1. (a) In setting rates, an insurer shall consider:

   1. (1) past and prospective loss experience:

      1. (A) inside this state; and
      2. (B) outside this state if the data from this state are not credible;
   2. (2) the peculiar hazards and experiences of individual risks, past and prospective, inside and outside this state;
   3. (3) the insurer's actuarially credible historical premium, exposure, loss, and expense experience;
   4. (4) catastrophe hazards in this state;
   5. (5) operating expenses, excluding disallowed expenses;
   6. (6) investment income;
   7. (7) a reasonable margin for profit; and

   8. (8) any other factors inside and outside this state:

      1. (A) determined to be relevant by the insurer; and
      2. (B) not disallowed by the commissioner.
2. (a-1) In setting rates, an insurer may not consider whether a claim has been made by or on behalf of a policyholder in relation to an event documented by a report described by Article 56C.003(c), Code of Criminal Procedure.
3. (b) A rate may not be excessive, inadequate, unreasonable, or unfairly discriminatory for the risks to which the rate applies.

4. (c) The insurer may:

   1. (1) group risks by classification to establish rates and minimum premiums; and
   2. (2) modify classification rates to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in those risks on the basis of any factor listed in Subsection (a).
5. (d) In setting rates that apply only to policyholders in this state, an insurer shall use available premium, loss, claim, and exposure information from this state to the full extent of the actuarial credibility of that information. The insurer may use experience from outside this state as necessary to supplement information from this state that is not actuarially credible.
6. (e) In determining rating territories and territorial rates, an insurer shall use methods based on sound actuarial principles.

Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 2, eff. April 1, 2007.

Acts 2025, 89th Leg., R.S., Ch. 1156 (S.B. 2601), Sec. 5, eff. September 1, 2025.