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John E. FUlton Republic
Vice President . ".... _" Group..
.........;:=- -
June 30, 2008
Sunset Advisory Commission
clo Ms. Chloe Lieberknecht
P.O. Box 13066
Austin, Texas 78711
VIA Facsimile
Dear Chairman Isett and Commission Members:
Thank you for the opportunity to SUbmit additional comments following the recent Sunset Advisory
Commission hearing On the Texas Department of Insurance.
The purpose of this letter is to comment on New Issue #24 that appeared in the members' hearing
materials under the heading of "Miscellaneous P&C: This issue was sUbmitted by the Property and
Casualty Insurers Association of America and advocates a repeal of Article 5.01-1, Insurance Code,
which prohibits standard insurers from using driving records as a rating tool. A bill that would have
repealed Article 5.01-1 was ovelWhelmingly defeated (by a vote of 10 ayes and 119 nays) on the house
th
floor during the 79 Legislature, based on the reasoning that the standard insurers do not need an
additional tool to increase rates. .
We believe that the auto insurance market is stable, healthy, and competitive. In fact, the -rexas
Department of Insurance acknOWledged this in its biennial report to the 80th Texas Legislature, and
there was no oral testimony offered during the recent Sunset hearing to indicate otherwise, with regard
to the auto insurance market.
We believe that the repeal of Article 5.01-1 will only increase the number of negative factors that
standard insur-er~ can use in establishing their auto insurance rates. The likely result of repealing
. Article. ~.01-1 will be an increase in auto insurance premiums for preferred and standard risks currently
. ·jnsl:Jred by standard insurers - no segment of the auto insurance market is likely to experience a
...•.. ,... reduction in rates as a result of the repeal of this provision.
The auto insurance market was stable before the enactment of S8 14 in 2003 and remains stable
today. meaning there is no rate crisis or market inequality that needs to be addressed. Repealing
Article 5.01-1 would result in the disruption of a stable market at a time when a large number of
preViously uninsured drivers begin to enter the market due to implementation of the financial
responsibility verification system mandated by the 79 th Legislature.
We therefore ask that this issue be excluded from the sunset legislation for the Texas Department of
Insurance. Thank you for your consideration of our comments. Please do not hesitate to contact me if
you have any questions.
k FUlton, Vice President
.... ... .1J:liblicprog~am Management
·:.9. 27B8680P(voice)
9727-88.·6609 (fax)· ...
JEF/ck
5525 LBJ Free1/llQY. Dallas, Texas 75240-6241 www.RepublicGroup.com
07/01/08 TUE 08:43 [TX/RX NO 6952J