1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Filer--An insurer that files rates, prospective loss costs, or supplementary rating information under this section.
   2. (2) Insurer--Every insurance company, corporation, interinsurance exchange, mutual, reciprocal, association, Lloyds, or other organization or insurer writing any of the characters of insurance business herein set forth in this section, but does not include the Texas Catastrophe Property Insurance Association or any county or farm mutual insurance company or association as regulated under the Texas Insurance Code, Chapters 16 and 17. However, the provisions of subsections (c), (d), and (e) of this section shall not apply to Lloyds or reciprocals.
   3. (3) Prospective loss costs--That portion of a rate that does not include provisions for profit or expenses, other than loss adjustment expenses, that is based on historical aggregate losses and loss adjustment expenses projected by development to their ultimate value and through trending to a future point in time.
   4. (4) Rate--The cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost, with an adjustment to account for the treatment of expenses, profit, and individual insurer variation in loss experience, before any application of individual risk variations based on loss or expense considerations. The term does not include a minimum premium.
   5. (5) Supplementary rating information--Any manual, rating schedule, plan of rules, rating rules, classification systems, territory codes and descriptions, rating plans, and other similar information used by the insurer to determine the applicable premium for an insured. For the multi-peril package policy with a divisible premium, the supplementary rating information must be submitted for each line of insurance included. The term includes factors and relatives, such as increased limit factors, classification relativities, deductible relativities, premium discount, and other similar factors and rating plans such as experience, schedule and retrospective rating.

   6. (6) Supporting information--

      1. (A) the experience and judgment of the filer and the experience or information of other insurers or advisory organizations relied on by the filer;
      2. (B) the interpretation of any other information relied on by the filer;
      3. (C) descriptions of methods used in making the rates; and
      4. (D) any other information required by the Texas Department of Insurance to be filed.

2. (b) Commercial multi-peril package policy. Insurers which write lines of insurance covered by the Texas Insurance Code, Chapter 5, may include coverage for any two or more of the following lines of insurance in a commercial multi-peril package policy with rates filed and forms approved pursuant to the provisions of this section:

   1. (1) general liability;
   2. (2) commercial property;

   3. (3) commercial casualty, which includes the coverages specified in subparagraphs (A)-(E) of this paragraph, but excludes commercial automobile insurance; fidelity, surety and guaranty bonds; and workers' compensation:

      1. (A) boiler and machinery;
      2. (B) commercial crime;
      3. (C) commercial glass;
      4. (D) miscellaneous professional liability, including any professional liability insurance regulated pursuant to the Insurance Code, Articles 5.13 and 5.15, prior to September 1, 1993; and excluding professional liability coverage for accountants, architects, beauticians/barbers, engineers, for-profit nursing homes, lawyers, medical laboratory personnel, psychologists, real estate agents, surveyors, and x-ray laboratory personnel; or
      5. (E) any other commercial casualty;
   4. (4) medical professional liability;
   5. (5) inland marine; and
   6. (6) garage insurance including all coverages and endorsements included in the Texas Garage Policy, except for those coverages specifically rated on the basis of the risk characteristics of the automobile or the person driving.

3. (c) Rate standards.

   1. (1) Rates for commercial multi-peril package policies under this section shall be made in accordance with the provisions of this subsection.

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

      1. (A) past and prospective loss experience inside and outside this state;
      2. (B) any applicable catastrophe hazards;
      3. (C) operation expenses;
      4. (D) investment income;
      5. (E) a reasonable margin for profit and contingencies; and
      6. (F) any other relevant factors inside and outside this state.
   3. (3) An insurer may group risks by classifications for the establishment of rates and minimum premiums and may 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 paragraph (2) of this subsection.
   4. (4) Rates may not be excessive, inadequate, or unfairly discriminatory and may not be unreasonable.
   5. (5) In setting rates applicable solely 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.

4. (d) Rate filings.

   1. (1) For each line of insurance included in a commercial multi-peril package policy with a divisible premium, each insurer shall file with the Texas Department of Insurance all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in the state. For each commercial multi-peril package policy with an indivisible premium based on the loss experience under such package policy as a whole, each insurer shall file with the Texas Department of Insurance all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state.
   2. (2) If the Texas Department of Insurance determines after a hearing that an insurer's rates require supervision because of the insurer's financial condition or the insurer's rating practices, the department may require the insurer to file with the department all rates, supplementary rate information, and any supporting information prescribed by the department.
   3. (3) An insured that is aggrieved with respect to any filing in effect, or the public insurance counsel, may make a written application to the Texas Department of Insurance for a hearing on the filing. The application must specify the grounds on which the applicant bases the grievance. If the Texas Department of Insurance finds that the application is made in good faith, that the applicant would be so aggrieved if the grounds in the application are established and that those grounds otherwise justify holding a hearing, the department shall hold a hearing not later than the 30th day after the date of receipt of the application. The department shall give at least 10 days' written notice to the applicant and to each insurer that made the filing in question.
   4. (4) If, after the hearing, the Texas Department of Insurance finds that the filing does not meet the requirements of this section, the department shall issue an order specifying how the filing fails to meet the requirements of this section and stating the date on which, within a reasonable period after the order date, the filing is no longer in effect. The department shall send copies of the order to the applicant and to each affected insurer.
   5. (5) Each insurer subject to this section shall file with the Texas Department of Insurance, on a quarterly basis, information relating the changes in losses, premiums, and market share since January 1, 1993.
   6. (6) Each filing and any supporting information filed under this section is open to public inspection as of the date of the filing.

5. (e) Disapproval.

   1. (1) The Texas Department of Insurance shall disapprove a rate if the department determines that the rate filing made under this section does not meet the standard established under this section.
   2. (2) If the Texas Department of Insurance disapproves a filing, the department shall issue an order specifying in what respects the filing fails to meet the requirements of this section. Upon written request made to the department, the filer is entitled to a hearing not later than the 30th day after the effective date of the disapproval order.
   3. (3) If the Texas Department of Insurance disapproves a rate that is in effect, the department may issue a disapproval order only after a hearing held after at least 20 days' written notice to the insurer that made the filing. The disapproval order shall be issued not later than the 15th day after the close of the hearing and shall specify how the rate fails to meet the requirements of this section. The disapproval order shall state the date on which the further use of that rate is prohibited. The department shall set the date not earlier than the 45th day after the date on which the hearing closes.

6. (f) Forms.

   1. (1) A commercial multi-peril package policy or printed endorsement for use in connection with a commercial multi-peril package policy described in subsection (b) of this section may not be delivered or issued for delivery in this state unless the form has been filed with and approved by the Texas Department of Insurance. Commercial multi-peril package policy forms and endorsements for use with "large risks" as defined in the Insurance Code, Article 5.13-2, §8(f), shall be exempt from the filing requirements in this subsection.
   2. (2) Each filing shall be made not later than the 60th day before the date of any use or delivery for use. At the expiration of the 60-day period a filed form is approved unless, before the expiration of the 60 days, the Texas Department of Insurance approves or disapproves the form by order. Approval of a form by the department constitutes a waiver of any unexpired portion of the 60-day period. The department may extend by not more than an additional 10 days the period during which the department may approve or disapprove a form by giving notice to the filer of the extension before the expiration of the initial period. At the expiration of any extension and in the absence of any earlier approval or disapproval, the form shall be considered approved. For good cause shown, the department may withdraw approval at any time after notice and a hearing.
   3. (3) An order of the Texas Department of Insurance disapproving any form or any notice of the department's intention to withdraw a previous approval shall state the grounds for the disapproval in enough detail to reasonably inform the filer of the grounds. An order of withdrawal of a previously approved form takes effect on the expiration of the prescribed period, but not sooner than the 30th day after the effective date of the withdrawal order, as prescribed by the Texas Department of Insurance.
   4. (4) An insurer may not use in this state any form after disapproval of the form or withdrawal of approval by the Texas Department of Insurance.
   5. (5) If the Texas Department of Insurance promulgates standard commercial multi-peril insurance forms, endorsements, and other related forms, an insurer, at its discretion, may use these forms instead of the insurer's own forms for writing commercial multi-peril insurance.

7. (g) Additional lines of insurance.

   1. (1) In addition to the lines of insurance enumerated in subsection (b) of this section, commercial automobile, other than garage insurance as described in subsection (b)(6) of this section may also be included in a multi-peril package policy.
   2. (2) The rates and policy forms for commercial automobile insurance, other than garage insurance as described in subsection (b)(6) of this section, shall be those rates and forms approved in the manner provided by the Texas Insurance Code, Articles 5.101 and 5.06. Policy forms and endorsements for this line of insurance shall be self-contained and severed from all other coverages under the multi-peril policy.

Source Note:The provisions of this §5.9101 adopted to be effective April 13, 1992, 17 TexReg 2270; amended to be effective September 29, 1993, 18 TexReg 6323; amended to be effective March 27, 1996, 21 TexReg 2247; amended to be effective April 26, 1998, 23 TexReg 3834.