Certificate of Insurance - COI's Texas / Senate Bill 425

Certificates of Insurance Legislation Signed by Texas Governor

By Stephanie K. Jones | July 4, 2011

• Share on emailEmail This
• Print
• Newsletters

• inShare1

• Article
• Comments

Texas Gov. Rick Perryhas signed into law a measure backed by agents that requires regulatory approval of property and casualty certificate of insurance forms provided to insureds as proof of insurance coverage.
Certificates of insurance are widely used in commercial insurance and agents traditionally have been asked to provide them to insureds. As a result agents are often brought into policy disputes because of language contained in the certificates.
Under Senate Bill 425, only certificates approved by the Texas Department of Insurance may be issued. The bill allows for both a fee for filing a certificate with the department and penalties for noncompliance.
The Independent Insurance Agents of Texas worked with various stakeholders to help craft the legislation. IIAT Executive Director David VanDelinder explained the importance of the measure to agents and what to look for in its implementation.
Insurance Journal: Why was the certificate of insurance legislation necessary?
David VanDelinder: Certificates are supposed to be simply evidence that there’s insurance in place to protect a third party that may be relying on that insured for some work that’s being done. So it’s basically a message to a third party that there is insurance in effect when you need it.
What the third party started doing over time, however, is trying to get the certificates to replace the insurance policy by guaranteeing certain things would be true. For instance, they might have a contract with that insured that requires them to indemnify or protect that third party. And they want the certificate to say that this protects me in that situation. So it went way beyond the typical certificate, which says I’ve got liability coverage and this limit. …
So we were being asked with more and more frequency to certify issues that we could not have a judgment on, because we’re not attorneys, and there were situations where they were asking for terms of coverage that didn’t exist and couldn’t be done.
And yet we were in a situation where we had no leverage. We pretty much had to sign some of these certificates because our insured couldn’t work the next day if he didn’t produce a certificate of insurance.
So it was an attempt by third parties to leverage the situation to get more of what they wanted into a certificate. And that’s not good for them either because the ultimate result is agents end up issuing ambiguous or inaccurate certificates.
IJ: How does the legislation that has passed address those issues?
VanDelinder: It requires any non-standard certificate form – a standard form would be typically the ACORD form or some of the other national forms that were published years ago for this purpose – but any non-standard form created by a third party would have to first be approved by the Department of Insurance.
And the department, we hope, is going to look at some of these issues where we are being asked to certify things that we can’t certify and eliminate those from the certificates. As a practical matter in other states where this has been done, a lot of time those third parties that have had these non-standard certificates simply say ‘OK we’ll just take the ACORD form or we’ll take one of these standard certificates.’ That’s really what we would prefer.
IJ: Have you been working with TDI to craft the legislation?
VanDelinder: We certainly ran it by them. They offered some changes in language, which were amended into the bill. We worked with the general contractors, we worked with the oil and gas people, we worked with municipalities to make sure that everyone was clear on what we were trying to accomplish. One of the reasons the bill passed is that we had the people most affected by it onboard with the legislation.
IJ: Do you have any expectations about how TDI will implement it or any concerns about what they might do?
VanDelinder: Well, yes, we are concerned. I think implementation is going to be everything here. … We will be close to the process and hopefully engaged in providing advice to them about some of the rules that should exist. But ultimately, it’s going to be the experts at TDI that review these forms and approve them or disapprove them.

	82R20567 TRH-F
	By: Carona, et al.	S.B. No. 425
	(Hancock)
	Substitute the following for S.B. No. 425: No.

	A BILL TO BE ENTITLED
	AN ACT
	relating to property and casualty certificates of insurance and
	approval of property and casualty certificate of insurance forms by
	the Texas Department of Insurance; providing penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subtitle A, Title 10, Insurance Code, is amended
	by adding Chapter 1811 to read as follows:
	CHAPTER 1811. CERTIFICATES OF PROPERTY AND CASUALTY INSURANCE
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 1811.001. DEFINITIONS. In this chapter:
	(1) "Agent" means a person required to hold a license
	as a property and casualty agent or surplus lines agent.
	(2) "Certificate holder" means a person, other than a
	policyholder:
	(A) who is designated on a certificate of
	insurance as a certificate holder; or
	(B) to whom a certificate of insurance has been
	issued by an insurer or agent at the request of the policyholder.
	(3) "Certificate of insurance" means a document,
	instrument, or record, including an electronic record, no matter
	how titled or described, that is executed by an insurer or agent and
	issued to a third person not a party to the subject insurance
	contract, as a statement or summary of property or casualty
	insurance coverage. The term does not include an insurance binder
	or policy form.
	(4) "Electronic record" has the meaning assigned by
	Section 322.002, Business & Commerce Code.
	(5) "Insurance" means an insurance contract for
	property or casualty insurance.
	(6) "Insurer" means a company or insurance carrier
	that is engaged in the business of making property or casualty
	insurance contracts. The term includes:
	(A) a stock fire or casualty insurance company;
	(B) a mutual fire or casualty insurance company;
	(C) a Mexican casualty insurance company;
	(D) a Lloyd's plan;
	(E) a reciprocal or interinsurance exchange;
	(F) a county mutual insurance company;
	(G) a farm mutual insurance company;
	(H) a risk retention group;
	(I) the Medical Liability Insurance Joint
	Underwriting Association under Chapter 2203;
	(J) the Texas Windstorm Insurance Association
	under Chapter 2210;
	(K) the FAIR Plan Association under Chapter 2211;
	(L) an eligible surplus lines insurer; and
	(M) any other insurer authorized to write
	property or casualty insurance in this state.
	(7) "Lender" has the meaning assigned by Section
	549.001.
	(8) "Person" means:
	(A) an individual; or
	(B) a partnership, corporation, limited
	liability company, association, trust, or other legal entity,
	including an insurer or a political subdivision or agency of this
	state.
	(9) "Policyholder" means a person who has contracted
	with a property or casualty insurer for insurance coverage.
	(10) "Record" has the meaning assigned by Section
	322.002, Business & Commerce Code.
	Sec. 1811.002. APPLICABILITY. (a) This chapter applies to
	a certificate holder, policyholder, insurer, or agent with regard
	to a certificate of insurance issued on property or casualty
	operations or a risk located in this state, regardless of where the
	certificate holder, policyholder, insurer, or agent is located.
	(b) This chapter may not be construed to apply to:
	(1) a statement, summary, or evidence of property
	insurance required by a lender in a lending transaction involving:
	(A) a mortgage;
	(B) a lien;
	(C) a deed of trust; or
	(D) any other security interest in real or
	personal property as security for a loan;
	(2) a certificate issued under:
	(A) a group or individual policy for:
	(i) life insurance;
	(ii) credit insurance;
	(iii) accident and health insurance;
	(iv) long-term care benefit insurance; or
	(v) Medicare supplement insurance; or
	(B) an annuity contract; or
	(3) standard proof of motor vehicle liability
	insurance under Section 601.081, Transportation Code.
	Sec. 1811.003. RULES. The commissioner may adopt rules as
	necessary or proper to accomplish the purposes of this chapter.
	Sec. 1811.004. FILING FEE. (a) The department may collect a
	fee in an amount determined by the commissioner for the filing of a
	new or amended certificate of insurance form under this chapter.
	(b) The fee may not exceed $100.
	(c) A fee collected under this section shall be deposited to
	the credit of the Texas Department of Insurance operating account.
	[Sections 1811.005-1811.050 reserved for expansion]
	SUBCHAPTER B. PROHIBITED ACTS AND PRACTICES
	Sec. 1811.051. ALTERING, AMENDING, OR EXTENDING THE TERMS
	OF AN INSURANCE POLICY; CONTRACTUAL RIGHTS OF CERTIFICATE HOLDER.
	(a) A property or casualty insurer or agent may not issue a
	certificate of insurance or any other type of document purporting
	to be a certificate of insurance if the certificate or document
	alters, amends, or extends the coverage or terms and conditions
	provided by the insurance policy referenced on the certificate or
	document.
	(b) A certificate of insurance or any other type of document
	may not convey a contractual right to a certificate holder.
	Sec. 1811.052. USE OF APPROVED CERTIFICATE OF INSURANCE
	FORMS. (a) An insurer or an agent may not issue a certificate of
	insurance unless the form of the certificate:
	(1) has been filed with and approved by the department
	under Section 1811.101; or
	(2) is a standard form deemed approved by the
	department under Section 1811.103.
	(b) A person may not execute, issue, or require the issuance
	of a certificate of insurance for risks located in this state,
	unless the certificate of insurance form has been filed with and
	approved by the department.
	Sec. 1811.053. ALTERATION OR MODIFICATION OF APPROVED
	CERTIFICATE OF INSURANCE FORMS. A person may not alter or modify a
	certificate of insurance form approved under Section 1811.101
	unless the alteration or modification is approved by the
	department.
	Sec. 1811.054. ISSUANCE OF FALSE OR MISLEADING CERTIFICATE
	OF INSURANCE. A person may not require the issuance of a
	certificate of insurance from an insurer, agent, or policyholder
	that contains any false or misleading information concerning the
	policy of insurance to which the certificate refers.
	Sec. 1811.055. REQUEST FOR DOCUMENTS IN LIEU OF CERTIFICATE
	OF INSURANCE. A person may not require an agent or insurer, either
	in addition to or in lieu of a certificate of insurance, to issue
	any other document or correspondence, instrument, or record,
	including an electronic record, that is inconsistent with this
	chapter.
	Sec. 1811.056. USE OF DISAPPROVED CERTIFICATE OF INSURANCE
	FORMS. A person who receives written notice under Section 1811.102
	that a certificate of insurance form filed under this chapter has
	been disapproved by the commissioner shall immediately stop using
	the form.
	[Sections 1811.057-1811.100 reserved for expansion]
	SUBCHAPTER C. CERTIFICATE OF INSURANCE FORMS
	Sec. 1811.101. FILING AND APPROVAL OF FORMS. (a) Except as
	provided by Subsection (b), an insurer or agent may not deliver or
	issue for delivery in this state a certificate of insurance unless
	the certificate's form:
	(1) has been filed with and approved by the
	commissioner; and
	(2) contains the phrase "for information purposes
	only" or similar language.
	(b) If a certificate of insurance form does not contain the
	language required by Subsection (a)(2), the commissioner may
	approve the form if the form states:
	(1) that the certificate of insurance does not confer
	any rights or obligations other than the rights and obligations
	conveyed by the policy referenced on the form; and
	(2) that the terms of the policy control over the terms
	of the certificate of insurance.
	(c) A filed form is approved at the expiration of 60 days
	after the date the form is filed unless the commissioner by order
	approves or disapproves the form during the 60-day period beginning
	the date the form is filed. The commissioner's approval of a filed
	form constitutes a waiver of any unexpired portion of the 60-day
	period.
	(d) The commissioner may extend by not more than 10 days the
	60-day period described by Subsection (c) during which the
	commissioner may approve or disapprove a form filed by an insurer or
	agent. The commissioner shall notify the insurer or agent of the
	extension before the expiration of the 60-day period.
	(e) A filed form for which an extension has been granted
	under Subsection (d) is considered approved at the expiration of
	the extension period described by that subsection absent an earlier
	approval or disapproval of the form.
	(f) A person may not use a form unless the form has been
	filed with and approved by the commissioner.
	Sec. 1811.102. DISAPPROVAL OF FORMS; WITHDRAWAL OF
	APPROVAL. (a) The commissioner shall disapprove a form filed under
	Section 1811.101 or withdraw approval of a form if the form:
	(1) contains a provision or has a title or heading that
	is misleading, is deceptive, or violates public policy;
	(2) violates any state law, including a rule adopted
	under this code;
	(3) requires an agent to provide certification of
	insurance coverage that is not available in the line or type of
	insurance coverage referenced on the form; or
	(4) directly or indirectly requires the commissioner
	to make a coverage determination under a policy of insurance or
	insurance transaction.
	(b) The commissioner may not disapprove a form filed under
	Section 1811.101 or withdraw approval of a form based solely on the
	fact that the form contains language described by Section
	1811.101(b).
	(c) An order issued by the commissioner disapproving a form,
	or a notice of the commissioner's intention to withdraw approval of
	a form, must state the grounds for the disapproval or withdrawal of
	approval in sufficient detail to reasonably inform the person
	filing the form of those grounds and the changes to the form
	necessary to obtain approval.
	(d) An order disapproving a form or withdrawing approval of
	a form takes effect on the date prescribed by the commissioner in
	the order. The commissioner may not prescribe a date earlier than
	the 30th day after the effective date of the order, as prescribed by
	the commissioner.
	Sec. 1811.103. STANDARD CERTIFICATE OF INSURANCE FORMS. A
	standard certificate of insurance form promulgated by the
	Association for Cooperative Operations Research and Development,
	the American Association of Insurance Services, or the Insurance
	Services Office (ISO) is deemed approved on the date the form is
	filed with the department. Notwithstanding this section, the
	commissioner may withdraw approval of a standard form under Section
	1811.102.
	Sec. 1811.104. PUBLIC INSPECTION OF INFORMATION. A
	certificate of insurance form and any supporting information filed
	with the department under this subchapter is open to public
	inspection as of the date of the filing.
	[Sections 1811.105-1811.150 reserved for expansion]
	SUBCHAPTER D. EFFECT OF APPROVAL OF CERTIFICATE OF INSURANCE FORM
	Sec. 1811.151. CONFIRMATION OF POLICY ISSUANCE. A
	certificate of insurance form that has been approved by the
	commissioner and properly executed and issued by a property and
	casualty insurer or an agent constitutes a confirmation that the
	referenced insurance policy has been issued or that coverage has
	been bound. This section applies regardless of whether the face of
	the certificate includes the phrase "for information purposes only"
	or similar language.
	Sec. 1811.152. CERTIFICATE OF INSURANCE NOT POLICY OF
	INSURANCE. A certificate of insurance is not a policy of insurance
	and does not amend, extend, or alter the coverage afforded by the
	referenced insurance policy.
	Sec. 1811.153. RIGHTS CONFERRED BY CERTIFICATE OF
	INSURANCE. A certificate of insurance does not confer to a
	certificate holder new or additional rights beyond what the
	referenced policy or any executed endorsement of insurance
	provides.
	Sec. 1811.154. REFERENCE TO OTHER CONTRACTS. A certificate
	of insurance may not contain a reference to a legal or insurance
	requirement contained in a contract other than the underlying
	contract of insurance, including a contract for construction or
	services.
	Sec. 1811.155. NOTICE. (a) A person may have a legal right
	to notice of cancellation, nonrenewal, or material change or any
	similar notice concerning a policy of insurance only if:
	(1) the person is named within the policy or an
	endorsement to the policy; and
	(2) the policy or endorsement or a law, including a
	rule, of this state requires notice to be provided.
	(b) A certificate of insurance may not alter the terms and
	conditions of the notice required by a policy of insurance or the
	law of this state.
	Sec. 1811.156. CERTIFICATE OF INSURANCE ISSUED IN VIOLATION
	OF CHAPTER. A certificate of insurance that is executed, issued, or
	required and that is in violation of this chapter is void and has no
	effect.
	[Sections 1811.157-1811.200 reserved for expansion]
	SUBCHAPTER E. ENFORCEMENT AND REMEDIES
	Sec. 1811.201. POWERS OF COMMISSIONER. (a) If the
	commissioner has reason to believe that an insurer or agent has
	violated or is threatening to violate this chapter or a rule adopted
	under this chapter, the commissioner may:
	(1) issue a cease and desist order;
	(2) seek an injunction under Section 1811.203;
	(3) request that the attorney general recover a civil
	penalty under Section 1811.203;
	(4) impose sanctions on the insurer or agent as
	provided by Chapter 82; or
	(5) take any combination of those actions.
	(b) This section does not prevent or limit any action by or
	remedy available to the commissioner under applicable law.
	Sec. 1811.202. HEARING; NOTICE. (a) The commissioner may
	hold a hearing on whether to issue a cease and desist order under
	Section 1811.201 if the commissioner has reason to believe that:
	(1) an insurer or agent has violated or is threatening
	to violate this chapter or a rule adopted under this chapter; or
	(2) an insurer or agent has engaged in or is
	threatening to engage in an unfair act related to a certificate of
	insurance.
	(b) The commissioner shall serve on the insurer or agent a
	statement of charges and a notice of hearing in the form provided by
	Section 2001.052, Government Code.
	(c) A hearing under this section is a contested case under
	Chapter 2001, Government Code.
	Sec. 1811.203. CIVIL PENALTY; INJUNCTION. (a) A person,
	including an insurer or agent, who wilfully violates this chapter
	is subject to a civil penalty of not more than $1,000 for each
	violation.
	(b) The commissioner may request that the attorney general
	institute a civil suit in a district court in Travis County for
	injunctive relief to restrain a person, including an insurer or
	agent, from continuing a violation or threat of violation of
	Subchapter B. On application for injunctive relief and a finding
	that a person, including an insurer or agent, is violating or
	threatening to violate Subchapter B, the district court shall grant
	the injunctive relief and issue an injunction without bond.
	(c) On request by the commissioner, the attorney general
	shall institute and conduct a civil suit in the name of the state
	for injunctive relief, to recover a civil penalty, or for both
	injunctive relief and a civil penalty, as authorized under this
	subchapter.
	Sec. 1811.204. INVESTIGATION OF COMPLAINTS. (a) The
	commissioner may:
	(1) investigate a complaint or allegation of specific
	violations by a person, including an insurer or agent, who has
	allegedly engaged in an act or practice prohibited by Subchapter B;
	and
	(2) enforce the provisions of this chapter.
	(b) If the commissioner has reason to believe that a person,
	including an insurer or agent, is performing an act in violation of
	Subchapter B, the person shall immediately provide to the
	commissioner, on written request of the commissioner, information
	relating to that act.
	SECTION 2. The changes in law made by this Act apply only to
	a certificate of insurance issued on or after January 1, 2012. A
	certificate of insurance issued before January 1, 2012, is governed
	by the law in effect immediately before the effective date of this
	Act, and that law is continued in effect for that purpose.
	SECTION 3. This Act takes effect September 1, 2011.

 

SR22 Insurance Austin, TX

Are you being required to carry a SR22 and have no idea what it is?  Not to worry, we do!  It is basically a way for the state to keep track of your automobile insurance.  You have likely had your license suspended or revoked and this is a requirement for you to reinstate it.  There is typically a charge the state will make your pay and there will be a charge for your insurance company to file it for you as well.  See below for what TX DPS has to say on the matter...

Enter Text Below

Form SR-22 Insurance Certificate

Financial Responsibility for Crash, Conviction or Judgment
According to the Safety Responsibility or Evidence of Financial Responsibility law, persons whose driving privilege has been suspended or revoked are required to file and maintain a Form SR-22 with the Department. Form SR-22 insurance is mandatory for a period of two (2) years from the date of conviction.
NOTE: An insurance card or policy cannot be accepted in place of the Form SR-22.
A Form SR-22 is a 'certificate of insurance’ that shows the Department proof of insurance for the future, as required by law. It is motor vehicle liability insurance which requires the insurance company to certify coverage to DPS, and the insurance company must notify DPS anytime the policy is cancelled, terminated or lapses.
Please contact an insurance agent/company of your choice who is authorized to write liability insurance for the State of Texas. You do not need to own a vehicle to buy this type of insurance. If you do not own a vehicle, please contact an insurance agent/company of your choice and talk to them about a non-owner Form SR-22.
Cancelled SR-22 Insurance
Once the Department receives notification from the insurance company that the policy is cancelled, terminated, or lapses, enforcement action may be taken. If the Form SR-22 is still required and there is not a valid Form SR-22 on file, the driving privilege and vehicle registration may be suspended.
Reinstatement Requirements

1. A reinstatement fee will be required prior to the renewal/issuance of a driver license.
2. Obtain proof of insurance (Form SR-22) from your insurance company and submit to the Department. The Form SR-22 is required for two (2) years from the date of conviction.

Minimum Liability Amounts in Texas
Current minimum liability coverage amounts are $30,000 for bodily injury to or death of one person in one accident, $60,000 for bodily injury to or death of two or more persons in one accident, and $25,000 for damage to or destruction of property of others in one accident. The Texas Department of Insurance has more information about minimum liability insurance laws.

http://www.google.com/imgres?hl=en&sa=X&biw=1280&bih=897&tbm=isch&prmd=imvns&tbnid=5TvZtSXKbVB1FM:&imgrefurl=http://sr22texas.sr22-autoinsurance.org/&imgurl=http://sr22texas.sr22-autoinsurance.org/files/2011/03/SR22-Texas-Certification-Sample.jpg&w=800&h=488&ei=O1E-UN3tDcql2AWSj4DQDA&zoom=1&iact=hc&vpx=367&vpy=166&dur=1326&hovh=175&hovw=288&tx=116&ty=94&sig=113530222410985192441&page=1&tbnh=120&tbnw=196&start=0&ndsp=20&ved=1t:429,r:1,s:0,i:79




www.nationwide.com/joshlewis
http://www.facebook.com/pages/Nationwide-Insurance-Josh-Lewis/115434628481061?ref=hl

Insurance Satire - The End of the Road for Auto Insurance

Taken from Insurance Journal...

 

How Profit Took a Back Seat and Technology Drove the Business Off a Cliff

The auto insurance industry is dead.

The last non-renewal notice has been sent, the last credit score has been calculated, and the last tee time made by a personal lines marketing rep has been moved up.
It wasn’t just one thing. It was a steady parade of hi-tech gadgets and gimmicks, an ironic turn for an industry banned from whiteboard sessions.
The collapse of the once-proud $100 billion industry is being felt in the city, Hartford, where Stragglers Insurance began it all back in 1897 by writing the first auto policy for an Ohio driver.
“Hartford is the new Detroit,” said Mayor Pedro Seguro on Fox News.
While for years economic and social forces have been putting dents in the industry, technology is what finally caused the engine to seize.
“When technology got behind the wheel, insurance underwriters were relegated not just to the back seat but to the trunk,” said Clive Anwell, Giant Auto Group of America (GAGA). “The industry was taken for a ride by tech and safety geeks.”
First came seat belts, which reduced deaths by 50 percent. Then came air bags, which lopped off another 20 percent from mortality statistics. Make-up mirror windshields and built-in beer coolers with freshness expiration alerts further contributed to the reduction in accidents and insurance sales.
But even though deaths were on the decline, insurers were buoyed by the fact that there were still accidents. They believed that drivers would still buy coverage for repairs and injuries, especially to their pets.
Then along came the one technology that is most responsible for putting the nail in the tire of the insurance industry: the driverless car.
That’s right, cars that drive like teens and seniors have been doing for years. No hands, no eyes, no clue. But these real driverless cars never hit anything. They are, in fact, guaranteed not to be in accidents.
When the first robot-made self-driving cars rolled off the Giggle/GM/GE (3G) assembly line in Flint, Michigan in 2012, Motor Friend named every self-driving model its Car of the Year and other auto trade press agreed.
“With their cute engineering and huge marketing budgets, the driverless car is biggest thing since the Yugo,” said Mindy Mork, editor of Car and Drivel.
Sales were helped by endorsements from Blind American Drivers and Kids4Cars.com.
Today 80 percent of the cars on America’s roads are original self-driving cars or cars that have been re-engineered with chips to be self-driving. The other 20 percent are 30-year old Toyokias with 5 million miles on them on average.
Now 3G is just one of a dozen manufacturers of self-driving cars including Hondai, Toyokia, Fordisney, IBMW, and Volksapple.
Just a few years after the bankruptcies of General Motors and Chrysler, the driverless car industry has put America back on top again in auto manufacturing.
“They didn’t build this new industry; tax breaks did,” proclaimed President Ryan Paul.
Safety and consumer advocates joined forces to put the brakes on the insurance business. Ralph Nader Ginsberg declared the vehicles “safe at every imaginable speed” and vowed to write a book about them as part of his next presidential campaign.
“Even a dummy can drive one of these,” said crash engineers at the Insurance Institute for Highway Robbery.
State and federal transportation departments stopped keeping records of car crashes because the incidences became too few and far between to justify the effort. They have, however, continued to report a rise in deer-on-deer crashes.
With accidents virtually eliminated, and premiums down to pennies, the insurance industry just ran out of gas.

Running on Empty

A 2013 report by the Latin American singing sensation and think tank Celena found that auto premiums accounted for 39 percent of the total premium for U.S. property/casualty insurers in 2011 but by 2013 this had dropped to three percent.
Celena found that auto liability premiums fell from 25 percent of total industry premium to one percent and auto physical damage from 14 percent to -20 percent, meaning insurers owed consumers money.
Warner Buffer saw the tank was nearing empty before others did. That’s why he sold Gecko Insurance several years ago. But even he is surprised at how quickly the entire car insurance business crashed and burned.
“Because I am in Nebraska, I missed how fast it was happening,” said Buffer. “I thought it would take a decade or more before it really caught on but I guess with social media word travels super fast nowadays.”
His Gecko was the first to falter. As technology became faster, Gecko’s promise that 15 minutes would save customers 10 percent, became 12 minutes will save 25 percent, then 5 minutes will save 50 percent. When it got down to one minute, Gecko, now owned by Giggle, began offering “car insurance” for free with the purchase of a self-driving Giggle vehicle.
Only Giggle wasn’t really offering insurance to car owners, it just gave people replacement parts and cars.
After Gecko fell, it wasn’t long before Ahstate, Impressive, State Barn, Hartworm and others began realizing how little they could charge customers whose premiums were now individualized, determined by credit score, shoe size, nose hair length and their own driving habits.
Hartworm was the last to go, kept on life support by its senior citizens insurance program that insured the Baby Boomers who were still prone to getting into accidents. But as these customers died off, there were fewer seniors to take their place and Baby Boomers had used up all of the reserves for themselves anyway.
In addition to technology, politics had some effect. When Congress repealed the health insurance mandate in 2013, it also set a timetable for states to repeal their state auto insurance requirements. Thus in a strange public policy twist, car insurance, which was no longer necessary, was no longer required either.
Insurers also helped drive their own industry into a ditch.
Insurers’ total reliance on predictive modeling led them to write only married tee-totaling actuaries with credit scores above 780, thereby severely limiting their markets.
The industry’s ballyhooing of black boxes also backfired. It turned out that most people really are excellent drivers and accidents are, in fact, almost always the other driver’s fault. As premiums reflected good driving behavior, they shrank to next to nothing.
Also demographic changes have been a factor. Millennials never got the knack for driving for several reasons.
Some teens say tougher teen driving laws took the fun out of driving for them. “What’s up with all the restrictions? I can’t drive with my friends, or at night, or with my cell phone or a beer? Whatever,” said 17-year old Ken Barbie of Peoria, Ill.
Also, up to their eyeballs in college debt, very few youngsters could get approved for a car loan. So they tend to walk, bike, hitchhike or take public transit or just stay home with their parents.
“It’s not something I have ever felt a need for,” said 22-year old Sandy Slacker of Houston when asked if she had a driver’s license. “I mean, I have no intention of ever voting so what do I need a license for?”
Finally, rising gas prices and the sharing economy have also played a part.
No longer does every family have multiple cars; rather people share them like they used to share passing lanes. A dozen families may use a single Chevy Volt.

End to Misery

Some people are glad to see the industry go. Bobby Hunterman, former Texas commissioner who now works at the People’s Insurance of China, said the auto insurance industry deserved to die due to its “disparate treatment” of low-to moderate-income families and its refusal to provide them with free insurance. “Let ‘em drive off into the sunset. Who cares?” he said.
Insurance economist Dr. Robbit Hurtbig, a staunch defender of the industry, seemed surprisingly nonchalant about the demise.
“It’s an industry that never really knew how to turn an underwriting profit,” Hurtbig said. “So maybe it’s just as well it is now out of its misery. RIP.”
But in Hartford the pain is real. A march to mark the passing of the industry had to be canceled due to lack of insurance for the antique cars used in the ceremony.
Mayor Seguro said positive-thinking residents in his city take some comfort in knowing that Detroit has enjoyed a resurgence thanks to the very forces that have now run over the Insurance City, so there may be a future for them down the road, too.
“I believe Hartford’s future is in newspaper publishing,” the Mayor said.
Former Gecko owner Buffer appeared nostalgic. “I do miss the little green guy and his funny accent,” he said. “Maybe he’ll catch on at Lloyd’s.”
Meanwhile, as insurers scramble to find new markets, and some talk of a bailout, they are facing more unsettling news. Production of driverless boats and planes has begun and Congress has its eye on repealing the workers’ compensation mandate still in effect in most states.
As lights were turned off at insurance companies across the country, famed poet Mayah Ungalue suggested that how America handles this loss would reveal much of its character. “I’ve learned that you can tell a lot about a country by the way it handles three things: a rainy day, no insurance and tangled Christmas tree lights,” she wrote.

Workers Comp Insurance Austin

What is Workers’ Compensation?

Workers’ compensation is a state-regulated insurance program that provides covered employees with income and medical benefits if they sustain a work-related injury or illness. Texas private employers can choose whether or not to provide workers’ compensation insurance coverage for their employees. In most cases, your employer is required to notify you whether or not they provide coverage.
Workers’ compensation pays your medical bills and replaces a portion of your lost wages if: you are injured at work or have a work-related illness; and your employer has workers’ compensation insurance coverage under the Texas Workers’ Compensation Act, Title 5, Subtitle A, Labor Code.

Workers' Compensation Insurance

(February 2012)
Workers’ compensation insurance pays medical and income benefits to workers who are injured at work or have work-related diseases or illnesses.
This type of insurance protects workers by assuring that they are compensated for their injuries. It also helps employers because it relieves them of liability for claims and gives them certain legal protections, including immunity from most injury lawsuits.
Workers get benefits based on the type and severity of their injuries. There are four types of workers’ compensation benefits:

• Income benefits pay a portion of a worker’s lost wages.
• Medical benefits pay for medical care to treat the work injury.
• Burial benefits pay for some funeral expenses.
• Death benefits pay some lost wages to the family of a worker killed on the job.

Workers’ compensation does not pay for injuries that

• are intentional or self-inflicted
• result from horseplay or voluntary drug or alcohol intoxication
• result from voluntary participation in off-duty recreational, social, or sports events
• result from “acts of God,” unless the job has a high risk of injury from such acts
• are inflicted by someone else for personal reasons unrelated to employment.

Choosing to Provide Workers’ Compensation

The Texas Department of Insurance (TDI) Division of Workers’ Compensation (DWC) regulates the state’s workers’ compensation system and certifies employers that want to self-insure.
Texas does not require most private employers to have workers’ compensation insurance. Private employers who contract with the government are required to provide workers’ compensation coverage for each employee working on the public project. Some clients may also require their contractors to have workers’ compensation insurance.
Employers who choose not to have workers’ compensation insurance must

• file an annual notice with TDI
• display notices of noncoverage in the personnel office and throughout the workplace
• give a written statement of noncoverage to each new employee.

Employers with workers’ compensation have some important legal protections, including immunity from most lawsuits by injured workers. If an employer has workers’ compensation insurance, a lawsuit may go to court after it’s been through TDI’s administrative dispute process. The court will consider TDI’s recommendations, and only issues in dispute may be used as evidence. Resolved issues cannot be reintroduced. The employer’s insurance company pays attorneys’ fees and other defense costs.
Employers without workers’ compensation could have to pay punitive damages if they lose lawsuits. They also lose certain common-law defenses, such as arguing that

• the injured worker’s negligence caused the injury
• the negligence of fellow employees caused the injury
• the injured worker knew about the danger and voluntarily accepted it.

Providing Workers’ Compensation

If employers choose to provide workers' compensation, they must do so in one of the following ways:

• purchase a workers’ compensation insurance policy from an insurance company licensed by TDI
• be certified by TDI to self-insure workers’ compensation claims
• join a self-insurance group that has received a certificate of approval from TDI.

Note: Political subdivisions may self-insure, buy coverage from insurance companies, or enter into inter-local agreements with other political subdivisions that self-insure. Emergency service organizations and political subdivisions may cover volunteers – such as volunteer firefighters, police officers, and emergency medical personnel – with a special endorsement on the policy. Most insurance companies will not sell a policy unless you have at least one part-time employee or expect to have an uninsured contractor work for you while the policy is in effect. Some companies may write a policy to cover executive officers of a corporation that has no other employees.

Certified Self-Insurance

Large private employers may self-insure if they are certified by TDI. To qualify, an employer must

• provide information to TDI about its profitability, previous workers’ compensation losses, and number of workers
• have certified safety programs at all job sites
• provide a minimum security deposit of $300,000 or 125 percent (whichever is greater) of the employer’s existing workers’ compensation liabilities
• have a minimum of $5 million of excess insurance coverage
• have a total unmodified Texas premium of at least $500,000 or nationwide premiums of $10 million
• pay fees and taxes necessary to support the administration of the program, including establishment of a guaranty fund for self-insured employers.

Private employers may also self-insure by joining with four or more private employers to establish a workers’ compensation self-insurance group. The group must receive a certificate of approval from TDI. The employers in the group must

• be engaged in the same or similar type of business
• be members of a bona fide trade or professional association that has been in existence in Texas for purposes other than insurance for at least five years before the establishment of the group
• enter into agreements to pool their liabilities for workers’ compensation benefits and employers’ liability in Texas
• provide required information to TDI, such as financial information about the members of the group, the governing classification code of the group or a description of operations for each member of the group showing that the members of the group are engaged in similar operations, and evidence of the required performance bonds
• provide a minimum security deposit of $300,000 or 25 percent (whichever is greater) of the group’s total incurred liabilities for workers’ compensation
• have an estimated annual premium subject to an experience modifier of at least $250,000 during the group’s first year of operation and an annual standard premium of at least $500,000 thereafter
• have a minimum of $5 million per occurrence of excess insurance
• pay fees and taxes to support the administration of the program.

Workers’ Compensation Health Care Networks

Employers may provide workers’ compensation coverage for their employees by participating in workers’ compensation health care networks certified by TDI. These networks provide cost-effective health care for work-related injuries and illnesses. Because the networks specialize in treating injured workers, they also can help workers return to the job quickly and safely. Employers’ premiums might be less if they participate in a network.
Insurance companies (including political subdivisions, individual certified self-insured employers, and groups of certified self-insured employers) may create or contract with workers’ compensation health care networks to provide health care for injured workers.
For more information about certified workers’ compensation health care networks, visit the workers’ compensation networks page on TDI’s website

www.tdi.texas.gov/wc/wcnet/indexwcnet.html

‘Alternative’ Policies

Texas law does not consider alternative policies and coverage bought from unlicensed insurers – including surplus lines insurers – as workers’ compensation. An injured worker covered by an alternative policy may still be able to sue an employer for damages resulting from a work-related injury.
Alternative accident and health policies contain dollar limits and time limits. If expenses exceed the limit, the employer may be responsible for paying the remainder. Workers’ compensation policies cover all related medical expenses even if an expense occurs years after the accident.

Shopping for Workers’ Compensation Insurance

Employers should shop around to find the best rate before buying coverage. You can use the Texas Workers’ Compensation Rate Guide to learn companies’ rate levels, schedule rating, and contact information.
It’s also important to buy insurance from companies licensed by TDI. Licensed companies are covered by the Texas Property and Casualty Guaranty Association, which pays claims for insurance companies who become insolvent and are unable to pay their claims. Claims against unlicensed insurance companies could go unpaid if they become insolvent. You can learn whether a company is licensed by calling TDI’s Consumer Help Line or viewing company profiles on the TDI website

1-800-252-3439
463-6515 in Austin
www.tdi.texas.gov

If you’re unable to find workers’ compensation insurance through the voluntary market, Texas Mutual Insurance Company is the insurer of last resort in Texas. Texas Mutual has a special program called START for employers who can’t buy coverage in the voluntary market. This coverage is generally more expensive than coverage bought in the voluntary market. For more information, contact Texas Mutual

1-800-859-5995www.texasmutual.com

Insurance Company Responsibilities

Insurance companies that sell workers’ compensation policies must provide the following free accident prevention services:

• safety surveys, recommendations, and training programs
• safety consultations, including analysis of accident causes, industrial hygiene information, and industrial health services.

Insurance companies are required to tell employers about any claims against their workers’ compensation policies, but employers can waive the requirement. Employers may request in writing that their insurance companies tell them about settlement proposals and any administrative or judicial proceedings used to resolve claims. Employers may also request notifications relating to individual claims.
Employers may also request that companies provide them with a list of all claims against their policies, payments made or reserves established for those claims, and a statement of the effect on the policy premium.

Workers’ Compensation Rates

Rates vary and are generally based on an employer’s business classification. Insurance companies charge rates based on about 400 classifications.
Each employer’s payroll is a classification, and each classification is multiplied by the insurance company’s filed rate for that classification (rate per $100 payroll) to determine the estimated annual premium. This amount may be adjusted to reflect an employer’s specific risk profile, such as experience and schedule rating and any deductible that the employer might have purchased. An “expense constant,” which is comparable to an issuance fee, is then added to this premium.
Employers, agents, and insurance companies may question a classification by submitting a description of work operations to DWC’s Classification and Premium Calculation Division.

Deputy Commissioner
Workers’ Compensation Classification and Premium Calculation Division, MC 105-2A
Texas Department of Insurance
P.O. Box 149104
Austin, Texas 78714-9104

Employers may not charge workers for workers’ compensation coverage. There are some exceptions for independent contractors and certain building and construction workers.

Higher Deductibles

Employers with estimated annual premiums over $5,000 may choose plans with high deductibles to reduce their premiums if they’re willing to reimburse the insurance company for part of the claim costs.
The standard deductible plans are:

• Per accident deductible option. This option offers deductibles of $1,000, $2,000, $5,000, $10,000, and $25,000 per accident, not to exceed 50 percent of the employer’s estimated annual premium.
• Aggregate deductible option. Applies to all accident claims covered during the policy period. Deductibles range from $2,000 to 100 percent of the employer’s estimated annual premium, up to a maximum of $100,000.
• Per accident/aggregate deductible option. This option is a combination of the two options listed above.

Employers with estimated annual premiums in excess of $100,000 who want higher deductibles may negotiate with their insurance company.
For all deductible options, the insurance company pays the claims, and the policyholder reimburses the company up to the amount of the deductible. An insurer may require a policyholder to pay a deposit premium for the policy and provide security for the deductible amount.

Group Purchase

Employers in similar lines of business or employers who are members of the same trade association may ask for TDI’s approval to form a group to purchase workers’ compensation insurance.
An insurance company will use group rates, but each member of the group will buy its own individual policy and retain its own experience modifier. However, premium discounts are based on the total premium for the group. In addition, specialized safety programs and dividends the insurance company pays may result in added benefits or savings.

Retrospective Rating

Retrospective rating is an optional plan that offers employers potential savings as an incentive for having a safe workplace. Employers must choose retrospective rating within the first 60 days of the policy period.
An employer’s premium is adjusted six months after the end of the policy period, based on the actual claims. Premiums are then adjusted each year until all claims for the period are closed or the premium reaches a pre-selected maximum. Premium adjustments reward employers when claims are low. If claims are high, the employer may pay more than the standard premium, subject to the pre-selected maximum.
Employers with a minimum annual workers’ compensation premium of at least $15,000 can choose from several plans, including:

• Option Five. This plan is available to employers with minimum annual premiums of $25,000. It allows employers to negotiate for both a minimum and maximum premium. In addition, an employer may negotiate a plan that includes other lines of insurance, such as automobile and general liability.
• The Large Risk Alternative Rating Option. This plan is the most common and is for employers with at least $100,000 in estimated annual premiums (or $350,000 for all states where they operate). Policyholders and insurance companies may negotiate retro factors under this plan. This plan cannot be negotiated to include other lines of insurance.

Experience Rating

Insurance companies are required to calculate experience modifiers and most contract with third parties. Experience rating rewards employers with losses that are less than expected and penalizes those with losses that are greater than expected.
The experience modifier calculation is based on an employer’s payroll and loss information for a period of 12 to 39 months. The experience period generally consists of the past four policy years, excluding the most recent policy year. An employer’s actual losses are compared with the expected losses for businesses with similar job classifications and payrolls. If losses are less than expected, the employer gets a credit modifier that reduces the employer’s premium. If losses are higher than expected, a debit modifier increases the employer’s premium.
Experience rating is mandatory for employers with either

• annual workers’ compensation premiums of at least $10,000 and a one-year experience history
• average premiums of $5,000 and at least two years of experience.

Your insurance company must send you a free copy of the experience modifier calculation and a plain-language letter explaining the calculation. This letter explains your right of appeal and offers you a free copy of the data used to calculate your modifier.
If your experience modifier is calculated during the policy period, your premium will be decreased or increased as follows:

• Premium decreases will be applied retroactively to the effective date of the policy or to the anniversary rating date.
• Premium increases for modifiers issued and endorsed within the first 60 days of the effective date or the anniversary rating date will be applied retroactively to the effective date of the policy or to the anniversary rating date.
• Premium increases for modifiers issued within the first 60 days of the effective date or the anniversary rating date -- but are not endorsed within the first 60 days after the anniversary rating date -- will be computed pro rata from the date the modifier is endorsed.
• Premium increases for modifiers issued after the first 60 days of the effective date or the anniversary rating date will be computed pro rata from the date the modifier is endorsed.

Appealing an Experience Modifier

Employers who disagree with their experience modifier should first try to resolve the dispute with their insurance company. Improved loss ratios and improved safety programs are both reasons an employer may negotiate a lower modifier. For a company with operations in Texas and other states, a negotiated modifier applies only to the Texas portion of the premium.
If the dispute cannot be resolved, you can file a written request for a ruling by TDI’s deputy commissioner of DWC’s Classification and Premium Calculation Division.
The deputy commissioner will allow both sides to make informal arguments in person or by phone. Either party may appeal the deputy commissioner’s ruling to the commissioner of insurance. Any hearing will be conducted by the State Office of Administrative Hearings. If the parties consent, the commissioner may issue a decision based on written arguments, without a hearing.
Mail your written request to:

Deputy Commissioner
Workers’ Compensation Classification and Premium Calculation Division, MC 105-2A
Texas Department of Insurance
P.O. Box 149104
Austin, Texas 78714-9104

Premium Incentive for Small Employers

Employers with a premium too low to qualify for experience rating may benefit from the premium incentive plan.
Businesses with an estimated annual premium of less than $5,000 are eligible for a 10 percent discount if they had no compensable lost-time injuries during the last year. The discount increases to 15 percent if there were no compensable lost-time injuries during the last two years. If there were two or more lost-time injuries in the last year, a 10 percent surcharge is applied.

Canceling a Policy

An employer may cancel a policy before its expiration date by notifying the insurance company and DWC by certified mail. The insurance company must refund any unearned premium. Although an insurance company may not charge a penalty if you choose to cancel your policy, there may be penalties involved if the policy is subject to retrospective rating or a deductible plan. Be sure to ask about penalties before you cancel a policy.
An insurance company may also cancel or refuse to renew a policy. The company must provide advance notice to the policyholder and to DWC by certified mail. Companies must give 10 days’ notice if they cancel or nonrenew a policy because of delinquent premium payments or fraud. Cancellation or nonrenewal for most other reasons requires 30 days’ notice.

For More Information or Assistance

To contact your local Workers’ Compensation Division field office, call the Injured Employee Hotline

1-800-252-7031
933-1899 in Austin

For general information about workers’ compensation, call the Customer Service Hotline

1-800-372-7713
804-4000 in Austin

For answers to general insurance questions, for information on filing an insurance-related complaint, or to report suspected insurance fraud, call the Consumer Help Line between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website

1-800-252-3439
463-6515 in Austin
www.tdi.texas.gov

You can also visit HelpInsure.com to help you shop for automobile, homeowners, condo, and renters insurance, and TexasHealthOptions.com to learn more about health care coverage and your options.
For printed copies of consumer publications, call the 24-hour Publications Order Line

1-800-599-SHOP (7467)
305-7211 in Austin

To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hotline

1-877-4FIRE45 (434-7345)

The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.

For more information contact:
ConsumerProtection@tdi.state.tx.us

THIS INFORMATION WAS PULLED DIRECTLY FROM THE TEXAS DEPARTMENT OF INSURANCE.