Commissioner Order No. 99-0196; NUNC PRO TUNC of Texas Private Passenger and Commercial Auto Benchmark Rates adopted in Commissioner Order No. 98-1418

Texas Department of Insurance 333 Guadalupe Street P.O. Box 149104 Austin, Texas 78714-9104 512/463-6169 COMMISSIONER’S BULLETIN NO.B-0009-99 DATE: February 12, 1999 TO: ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS OR OTHER INSURERS WRITING INSURANCE IN THE STATE OF TEXAS Re: TEXAS PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE BENCHMARK RATES AND FLEXIBILITY BANDS On February 2, 1999, the Insurance Commissioner issued a Commissioner’s Order NUNC PRO TUNC No. 99-0196 correcting previous Commissioner’s Order No. 98-1418 entitled “PRIVATE PASSENGER AND COMMERCIAL AUTOMOBILE INSURANCE BENCHMARK RATE HEARING”. The amended language concerns the private passenger auto comprehensive coverage only. As stated in order No. 99-0196 was the Commissioner’s intent by entering Commissioner Order No. 98- 1418 to set appropriate rate relationships among the various deductible options. The rate calculation for comprehensive coverage deductibles of $200 and $250 contained small errors and discrepancies that are corrected in the current Order NUNC PRO TUNC. Enclosed are revised pages 2l of the machine letter and 32 of the rate bulletin that are impacted by the changes. Furthermore, a revised “SUMMARY OF APPROVED FEBRUARY 15, 1999 BENCHMARK RATE CHANGES” is also provided. Please substitute these new pages from the previous one contained in Commissioner Bulletin 98-1418. Questions regarding the present bulletin or any private passenger automobile benchmark rate matter should be directed to the Property and Casualty Actuarial Section at (512) 475-3017. Sincerely, Philip O. Presley Chief Property/Casualty Actuary Technical Analysis Enclosures: 2/2/99 Private Passenger Auto Machine Letter, corrected page 21 (Voluntary Only Business) 2/2/99 Private Passenger Auto Rate Bulletin, corrected page 32 (Voluntary Only Business) SUMMARY OF APPROVED FEBRUARY 15, 1999 BENCHMARK RATE CHANGES corrected page TEXAS PRIVATE PASSENGER AUTOMOBILE PHYSICAL DAMAGE INSURANCE COMPREHENSIVE AND SPECIFIED CAUSES OF LOSS - STATED AMOUNT (CONT.) (Texas Automobile Manual Page 160) COMPREHENSIVE & SPECIFIED CAUSES SYMBOL OF LOSS GROUP MODEL YEAR DIFFERENTIALS 1 1990 & Later 1.000 2 1990 & Later 0.889 3 1990 & Later 0.882 4 1990 & Later 0.877 5 1990 & Later 0.874 6 1990 & Later 0.872 7 1990 & Later 0.869 8 1990 & Later 0.866 10 1990 & Later 0.864 11 1990 & Later 0.862 12 1990 & Later 0.861 13 1990 & Later 0.846 14 1990 & Later 0.832 15 1990 & Later 0.821 16 1990 & Later 0.815 17 1990 & Later 0.810 18 1990 & Later 0.805 19 1990 & Later 0.798 20 1990 & Later 0.793 21 1990 & Later 0.785 22 1990 & Later 0.777 23 1990 & Later 0.767 24 1990 & Later 0.754 25 1990 & Later 0.739 26 1990 & Later 0.727 27 1990 & Later (a) (a) Subtract 0.006 from symbol 26 differential for each $10,000 above $80,000. METHOD OF CALCULATION: Symbols 1-26 (1) Multiply stated amount base rate by symbol group differential and round to nearest cent. EXAMPLE: $100 deductible comprehensive, territory 01, 1991 model year, symbol 11. (1) $0.75 x 0.862 = $0.65 Symbol 27 (1) Calculate the appropriate symbol differential. Subtract $80,000 from the F.O.B. list price. Divide the result by $10,000 and round down to nearest whole number. Multiply the result by 0.006. Subtract the result from the symbol 26 differential. (2) Multiply stated amount base rate by the symbol differential in (1) and round to the nearest cent. EXAMPLE: $100 deductible comprehensive, territory 01, 1991 model year, $119,000 F.O.B. list price. (1) $119,000 - $80,000 = $39,000 (1) $39,000 / $10,000 = 3 (1) 3 x 0.006 = 0.018 (1) 0.727 - 0.018 = 0.709 (2) $0.75 x 0.709 = $0.53 -19- Effective 2/15/99 B. For deductibles not shown on the rate pages, compute the premiums as follows: 1. Comprehensive Deductibles a. Autos using private passenger rates. Multiply the factor below times the $50 deductible comprehensive premium for the deductible provided. Deductible Amount Factor $200 0.74 250 0.69 500 0.49 1,000 0.38 TEXAS PRIVATE PASSENGER AUTOMOBILE PHYSICAL DAMAGE INSURANCE DEDUCTIBLE INSURANCE - PHYSICAL DAMAGE (Texas Automobile Manual Page 118) -20- Effective 2/15/99 RATE SECTION IV, PAGE 168-180z TEXAS AUTOMOBILE RULES AND RATING MANUAL PRIVATE PASSENGER PHYSICAL DAMAGE PRIVATE PASSENGER AUTOMOBILE COLLISION - ACTUAL CASH VALUE (CONT.) METHOD OF CALCULATION (Cont.): Symbol 27 ( 1 ) Determine symbol 1 actual value premium for the desired coverage, territory, driver classification and model year. ( 2 ) Calculate the appropriate symbol differential. Subtract $80,000 from the F.O.B. list price. Divide the result by $10,000 and round down to the nearest whole number. Multiply the result by 0.14 and add the symbol 26 differential. ( 3 ) Multiply premium in ( 1 ) by result in ( 2 ) and round to nearest dollar. EXAMPLE: Class 2D, 1995 model year, $119,000 F.O.B. list price, $250 deductible, territory 01. (1) $118 (1) 3.11 x 0.88 x 1.00 = 2.737 (1) $118 x 2.737 = $323 (2) $119,000 - $80,000 = $39,000 (2) $39,000 / $10,000 = 3 (2) 3 x 0.14 + 3.94 = 4.36 (3) $323 x 4.36 = $1,408 -31- Effective 2/15/99 RATE SECTION II, PAGE 118 TEXAS AUTOMOBILE RULES AND RATING MANUAL COMMON COVERAGES B. The factors in this rule shall not apply to dealers comprehensive or garagekeepers insurance. For deductibles not shown on the rate pages, compute the premium as follows: 1. Comprehensive Deductibles. a. Autos using private passenger rates. Multiply the factor below times the $50 deductible comprehensive premium for the deductible provided. Deductible Amount Code Factor $200 015 0.74 250 055 0.69 500 726 0.49 1,000 727 0.38 40. DEDUCTIBLE INSURANCE -32- (Revised) Effective 2/15/99