THEREFROM.  (a) A maximum rate of premiums to be charged or 
collected by all companies transacting in this state the business 
of fire insurance, as herein defined, shall be exclusively fixed 
and determined and promulgated by the Board, and no such fire 
insurance company shall charge or collect any premium or other 
compensation for or on account of any policy or contract of fire 
insurance as herein defined in excess of the maximum rate as herein 
provided for;  provided, however, upon the written application of 
the insured stating his reasons therefor, filed with and approved 
by the Board, a rate in excess of the maximum rate promulgated by 
the Board may be used on any specific risk.
	(b)  Any insurer desiring to write insurance at a less rate 
than the maximum rate provided for in paragraph (a) above shall make 
a written application to the Board for permission to file a uniform 
percentage deviation for a lesser rate than the maximum rate, on a 
state-wide basis or by reasonable territories as approved by the 
Board, from the class rates or schedules or rating plans respecting 
fire insurance and its allied lines of insurance or class of risk 
within such kind of insurance or a combination thereof promulgated 
by the Board.  Such application shall specify the basis of the 
deviation, and shall be accompanied by the data upon which the 
applicant relies;  provided, however, such application, data and 
all other information filed in connection with such deviation shall 
be public records open to inspection at any reasonable time.  The 
provisions of this paragraph shall not be construed to prohibit the 
application of a uniform scale of percentage deviations from the 
maximum rate provided the general standards fixed in paragraph (d) 
hereof are met.
	(c)  Provided further, that any insurer desiring to write 
insurance at a lesser net rate than the maximum rate provided for in 
paragraph (a) above, either individually or as a member of a group 
or association, said lesser net rate being obtained by the 
application of a rating plan or procedure in use by it or by a group 
or association of which it is a member, which said rating plan or 
procedure shall apply only to special types or classes of risk in 
connection with which an inspection or engineering service and set 
of standards all acceptable to the Board are used, and which 
inspection or engineering services and set of standards have been 
and will continue to be maintained, shall make a written 
application to the Board for permission to file its said rating plan 
or procedure, the application of which would produce such lesser 
net rate.  Said application shall specify the basis of the 
modification and shall be accompanied by the data on which 
applicant relies.  Every insurer or group or association which 
avails itself of the provisions of this paragraph shall thereafter 
follow in the conduct of its business as to such classes or types of 
risks, only such rating plan or procedure ordered as permitted by 
the Board for its use as to said special types or classes of risks.  
If the Board shall issue an order permitting such deviation, such 
insurer or such group or association for it shall file with the 
Board all rates of premium or deposit for individual risks 
underwritten by it, which rates shall be considered as deviations 
from the rates that would have been promulgated by the Board on such 
risks.
	(d)  In considering any application provided for in (b) or 
(c) above, the Board shall give consideration to the factors 
applied by insurers in determining the bases for rates;  the 
financial condition of the insurer;  the method of operation and 
expenses of such insurer;  the loss experience of the insurer, past 
and prospective, including where pertinent the conflagration and 
catastrophe hazards, if any, both within and without this state;  to 
all factors reasonably related to the kind of insurance involved;  
to a reasonable margin for an underwriting profit for the insurer, 
and, in the case of participating insurers, to policyholders' 
dividends.  The Board shall issue an order permitting the deviation 
for such insurer to be filed if it is found to be justified upon the 
applicant's showing that the resulting premiums would be adequate 
and not unfairly discriminatory.  The Board shall issue an order 
denying such application if it finds that the resulting premiums 
would be inadequate or unfairly discriminatory.  As soon as 
reasonably possible after such application has been made the Board 
shall in writing permit or deny the same;  provided, that any such 
application shall be deemed permitted unless denied within thirty 
(30) days;  provided, that the Board may by official order postpone 
action for one additional period not exceeding thirty (30) days if 
deemed necessary for proper consideration;  except that deviations 
in effect at the time this Act becomes effective shall be controlled 
by subdivision (f) hereof.  Each deviation permitted to be filed 
shall be effective for a period of one (1) year from the date of 
final granting of such permission whether by the Board in the first 
instance or upon direction of the court.  However, a deviation may 
be withdrawn at any time with the approval of the Board or 
terminated by order of the Board, which order must specify the 
reasons for such termination.  All deviations from maximum rates 
shall be governed by this Article.
	(e)  No policy of insurance in force prior to the taking 
effect of any changes in rate that result from the provisions of 
this Act shall be affected thereby, unless there shall be a change 
in the hazard of the risk necessitating a change in the rate 
applicable to such risk, in which event such policy shall be subject 
to new rates developed under the provisions hereof.
	(f)  Any deviations from maximum rates on file with the Board 
and in effect until the effective time of this Act shall remain in 
effect for a period of thirty (30) days after such effective time, 
and if during such thirty (30) day period a written application to 
the Board is made for permission to file such deviations under this 
Act, same shall remain in effect until the Board has entered its 
order either permitting or denying the application and during the 
full course of any hearings on and appeal from any such order.
	(g)  The Board may call a public hearing on any application 
for permission to file a deviation or a hearing on a permitted 
deviation and shall call a hearing upon the request of any aggrieved 
policyholder of the company filing the deviation made within thirty 
(30) days after the granting or denying of any deviation.  The Board 
shall give reasonable notice of such hearings and shall hear 
witnesses respecting such matters.  Any applicant dissatisfied with 
any order of the Board made without a hearing under this Article may 
within thirty (30) days after entry of such order make written 
request of the Board for a hearing thereon.  The Board shall hear 
such applicant within twenty (20) days after receiving such request 
and shall give not less than ten (10) days written notice of the 
time and place of the hearing.  Within fifteen (15) days after such 
hearing the Board shall affirm, reverse or modify by order its 
previous action, specifying in such order its reasons therefor.  
Any applicant who may be dissatisfied with any order of the Board 
respecting its application may appeal in accordance with Article 
1.04 of this code. The judgment of the District Court shall be 
appealable as in any other civil case.  Such action shall have 
precedence over other civil cases on the dockets of the appellate 
courts.  Should the Board terminate or refuse to renew a permitted 
deviation or refuse permission for filing of a deviation under 
subdivision (f) hereof, then such deviation shall remain in effect 
during the course of any hearing thereon and thirty (30) days 
thereafter, and during the course of any appeal taken from such 
order and until final judgment of the courts. 
	(h)  Repealed by Acts 2003, 78th Leg., ch. 206, Sec. 
21.47(2).               
	(i)  Notwithstanding Subsections (a)-(h) of this article, on 
and after the effective date of S.B. No. 14, Acts of the 78th 
Legislature, Regular Session, 2003, rates for homeowners and 
residential fire and residential allied lines insurance coverage 
under this subchapter are determined as provided by Subchapter Q of 
this chapter, and rates for other lines of insurance subject to this 
subchapter are determined as provided by Article 5.13-2 of this 
code, except that on and after December 1, 2004, rates for all lines 
of insurance subject to this subchapter are determined as provided 
by Article 5.13-2 of this code.

Acts 1951, 52nd Leg., ch. 491.  Amended by Acts 1957, 55th Leg., p. 
1443, ch. 497, Sec. 1;  Acts 1981, 67th Leg., p. 2637, ch. 707, Sec. 
4(23), eff. Aug. 31, 1981.

Subsec. (d) amended by and Subsec. (i) added by Acts 1991, 72nd 
Leg., ch. 242, Sec. 2.26, eff. Sept. 1, 1991;  Subsec. (i) amended 
by Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 8.12, eff. Jan. 1, 
1992;  Subsec. (g) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 
4.03, eff. Sept. 1, 1993;  Subsec. (i) amended by Acts 1995, 74th 
Leg., ch. 984, Sec. 15, eff. Sept. 1, 1995;  Subsec. (i) amended by 
Acts 1997, 75th Leg., ch. 1330, Sec. 5, eff. Sept. 1, 1997;  Subsec. 
(h) repealed by Acts 2003, 78th Leg., ch. 206, Sec. 21.47(2), eff. 
June 11, 2003;  Subsec. (i) amended by Acts 2003, 78th Leg., ch. 
206, Sec. 21.15, eff. June 11, 2003.

Last modified: August 11, 2007