PART 3. TEXAS BOARD OF CHIROPRACTIC EXAMINERS

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TITLE

22.

EXAMINING

BOARDS

PART

3.

TEXAS

BOARD

OF

CHIROPRACTIC EXAMINERS

CHAPTER

71.

APPLICATIONS

AND

APPLICANTS

22TAC§§71.1- 71.3,71.5- 71.7,71.9- 71.12,71.15,71.17, 71.19

TheTexasBoardofChiropracticExaminersadopts therepeal

ofChapter71,§§71.1- 71.3,71.5- 71.7,71.9- 71.12,71.15, 71.17and71.19,concerningApplicationsandApplicants,

with-outchangestotheproposalaspublishedintheSeptember26,

2014,issueoftheTexasRegister(39 TexReg7659). The

re-pealswillnotberepublished.

Therepealsarenecessaryinordertoclarify,retitleand

reorga-nizenewrulesregardingBoardprocedurestoprovideconcise

andclearguidancetothepublicandlicensees.

Nocommentswerereceivedregardingtheadoption.

ThesectionsarerepealedundertheTexasOccupationsCode

§201.152,whichauthorizestheDirectortoadoptrules concern-ingapplicationsandapplicantsforalicense.

Theagencycertifiesthatlegalcounselhasreviewedthe adop-tionandfoundittobeavalidexerciseoftheagency'slegal au-thority.

FiledwiththeOfficeoftheSecretaryofStateonJanuary9,2015. TRD-201500039

Bryan Snoddy General Counsel

Texas Board of Chiropractic Examiners Effective date: January 29, 2015

Proposal publication date: September 26, 2014 For further information, please call: (512) 305-6715

CHAPTER

73.

LICENSES

AND

RENEWALS

22TAC§§73.1- 73.5,73.7

ofChapter73,§§73.1- 73.5and73.7,concerningLicensesand

Renewals,withoutchangestotheproposalaspublishedinthe

September26,2014,issue oftheTexasRegister (39TexReg

7659). Therepealswillnotberepublished.

CHAPTER

74.

CHIROPRACTIC

FACILITIES

22TAC§§74.1- 74.3,74.5,74.9

TheTexasBoardofChiropracticExaminersadoptstherepealof Chapter74,§§74.1- 74.3,74.5and74.9,concerningFacilities andFacilityRegistrations, withoutchangestotheproposalas publishedintheSeptember26,2014,issueoftheTexas Regis-ter(39TexReg7660).Therepealswillnotberepublished. Therepealsarenecessaryinordertoclarify,retitleand

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CHAPTER

75.

RULES

OF

PRACTICE

22TAC§§75.1- 75.4,75.6- 75.11,75.13,75.15,75.17,75.19, 75.21,75.23,75.25

TheTexasBoardofChiropracticExaminersadoptstherepeal

ofChapter75,§§75.1- 75.4,75.6- 75.11,75.13,75.15,75.17,

75.19, 75.21, 75.23,and 75.25,concerningRulesof Practice,

withoutchangestotheproposalaspublishedintheSeptember

26,2014,issue oftheTexasRegister(39TexReg7660). The

repealswillnotberepublished.

§201.152,whichauthorizestheDirectortoadoptrules concern-ingtherulesofpractice.

CHAPTER

76.

FORMAL

SOAH

PROCEEDINGS

22TAC§§76.1,76.3,76.5,76.7,76.9,76.11,76.13,76.15, 76.17,76.19,76.21

TheTexasBoardofChiropracticExaminersadoptstherepealof Chapter76,§§76.1,76.3,76.5,76.7,76.9,76.11,76.13,76.15,

76.17,76.19and76.21concerningFormalSOAHProceedings,

withoutchangestotheproposalaspublishedintheSeptember

26,2014,issue oftheTexasRegister(39TexReg7661). The

repealswillnotberepublished.

§201.152,whichauthorizestheDirectortoadoptrules

concern-ingformalSOAHproceedings.

CHAPTER

77.

ADVERTISING

AND

PUBLIC

COMMUNICATION

22TAC§§77.1- 77.3,77.5

TheTexasBoardofChiropracticExaminersadoptstherepealof Chapter77,§§77.1- 77.3and77.5,concerningAdvertisingand

PublicCommunication,withoutchangestotheproposalas

pub-lishedintheSeptember26,2014,issueoftheTexasRegister

(39TexReg7662).Therepealswillnotberepublished. Therepealsarenecessaryinordertoclarify,retitleand

§201.152,whichauthorizestheDirectortoadoptrules concern-ingadvertisingandpubliccommunication.

CHAPTER

78.

CHIROPRACTIC

RADIOLOGIC

TECHNOLOGISTS

22TAC§78.1,§78.2

TheTexasBoardofChiropracticExaminersadoptstherepeal

ofChapter78,§78.1and§78.2,concerningChiropractic

Radi-ologicTechnologists, withoutchangestotheproposalas

pub-lishedintheSeptember26,2014,issueoftheTexasRegister

(39TexReg7662).Therepealswillnotberepublished. Therepealsarenecessaryinordertoclarify,retitleand

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§201.152,whichauthorizestheDirectortoadoptrules concern-ingchiropracticradiologictechnologists.

CHAPTER

79.

LICENSURE

OF

CERTAIN

OUT-OF-STATE

APPLICANTS

22TAC§79.1,§79.3

ofChapter 79,§79.1and §79.3concerningLicensureof

Cer-tainOut-of-StateApplicants,withoutchangestotheproposalas publishedintheSeptember26,2014,issueoftheTexas Regis-ter(39TexReg7663).Therepealswillnotberepublished. Therepealsarenecessaryinordertoclarify,retitleand

§201.152,whichauthorizestheDirectortoadoptrules concern-inglicensureofcertainout-of-stateapplicants.

CHAPTER

80.

PROFESSIONAL

CONDUCT

22TAC§§80.1- 80.3,80.5,80.7,80.9,80.11,80.13

ofChapter80,§§80.1- 80.3,80.5,80.7,80.9,80.11and80.13,

concerningProfessionalConduct,withoutchangestothe

pro-posalaspublishedintheSeptember26,2014,issueoftheTexas Register(39TexReg7663).Therepealswillnotberepublished.

§201.152,whichauthorizestheDirectortoadoptrules concern-ingprofessionalconduct.

CHAPTER

81.

RULEMAKING

22TAC§81.1,§81.3

TheTexasBoardofChiropracticExaminersadoptstherepealof

Chapter81,§81.1and §81.3,concerningRulemaking,without

changestotheproposalaspublishedintheSeptember26,2014, issueoftheTexasRegister(39TexReg7664). Therepealswill notberepublished.

CHAPTER

71.

RULEMAKING

22TAC§71.1,§71.2

TheTexasBoardofChiropracticExaminersadoptsnew§71.1

and§71.2,concerningRulemaking,withoutchangestothe

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TexasRegister(39TexReg7665). Theruleswillnotbe repub-lished.

Thenewrules inChapter71willimplementretitling and reor-ganizationof theBoardrulesin currentChapter81toprovide conciseandclearguidancetothepublicandlicensees.

ThenewrulesareadoptedundertheTexasOccupationsCode

§201.152,which authorizestheDirectortoadoptrules

neces-sarytoregulatethepracticeofchiropractictoprotectthepublic healthandsafety.

CHAPTER

72.

APPLICATIONS

AND

APPLICANTS

22TAC§§72.1- 72.12

TheTexasBoardofChiropracticExaminersadoptsnew§§72.1

-72.12,concerningApplicationsandApplicants,withoutchanges

totheproposedtextaspublishedin theSeptember26,2014,

issueoftheTexasRegister(39TexReg7666).Theruleswillnot berepublished.

CHAPTER

73.

CHIROPRACTIC

FACILITIES

22TAC§§73.1- 73.5

- 73.5,concerningChiropracticFacilities,withoutchangestothe

proposedtextas publishedin theSeptember26,2014,issue

oftheTexasRegister(39TexReg7669). Theruleswillnotbe republished.

CHAPTER

74.

CHIROPRACTIC

RADIOLOGIC

TECHNOLOGISTS

22TAC§74.1,§74.2

and §74.2, concerning Chiropractic Radiologic Technologists,

without changes to the proposed text as published in the

September26,2014,issue oftheTexas Register(39TexReg

7671). Theruleswillnotberepublished.

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CHAPTER

75.

LICENSES

AND

RENEWALS

22TAC§§75.1- 75.7

- 75.7,concerningLicensesandRenewals,withoutchangesto

theproposedtextaspublishedintheSeptember26,2014,issue oftheTexasRegister(39TexReg7673). Theruleswillnotbe republished.

Thenewrulesin Chapter75willimplementretitling and reor-ganizationoftheBoardrulesin currentChapter73to provide conciseandclearguidancetothepublicandlicensees.

§201.152,which authorizestheDirector toadoptrules

CHAPTER

76.

LICENSURE

OF

CERTAIN

OUT-OF-STATE

APPLICANTS

22TAC§76.1,§76.2

and §76.2, concerning Licensure of Out-of-State Applicants,

without changes to the proposed text as published in the

September26,2014,issue oftheTexasRegister (39TexReg

7679). Theruleswillnotberepublished.

Thenewrulesin Chapter76willimplementretitling and reor-ganizationof theBoardrulesin currentChapter79toprovide conciseandclearguidancetothepublicandlicensees.

CHAPTER

77.

PROFESSIONAL

CONDUCT

22TAC§§77.1- 77.12

-77.12,concerningProfessionalConduct,withoutchangestothe

proposedtextas publishedintheSeptember26, 2014,issue

§201.152,whichauthorizes theDirectorto adoptrules

CHAPTER

78.

RULES

OF

PRACTICE

22TAC§§78.1- 78.17

- 78.17, concerningRulesof Practice, withoutchanges tothe

proposedtextas publishedintheSeptember26, 2014,issue

§201.152,which authorizestheDirectorto adoptrules

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CHAPTER

79.

SOAH

HEARINGS

22TAC§§79.1- 79.11

The Texas Board of Chiropractic Examiners adopts §§79.1

- 79.11, concerning SOAH Hearings, without changes to the

proposedtextas publishedin theSeptember26,2014, issue

ThenewrulesareadoptedundertheTexasOccupationsCode,

PART 11.

TEXAS BOARD OF NURSING

CHAPTER

223.

FEES

22TAC§223.1

(Editor'sNote:Duetoasubmissionerror,thewrongrulemaking doc-umentforanadoptedamendmentto22TAC§223.1waspublishedin theJanuary9,2015,issueoftheTexasRegister.Thecorrect rulemak-ingnotice,includingtheruletext,ispublishedasfollows.)

Introduction. The Texas Board of Nursing (Board) adopts

amendments to §223.1, concerningFees. The amendments

areadoptedwithoutchangestotheproposedtextpublishedin

theNovember21,2014,issueoftheTexasRegister(39TexReg

9148).

Reasoned Justification. The amendmentsare adoptedunder

theauthorityoftheOccupationsCode§301.151and§301.155

andare necessarytocomplywithbudgetaryrequirements

es-tablishedbytheTexasLegislature.AsrequiredbytheGeneral

AppropriationsActforthe2014-2015Biennium,83rdTexas Leg-islature,RegularSession,2013,theBoardisrequired,bya con-tingencyrevenuerider,togeneratefeestotaling$25,334,204.In July,2013,theBoardvotedtoreviseitsfeestructureinorderto raisethisadditionalmoney. Basedonareviewoflicensee re-newaltrendsforthepastfivefiscalyears,theBoardexpectsthe numberofrenewalsforfiscalyear2015toincreaseby3%. Pro-videdthisprojectionholdstrue,atthecurrentfeestructure,the Boardprojectsthatitwillexceedtheamountofmoniesrequired

bythecontingencyrevenueriderbyapproximately$4,000,000.

Asaresult,theBoardhasdetermined thatitisappropriateto amenditsfeestructuretoreducetheanticipatedamountof sur-plusthatdoesnotsupporttheBoard's2014-2015budget. TheBoard'scurrentrenewalfeeforalicensedvocationalnurse

licenseis$55eachbiennium. TheBoard'scurrentrenewalfee

foraregisterednurselicenseis$70eachbiennium.TheBoard's

currentrenewalfeeforanadvancedpracticeregisterednurse

licenseis$60 each biennium. Theadoptedamendmentswill

reduceeachleveloflicensurerenewalby$10,therebymaking

thenewrenewalfeeforavocationalnurselicense$45;the re-newalfeeforaregisterednursinglicense$60;andtherenewal feeforanadvancedpracticeregisterednursinglicense$50.The adoptedfeereductionwilldecreasetheagencysurplusand al-lowtheBoardtoabidebytheOfficeoftheComptroller'srevenue certification.

Howthe SectionWillFunction. Adopted §223.1(a)(3)(A)sets

therenewalfeeforaregisterednursinglicenseat$60.Adopted §223.1(a)(3)(B)setstherenewalfeeforavocationalnursing li-censeat$45.Adopted§223.1(a)(16)setstherenewalfeeforan advancedpracticeregisterednursinglicenseat$50.

SummaryofCommentsandAgencyResponse. TheBoarddid

notreceiveanycommentsontheproposal.

Statutory Authority. The amendments are adoptedunder the

OccupationsCode§301.151and§301.155.

Section301.151authorizestheBoardtoadoptandenforcerules

consistentwithChapter 301and necessary to: (i) performits

dutiesandconductproceedingsbeforetheBoard;(ii)regulate thepracticeofprofessionalnursingandvocationalnursing;(iii) establishstandardsofprofessionalconductforlicenseholders Chapter301;and(iv)determinewhetheranactconstitutesthe practiceofprofessionalnursingorvocationalnursing.

Section301.155(a)statesthattheBoardbyruleshallestablish feesinamountsreasonableandnecessarytocoverthecostsof administeringChapter301.TheBoardmaynotsetafeethat

ex-istedonSeptember1,1993,inanamountlessthantheamount

ofthatfeeonthatdate.

Section 301.155(b) statesthat theBoard may adopt a feein

anamountnecessaryfora periodicnewslettertoproduceand

disseminateto licenseholders theinformation requiredunder

§301.158.

Section301.155(c)providesthattheBoardshallassessa

sur-charge of not less than $3 or more than $5 fora registered

nurseandasurchargeofnotlessthan$2ormorethan$3for

a vocationalnurseto thefee establishedby theBoardunder

§301.155(a)fora licenseholder torenewa licenseunderthis

chapter. TheBoardmayuseninecentsoftheregisterednurse

surchargeand six centsof the vocationalnursesurcharge to

covertheadministrativecosts ofcollectingand depositingthe surcharge. TheBoardquarterlyshalltransmittheremainderof

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beusedonlytoimplementthenursingresourcesectionunder

§105.002,HealthandSafetyCode.TheBoardisnotrequiredto collectthesurchargeiftheBoarddeterminesthefundscollected arenotappropriatedforthepurposeoffundingthenursing re-sourcesection.

§223.1. Fees.

(a) TheTexasBoardofNursinghasestablishedreasonableand necessaryfeesfortheadministrationofitsfunctions.

(1) Examination:$100; (2) Endorsement:$161;

(3) Licensurerenewal(eachbiennium): (A) RegisteredNurse(RN):$60;

(B) LicensedVocationalNurse(LVN):$45; (4) reactivatingfrominactivestatus:

(A) lessthanfouryears--$10pluscurrentrenewalfee; (B) morethanfouryears--$20pluscurrentrenewalfee; (5) latefeeforreactivationfromdelinquentstatus:

(A) lessthan 90 days--$60plus current licensure re-newalfee;

(B) morethan90days--$120pluscurrentlicensure re-newalfee;

(6) duplicateorsubstitutepermanentcertificate:$25; (7) issuanceofa temporarypermit forcompletinga re-freshercourse,atemporarypermitunder§301.258,oran accustom-ationpermit:$25;

(8) approvalofnewnursingeducationprograms:$2,500; (9) verificationoflicensure: $5;

(10) verificationofrecords:$25; (11) badchecks: $30;

(12) AdvancedPracticeNurseinitialcredentials:$100; (13) declaratoryorderofeligibility:$150;

(14) eligibilitydetermination: $150;

(15) Licensed Vocational Nurse, Retired; Registered Nurse,Retired;VolunteerRetiredVocationalNurse(VR-VN); Volun-teerRetiredRegisteredNurse(VR-RN);VolunteerRetiredRegistered Nurse(VR-RN)withqualificationsinagivenadvancedpracticenurse roleandspecialty(e.g.,VR-RN,FNP):$10;

(16) AdvancedPracticeNurserenewal:$50; (17) InitialPrescriptiveAuthority:$50; (18) outpatientanesthesiaregistryrenewal:$35;

(19) outpatientanesthesiainspectionandadvisoryopinion: $625;

(20) feeforFederalBureauofInvestigations(FBI)and De-partmentofPublic Safety (DPS)criminalbackground check for li-censees,initiallicensureapplicantsandendorsementapplicantsas de-terminedbyfeesimposedbytheCriminalJusticeInformationServices (CJIS)DivisionandtheTexasDepartmentofPublicSafety;

(21) DisciplinarymonitoringfeesasstatedinaBoard or-der;

(22) NursingJurisprudenceExaminationfee:nottoexceed $25;

(23) approval of remedial education course: $300 per course;

(24) renewal of remedial education course: $100 per course;and

(25) approval of a nursing education program outside Texas'jurisdictiontoconductclinicallearningexperiencesinTexas: $500.

(b) Allfeesarenon-refundable.

FiledwiththeOfficeoftheSecretaryofStateonDecember22, 2014.

TRD-201406229 Jena Abel

Assistant General Counsel Texas Board of Nursing Effective date: January 11, 2015

Proposal publication date: November 21, 2014 For further information, please call: (512) 305-6822

CHAPTER

224.

DELEGATION

OF

NURSING

TASKS

BY

REGISTERED

PROFESSIONAL

NURSES

TO

UNLICENSED

PERSONNEL

FOR

CLIENTS

WITH

ACUTE

CONDITIONS

OR

IN

ACUTE

CARE

ENVIRONMENTS

22TAC§§224.1- 224.3,224.5- 224.11

Introduction. The Texas Board of Nursing (Board) adopts

amendments to Chapter 224, §§224.1 - 224.3 and §§224.5

- 224.11, concerning RN Accountability for Delegated Tasks;

GeneralCriteriaforDelegationandSupervisionofDelegationof Tasks;nursedelegationrelativetotheMedicationAidePermit

Holder; Supervising Unlicensed Personnel Performing Tasks

DelegatedbyNonRNPractitioners;anddelegationinrelationto

ApplicationofOtherLawsandRegulations. Theamendments

areadoptedwithoutchangestotheproposedtextpublishedin

theDecember5,2014,issueoftheTexasRegister(39TexReg

9451)andwillnotberepublished.

Reasoned Justification. The amendmentsare adoptedunder

theauthorityoftheOccupationsCode§301.151and§301.152.

The amendments to the chapter correct outdated references

to the"Boardof Nurse Examiners"(BNE) and legal citations; clarify "continuously provided" to include correctional health

settings; provide guidance to Advanced Practice Registered

Nurses(APRN)sotheyunderstandtheAPRNcanusethe

del-egationrulestodelegatenursingtaskstounlicensedpersonnel; clarify responsibilities ofthe Chief Nursing Officer (CNO)and

otherRegisteredNurse(RN)responsibilitieswhensupervising

tasksdelegatedtounlicensedpersonnelorwhendelegatedby

anotherpractitioner; andallowsRNstodelegatethecollection of capillary blood and urine tests to unlicensed personnel for morethanjust"sugarandhematests."

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HowtheSectionsWillFunction.

Theadoptedamendmentto§224.1(2)clarifiesthephrase "con-tinuouslyprovided"byaddingadditionalsettingsconsideredto

beinanacutecareenvironment. Theadoptedamendmentto

§224.2(1)reflectsthenewgovernmentcodereference.

The adopted amendment to §224.3 designates the existing

paragraphsas subsections(a) and (b). Theadopted

amend-ment to §224.3(a) correctly references the "Texas Board of

Nursing". The adopted amendment to §224.3(b) provides

guidancetoAPRNsregardingtherulesAPRNsarerequiredto

usewhendelegatingnursingtaskstounlicensedpersonnel.

Theadoptedamendmentto§224.5(a)correctlyreferencesthe

"TexasBoardofNursing".Theadoptedamendmentto§224.5(c) isadded to mirrorsimilar requirements to§225.3(e), foundin §217.19(l)(2)and§217.20(j)(1)regardingaCNO'sresponsibility relatedtoRNdelegation.

The adoptedamendment to §224.6(8)adds newlanguage to

clarify anRN'sresponsibilityto reassessand reevaluate peri-odicallyandwhenchangesinconditionoccur.

The adopted amendment to §224.7 further clarifies an RN's

responsibilitieswhensupervisingtasksdelegatedtounlicensed

personnel or when delegated by another practitioner. The

adoptedamendments to §224.7(1)and (2) add clarifying

lan-guageregardingthesupervisingRN.Theadoptedamendment

to §224.7(2)(C) isadded to provide guidance consistentwith

§211.11(1)(M)concerningthesupervisingRN'sresponsibilityto interveneand§211.11(1)(P)regardingtheRN'sresponsibilityto promotethepatient'ssafetyandcollaboratewiththedelegating

RNtofostercommunication.

The adopted amendment to §224.8(a)(2)(A) provides for the

RNtodelegatethecollectionofcapillarybloodandurinetests to unlicensedpersonnelformorethanjust"sugar and hemat-ests," which is consistent with changes in nursing practice

sincethisrulewasadoptedin2003. Theadoptedamendment

to §224.8(b)(1)(B) provides further clarification regarding the

employer'suseofunlicensedpersonnel. Theadopted

amend-mentto§224.8(b)(1)(B)(v)isaddedtoaddresscommunication

requirementsbetweenunlicensedpersonnelandthedelegating

RN. The adoptedamendment to §224.8(b)(1)(B)(vi) is added

to address the need for periodic competency verification of

unlicensedpersonnel.

Theadoptedamendmentto§224.9(a)reflectsrecentchangesto

HumanResourcesCodeChapter161and40Texas

Administra-tiveCodeChapter95thatallowcorrectionalhealthsettingsto uti-lizecertifiedmedicationaidesandwillallowinthefutureforother

areasthat may adoptsimilarrules. Theadoptedamendment

to§224.9(b)(3)reflectschangesconsistentwithamendmentsto

§225.12adoptedinFebruary2014. The adoptedamendment

to§224.9(b)(4)reflectschangesconsistentwithamendmentsto

§225.10(10)(F)adoptedinFebruary2014.Theadopted

amend-ment to§224.9(b)(5) reflectschangesconsistentwith

amend-mentsto§225.10(10)(A)adoptedinFebruary2014.

The adopted amendment to §224.10(a) correctly references

the "Texas Board of Nursing". The adopted amendment

to §224.10(c) is added to provide guidance consistent with

§211.11(1)(M)concerningthesupervisingRN'sresponsibilityto interveneand§211.11(1)(P)regardingtheRN'sresponsibilityto promotethepatient'ssafetyandcollaboratewiththedelegating

RNtofostercommunication.

The adopted amendment to §224.11(a) correctly references

the "Texas Board of Nursing". The adopted amendment to §224.11(b)addsthelanguage"facilitylicensing"toexplainthat

these laws and regulations may apply and therefore the RN

musttaketheseintoaccount.

SummaryofCommentsandAgencyResponse. TheBoarddid

notreceiveanycommentsontheproposal.

Statutory Authority. The amendmentsare adoptedunder the

OccupationsCode§301.151and§301.152.

Section301.151authorizestheBoardtoadoptandenforcerules

consistentwithChapter301andnecessary to: (1)perform its

dutiesandconductproceedingsbeforetheBoard;(2)regulate

thepracticeofprofessionalnursingandvocationalnursing;(3) establishstandardsofprofessionalconductforlicenseholders underChapter301;and(4)determinewhetheranactconstitutes thepracticeofprofessionalnursingorvocationalnursing. Section 301.152defines "advancedpractice registerednurse" asaregisterednurselicensedbytheboardtopracticeasan ad-vancedpracticeregisterednurseonthebasisofcompletionof

anadvancededucationalprogram. Thetermincludesanurse

practitioner,nursemidwife,nurseanesthetist,andclinicalnurse specialist. Thetermissynonymouswith"advancednurse prac-titioner"and"advancedpracticenurse."

CrossReferencetoStatute. Thefollowingstatutesareaffected

bythisadoption:theOccupationsCode§301.151and§301.152.

James W. Johnston General Counsel Texas Board of Nursing Effective date: January 27, 2015

Proposal publication date: December 5, 2014 For further information, please call: (512) 305-6821

TITLE

28.

INSURANCE

PART

1.

TEXAS DEPARTMENT

OF

INSURANCE

CHAPTER

5.

PROPERTY

AND

CASUALTY

INSURANCE

SUBCHAPTER

A.

AUTOMOBILE

INSURANCE

DIVISION

3.

MISCELLANEOUS

INTERPRETATIONS

28TAC§5.208

The commissioner of insurance adopts new 28 TAC §5.208,

concerningdisclosurerequirements fornamed driver

automo-bileinsurancepoliciesunderInsuranceCode§1952.0545. The

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publishedintheJuly25,2014,issueoftheTexasRegister(39

TexReg5715).

SenateBill1567,83rdLegislature,RegularSession(2013)

cre-ated InsuranceCode §1952.0545, which requireswrittenand

oraldisclosures,and contemporaneouswrittenconfirmation of

theoral disclosure, fornameddriverpolicies. Topartially

im-plementSB 1567and InsuranceCode §1952.0545, the

com-missioneradoptedamendmentsto28TAC§5.204onApril28,

2014,torequirethenameddriverdisclosureonautoIDcards. Inthisorder,thecommissioneradoptsnew§5.208toimplement theothernameddriverpolicydisclosuresrequiredfornewand renewalpolicies.

TDIreceivedmanyinquiries andfilings as aresult ofthe

dis-closure requirements in SB 1567. Additionally, TDI received

commentsfollowingastakeholdermeetingheldonDecember2,

2013,andcommentsonaninformaldraftpostedonTDI's

web-siteonApril3,2014.TDIconsideredthosecommentsindrafting theproposaltoadopt§5.208.

OnAugust20,2014,TDIheldahearingontheproposal. In

re-sponsetowrittencommentsandcommentsmadeatthehearing,

TDImadethefollowingchangestotheproposedsection.

* TDIdeletedtherequirement thatnamed non-ownerpolicies

complywiththerule.

*TDIclarifiedthesignaturerequirementsin§5.208(c)(6). * TDIclarified that excluded driverpolicies are notsubject to §5.208.

*TDIaddedareferencetotheconspicuousnessrequirements

inBusinessandCommerceCode§1.201(B)(10).

*TDIalsomadeseveralnonsubstantiveeditorialchangestothe rule.

REASONEDJUSTIFICATION.InsuranceCode§1952.0545

re-quiresagentsandinsurerstoprovidedisclosurestoapplicants

and insuredsthatnameddriverpolicieshave coverage

limita-tions. Section5.208isnecessaryto:

1.clarifythedisclosureandapplicabilityrequirements;and

2. ensure that agents and insurers issuing new or renewal

nameddriverpoliciesareconsistentinapplyingthedisclosure

requirementsinInsuranceCode§1952.0545.

Typically,astandardpersonalautopolicyprovidescoverageto almosteveryonewhodrivesthecoveredvehicle,unless specif-icallyexcluded.Incontrast,anameddriverpolicydoesnot

pro-videcoverage forindividualswhoare residentsof thenamed

insured'shouseholdandarenotnamedasinsuredsonthe

pol-icy. Insurance Code§1952.0545requiresspecificdisclosures

fornameddriverpoliciesatthetimeneworrenewalpoliciesare issued.

The disclosures put theapplicant or insured onnotice that a

nameddriverpolicyhaslimitationsincoverageandthat cover-agedependsonwhoisdrivingthecar.Thedisclosuresalertthe applicantorinsured toreviewtheextentofcoverage withthe agentorinsurer. Thedisclosures donotsaythateverydriver notnamedonthepolicyisnotcovered-theysimplyalertpeople thatnotallindividualsresidinginthenamedinsured'shousehold arecoveredunderthepolicy.Althoughsomenameddriver

poli-ciescovermorepeoplethanjustthenamedinsured,theremay

beasubstantialgroupofpeoplewhocoulddrivethecarandbe uninsuredunderthepolicy,includingrelatives,unrelated room-mates,orotherhouseholdresidents.

Definitionof"NamedDriverPolicy"

Section5.208(a)and(b) clarifythedefinitionof"nameddriver policy"andtheapplicabilityofthedisclosurerequirementsunder

InsuranceCode§1952.0545.

Section 5.208(a)(1) restates the definition of "named driver

policy" in Insurance Code §1952.0545(a). Insurance Code

§1952.0545(a)definesanameddriverpolicyas"anautomobile insurancepolicythatdoesnotprovidecoverageforanindividual

residing in a named insured's household specifically unless

the individual is named on thepolicy. The term includes an

automobileinsurancepolicythathasbeenendorsedtoprovide

coverageonlyfordriversspecificallynamedonthepolicy." Section5.208(a)(2)clarifiesthatthedefinitionof"nameddriver policy"includesautomobileinsurancepoliciesthatdonotcover allhouseholdresidents.Thisinterpretationisconsistentwiththe intentof§1952.0545,whichistoinformtheinsuredorapplicant thatthepolicyhascoveragelimitationsthatmakeitdifferentfrom astandardpersonalautopolicy.Forexample,apolicythat cov-ersall roommates, butdoesnotcoverresidentrelatives, pro-videslesscoveragethanastandardpersonalautopolicy. That information-thatifanunnamedhouseholdresidentdrivesthe ve-hicle,thedrivermaynotbecovered-iswhattheLegislature in-tendedtohaveinsurersandagentsconveytopolicyholders.The

disclosuresrequiredunder§1952.0545aredesignedtoensure

thatpolicyholdersarenotifiedofthecoveragelimitationssothey canpreventpeoplewhoarenotcoveredundertheirpoliciesto drivetheirvehicles.

Conversely,almostallautopoliciesprovidecoveragefora resi-dentspouseasa"coveredperson"underthepolicy,evenifthe

spouseisnotnamedandthepolicydoesnotcovereveryother

householdresident.Underanarrowreadingofthedefinitionof "nameddriverpolicy,"apolicythatcoversanyhousehold resi-dentsotherthanthehouseholdresidentsspecificallynamedon thepolicy-evenjustone-isnotanameddriverpolicy. Reading thedefinitionof"nameddriverpolicy"narrowlywouldmeanthat therearevirtuallynonameddriverpoliciesapprovedforusein Texas.

Suchareadingiscontrarytocodeconstructionguidelines

un-derGovernmentCode§311.021(2)and(4),which statethatit

ispresumedthat"theentirestatuteisintendedtobeeffective," and that "aresult feasibleof executionisintended." Addition-ally, notrequiring disclosures onpoliciesthat cover some-but notall-unnamedhouseholdresidentswouldfrustratetheintent of§1952.0545byfailingtowarnpolicyholders andother

inter-estedpartieswhomightnotrealizethatsomehousehold

resi-dentsarenotcovered.

Applicability:ExcludedDriverPolicies

Section5.208(a)(3)statesthatanautomobileinsurancepolicy thatprovidescoverageforallresidentsoftheinsured's house-holdisnotanameddriverpolicy,evenifthepolicyoran

endorse-mentexcludesoneormoredriversspecificallybyname.Those

policiesareknownas"excludeddriverpolicies"orpolicieswith "excludeddriverendorsements."Merelyattachingan endorse-menttospecificallyexcludeadriverdoesnotnecessarilymake apolicyanameddriverpolicy.

Anexcludeddriverpolicyisfunctionallytheoppositeofanamed

driver policy. While a named driver policy generally covers

named driversresiding within thehouseholdand drivers from

outside thehousehold operating the vehicle with permission,

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those specifically excluded from coverage by name. Those whobuyexcludeddriverpoliciesarealreadyinformedthatthe policydoesnotcoverallpossibledrivers,becausetheexcluded driversarespecificallylistedbyname. Section5.208(a)(3) clari-fiesthatspecificallyexcludingoneormorehouseholdresidents

by namedoesnotmakea policy a nameddriverpolicy ifthe

policycoversallotherhouseholdresidents.

However,anameddriverpolicythatalsohasanexcludeddriver endorsementisstillanameddriverpolicy. Forexample,a pol-icythatdoesnotcovereveryhouseholdresident,andthatalso excludes"JohnDoe,"isanameddriverpolicywithanexcluded

driverendorsement.

Applicability:CoveragesandRenewals

Section5.208(b)(1)clarifiesthatthesectionappliestoallnew andrenewalnameddriverpoliciesofanyterm. Italsoclarifies thatthesectionappliestopoliciesinwhichanytypeofcoverage appliesonlytonameddrivers.

Insurance Code §1952.0545 applies to every renewal of a

nameddriverpolicy. SB1567,Section3, statesthatitapplies toan insurancepolicythat isdelivered, issuedfordelivery, or renewedonorafterJanuary1,2014.Itdoesnotsay"annuallyat renewal,""atthefirstrenewalafterJanuary1,2014,"or"before acceptingtheinitialpremiumorfee."Instead,InsuranceCode

§1952.0545(b) requiresan agentor insurerto make oral and

writtendisclosurestotheapplicantorinsuredbeforeaccepting anypremiumorfeeforanameddriverpolicy. Ifthedisclosure requirementswereintendedtoapplyonlytonewpolicies,only theterm"applicant"wouldappearinthetext. Theinclusionof the word "insured" indicates that the disclosurerequirements

weremeanttoapplytorenewals.

Moreover,ifthedisclosurerequirementswereonlyintendedto applytoaninsuredwithanexistingpolicyontheeffectivedate

ofSB1567andtonorenewalsthereafter,§1952.0545(b)could

havestated,"insuredwithanexistingpolicyonJanuary1,2014." GovernmentCode§311.021(2)statesthat,inenactingastatute, itispresumedthattheentirestatuteisintendedtobeeffective. Ignoringtheinclusionoftheword"insured"wouldbecontrary to thispresumption. In addition, thephrase"any premium or fee"inInsuranceCode§1952.0545(b)logicallyincludesrenewal premiums.

Finally, other statutes that require automobileinsurers to ob-tainsignaturesfrominsuredsspecificallyallowinsurerstoobtain theinsured'ssignatureonlyonce. Forexample,bothInsurance Code§1952.101(whichappliestowrittenrejectionofuninsured

orunderinsuredmotoristcoverage)and§1952.152(which

ap-plies towritten rejectionof personal injuryprotection) contain languagethat specifiesthattheinsurerisnotrequiredtooffer therejectedcoverageagainforreinstatedorrenewal policies.

TheseexamplesguideTDIonhowtointerpret§1952.0545.

Ex-pressstatutoryauthoritywasrequired toallowinsurersto

ap-ply a rejection of coverage under Insurance Code §1952.101

or§1952.152tofuturereinstatedorrenewalpolicies. Because

§1952.0545containsnosimilar,expressprovisionallowingan

insurer or agentto provide disclosures and obtainsignatures

onlyonce,TDIcanonlyconcludethattheLegislatureintended thattheinsureroragentmustgivethedisclosuresandobtainthe confirmingsignatureseachandeverytimetheinsureroragent

acceptsanypremiumorfee.

Section5.208(b)(2)clarifiesthatthesectionappliestoallagents

and insurersoffering automobileinsurance in Texas, whichis

consistentwithInsuranceCode§1952.0545(b)- (e).

DisclosureRequirements

Section5.208(c)clarifiesthedisclosurerequirementsfornamed

driverpolicies under Insurance Code §1952.0545. Insurance

Code §1952.0545(b) requires an agentor insurer, before

ac-ceptinganypremiumorfeeforanameddriverpolicy,tomake

thefollowingdisclosure,orallyandinwriting,totheapplicantor

insured,"WARNING:ANAMEDDRIVERPOLICYDOESNOT

PROVIDECOVERAGEFORINDIVIDUALSRESIDINGINTHE

INSURED'SHOUSEHOLDTHATARENOTNAMEDONTHE

POLICY."

InsuranceCode§1952.0545(c)and (d)requireanagentor

in-surerthatdeliversorissuesfordeliveryanameddriverpolicyin Texastoreceiveacopyofthedisclosureinsubsection(b)that issignedbytheapplicantorinsured,andtospecificallyinclude inthepolicyandconspicuouslyidentifyonthefrontofanyproof ofinsurancedocumentissuedtotheinsuredtherequired disclo-sure.

InsuranceCode§1952.0545(e)requirestheagentorinsurerto

requiretheapplicantorinsuredtoconfirmcontemporaneously

inwritingtheprovisionoforaldisclosure.

Section5.208(c)(1)restatesInsuranceCode§1952.0545tolist theproceduralrequirements. It statesthatanagentorinsurer maynotacceptapremiumorfeeforanameddriverpolicyuntil theagentorinsurerhasmadetherequiredoralandwritten dis-closures,receivedasignedcopyofthewrittendisclosure,and receivedacontemporaneouswrittenconfirmationoftheoral dis-closure.

Section5.208(c)(2)restatesthedisclosurerequirementin

Insur-anceCode§1952.0545(b).

Section5.208(c)(3)affirmsthatanagentorinsurermayprovide

the oral disclosure live or by using a recording, and allows

telephone and Internet disclosures. Though Insurance Code

§1952.0545 doesnot expresslyallowrecorded disclosures, it

alsodoesnotprohibitthem. InsuranceCode§1952.0545does

not require in-person oral disclosures; and Insurance Code

§35.003allowsagentsandinsurers,onagreementofallparties tothebusiness,toconductbusinesselectronicallytothesame extentthattheyare authorizedtoconductbusinessotherwise. Withoutanexpressprohibitiononelectronicorrecorded disclo-suresfornameddriverpolicies,insurersandagentswhocomply

withthe InsuranceCode §1952.0545disclosurerequirements

toconducttheirbusinessmayuseelectronicmeanstodoso. Section5.208(c)(4)reiteratestherequirementinInsuranceCode

§1952.0545(e)forcontemporaneouswrittenconfirmationofthe

oraldisclosure.

Section 5.208(c)(5) reiterates the requirements in Insurance

Code §1952.0545 that an agent or insurer must include the

writtendisclosurein thepolicy and onanyproofof insurance

documentissuedtotheinsured,andmustrequireanapplicant

orinsuredtosignacopyofthedisclosure.

Section5.208(c)(6) providesthat all required signatures must beoriginalorelectronicsignaturesexecutedforeachnewand

renewal policy. Electronic signaturesmust comply with

Busi-nessandCommerceCodeChapter322(theUniformElectronic

TransactionsAct),InsuranceCodeChapter35,andany

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withregardtothesignaturesrequiredunderthissection-namely, thatsignaturesmustnotprecedetheactualprovisionofthe

dis-closure,andmaynotbecopied,presumed,orassumedon

pay-ment.

Under§5.208(c)(7),agentsandinsurersmustprovidethe

Eng-lishdisclosuresthatInsuranceCode§1952.0545requires,and

mayprovidethedisclosuresinotherlanguages.

Section5.208(d)providesthatacceptinginstallmentpayments

ofpremiumandassociatedfeesdoesnot,byitself,triggera

re-quirementfora newsetofdisclosures underInsurance Code

§1952.0545. Insurance Code §1952.0545(b) requiresagents

andinsurerstocomplywiththedisclosurerequirementsbefore

acceptinganypremiumorfeefora nameddriverpolicy. The

statutedoesnotstatethatthedisclosuremustbegiven repeat-edlyduringorthroughoutthetermofthepolicy.Installment

pay-mentsdonotrequirea newsetofdisclosuresbecauseatthe

time aninsuredmakesaninstallment paymentthepolicyhas

alreadybeendeliveredorissued,andtheagentorinsurerwas requiredto havealreadyprovidedthedisclosures forthat pol-icy'sterm.

Noncompliance

Section 5.208(e) clarifies that an agent or insurer may not

use noncompliance with Insurance Code §1952.0545 or the

proposedsectionasareasontoavoidliabilityunderthepolicy,

and that noncompliance isnotgroundsfor cancellationofthe

insured's policy under Insurance Code §551.104. Insurance

Code §551.104 provides that an insurer may cancel a

per-sonal automobile policy onlyfor specified reasons, including:

nonpayment ofpremium; fraud; ifcontinuing thepolicy would

be illegal; if specific circumstances pertaining to suspension orrevocationofa driver'slicenseormotor vehicleregistration exist;or,withpropernotice,onany12-monthanniversaryofthe originaleffectivedateofthepolicy. Anagentorinsurer'sfailure

tocomplywiththedisclosurerequirementsin InsuranceCode

§1952.0545 or theproposed sectiondoes notfall intoany of

thecategoriesinInsuranceCode§551.104. However,nothing

intheruleor§1952.0545preventsaninsurerfromcancelinga policyforthereasonsallowedinInsuranceCode§551.104. TDIretainsitsenforcementauthoritytoenforceviolationsunder theInsuranceCodeandanyotherapplicablestatutesandrules. TDI's authorityincludes,butis notlimitedto, InsuranceCode

Chapter82(Sanctions)andChapter83(EmergencyCeaseand

DesistOrders),whichapplytoallcompaniesandindividuals

reg-ulatedbythecommissioner. Thecommissionermayalsotake

actionunderChapter86(RevocationorModificationof Certifi-cateofAuthority;AuthoritytoBringCertainActions). Notlisting specificauthorityorpenaltiesforviolationsineachruledoesnot depriveTDIofthisauthority.Rulestypicallydonotarticulate ev-erypossiblegroundforenforcementactionortherangeof sanc-tionsandpenaltiesavailable.

SUMMARYOFCOMMENTSANDAGENCYRESPONSE.

Commenters: TDIreceivedwrittencommentsfrom21people,

andoralcommentsfromsevenpeople.Somecommenters

sub-mittedbothwrittenandoralcomments.Thecommenterswere:

Lone Star Insurance Agency, Harco Insurance, Independent

Insurance Agents of Texas, Sutliff & Stout, Senator Craig

Estes, Office of Public Insurance Counsel, Texas Watch,

Representative Ed Thompson, Senator WendyDavis, Alinsco

Insurance Company, Empower MGA, Safe Auto, ACCC

In-surance Company, Property Casualty InsurersAssociation of

America,AmWINSSpecialtyAuto,InsuranceCouncilofTexas,

NationwideInsurance,andthreeanonymousindividuals.

Four comments from three commenters were either against

adoption of the rule before the 2015 legislative session, or

for adoption with changes. Twenty-eight comments were for

adoptionwithchanges.

Comments on the Existence of Named Driver Policies: Four commentersstatedthatTDIshouldeliminatenameddriver poli-cies.

Agency Response to Comments on the Existence of Named DriverPolicies:TDIdoesnothavespecificstatutoryauthorityto

bannameddriverpolicies.TheLegislaturedidnotpassHouse

Bill1773,83rdLegislature,RegularSession(2013),whichwould haveeliminatednameddriverpolicies.

CommentsonStandardPolicyForms:Twocommentersstated that TDIshouldonlypermit standardpolicy forms, oronlythe InsuranceServicesOfficepolicyform.

AgencyResponsetoCommentsonStandardPolicyForms:TDI doesnothavethestatutoryauthoritytoprohibitinsurersfrom fil-ingtheirownpolicyformsforapproval,ortorefusetoapprove policyformsthatcomplywithall applicablestatutesandrules. SB14,78thLegislature,RegularSession(2003)allowed insur-ersandadvisoryorganizationstofileforapprovaltheirown pol-icyformsandendorsementsinsteadofusingpromulgatedforms, asthepreviousregulatoryschemerequired.

Comments on Renewals-Not Required: Seven commenters

stated that the rule should not require named driver policy

disclosuresateachrenewal.

Agency Response to Comments on Renewals-Not Required:

Section 1952.0545does not permit the consumeror the rule

to waivetherequirementthatinsurersprovidethedisclosures

required ateveryrenewalofa nameddriverpolicy. SB1567,

Section 3, states that itappliesto an insurancepolicy that is delivered,issuedfordelivery,orrenewedonorafterJanuary1, 2014.Itdoesnotsay"annuallyatrenewal,""atthefirstrenewal afterJanuary1,2014,"or"beforeacceptingtheinitialpremium or fee." Instead, Insurance Code §1952.0545(b) requires an

agent or insurer to make oral and written disclosures to the

applicant orinsured before acceptinganypremium or fee. If

thedisclosurerequirementswereintendedtoapplyonlytonew policies, only the term "applicant" would appear in the text. TheLegislature's inclusionoftheterm"insured"indicatesthat

thedisclosurerequirementsweremeant toapplyto renewals.

Moreover, if the disclosure requirements were only intended

to apply toan insured withanexisting policy ontheeffective

dateofSB1567andtonorenewalsthereafter,§1952.0545(b)

couldhavestated, "insuredwithanexistingpolicyonJanuary 1,2014."

GovernmentCode§311.021(2)statesthat,inenactingastatute, itispresumedthattheentirestatuteisintendedtobeeffective. Ignoringtheinclusionoftheword"insured"wouldbecontraryto thispresumption. Inaddition,thephrase"anypremiumorfee" inInsuranceCode§1952.0545(b)logicallyincludesrenewal pre-miums. Finally,aspreviouslystated,otherstatutesthatrequire insurerstoobtaindocumentsfrominsuredscontainspecific lan-guagethattheinsurerisnotrequiredtooffertherejected cov-erageagainforreinstatedorrenewalpolicies. InsuranceCode

§1952.0545containsnosuchprovision. Asaresult,TDImust

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CommentsonRenewalsvs. InstallmentPayments: One com-menterstatedthatrequiringdisclosures atrenewalbutnotfor installmentpaymentsseemsarbitrary.

Twocommentersstatedthattheruleshouldclearlynotapplyto

installmentpaymentseachtimeanagentoraninsuredaccepts

aninstallmentpaymentduringthepolicytermifthedisclosure andconfirmationisobtainedonorbeforethepaymentofthe ini-tialpremiumorfee;orthepolicyisissued,delivered,reinstated,

orrenewed.

AgencyResponsetoCommentsonRenewalsvs. Installment Payments: TDIagreesthattheruleshouldnotapplyto

install-mentpayments.Distinguishingbetweenrenewals,whichare

of-fersandacceptancesofaninsurancecontractforanewpolicy

term,andinstallmentpayments,whichareamethodof

spread-ingoutthecostofapolicyoverthatpolicy'sterm,isreasonable. Section3,SB1567,statesthatthebillappliestoapolicythat isdelivered,issuedfordelivery,orrenewedonorafterJanuary 1,2014. Installmentpaymentsarenotlikerenewals.Nopolicy isdelivered,issued,orrenewedwitheachinstallmentpayment. Thereisnochangetothepolicycontractateachinstallment pay-ment.Incontrast,theinsurercanmakechangestothecontract atrenewal.

Moreover, theinsured incursanobligationto payatpolicy

is-suanceorrenewal. Atrenewal,theinsuredreceivesarenewal

certificateandpaysforanewpolicyterm,ratherthanpayingpart ofadebtforanexistingpolicyterm.Theinsuredischargedthe entirepremiumforapolicytermwhenthepolicyisissuedor

re-newed.Installmentpaymentarrangementsareseparate

agree-mentsthatallowtheinsuredtofulfillthatobligationbypayingit overtime,insteadofallatonce.

CommentsonComparingNamedDriverDisclosureswith Dis-closuresforPIPandUM/UIM:Twocommentersstatedthat

re-peated disclosures and signatures have never been required

forpersonalinjury protectioncoverage, uninsured and

under-insuredmotoristcoverage,thepolicyapplication,andexcluded

driverendorsements. Theystatedthat aburdensomesystem

willincreaseratesandincreasethenumbersofuninsured

mo-torists;andthatrequiringdisclosuresateachrenewalofanamed driverpolicyisunprecedentedandinsultingtoinsureds.

One commenter stated that it is unlikely that the Legislature

intended that a non-mandated coverage (that primarily being

coverage of undisclosed resident drivers) receive stronger

proceduralprotectionsthanmandatedcoverageslikepersonal

injuryprotectioncoverage anduninsuredorunderinsured

mo-toristcoverages.

AgencyResponseto CommentsonComparingNamedDriver DisclosureswithDisclosuresforPIPandUM/UIM:The require-mentfordisclosuresateachrenewalisbasedonthestatutory languagechosenbytheLegislature.Otherstatutesthatrequire insurerstoobtainsignaturesfrominsuredsincludespecific lan-guagethattheinsurerisnotrequiredtooffertherejected cov-erageagainforreinstatedorrenewalpolicies.Forexample, In-suranceCode§1952.101(pertainingtowrittenrejectionof

unin-suredorunderinsuredmotoristcoverage)and§1952.152

(per-tainingtowrittenrejectionofpersonalinjuryprotection) specifi-callyallowcoveragerejectionstoapplytoreinstatedorrenewed

policies. InsuranceCode §1952.0545containsnosuch

provi-sion.

Moreover, the signatures required under Insurance Code

§1952.101 and §1952.152 are rejections of coverage, rather

thansignaturesconfirmingdisclosureoflimitedcoverageinthe

policy delivered, issued for delivery, or renewed. The

Insur-ance Code's specific allowance of a "once and done" waiver

ofthecoverages requiredto beofferedunder §1952.101and

§1952.152doesnotcreateasimilar"onceanddone"allowance fornameddriverdisclosuresandthesignaturesrequiredunder

InsuranceCode§1952.0545,absentspecificstatutorylanguage

tothateffect.

CommentsonRequiringDisclosuresatOnlytheFirstRenewal:

Onecommenterstatedthattheruleshouldrequiredisclosures

onlyonthefirstrenewalafterJanuary1,2014,andnotfor

sub-sequentrenewals. Thecommenter statedthat when apolicy

renews, thepolicyitselfjustcontinuesin force-itisnota new policy; andthatSB1567ismeanttoapplyat thepolicy level, for"policies,"not"policyterms."Thecommenteralsostatedthat

burdensomerequirementsateachrenewalwoulddrivesome

in-surersoutofthenameddrivermarket,wouldincreasepremiums forothers'policies,andwouldforcepeopletobeuninsured.

Onecommenterstatedthattheproposedrulecouldeventually

eliminatethepopularandnecessarynameddriveroptioninthe

nonstandardmarket.Thecommenterstatedthat§1952.0545

re-quiresdisclosuresonlyfornewnameddriverpoliciesafter Jan-uary1,2014,orforthefirstrenewalafterJanuary1,2014;and that, ifthe Legislature had intended to require disclosures at eachrenewal,SB1567,Section3wouldhavesaid,"delivered, issued fordelivery, AND renewed," instead of"OR renewed." Thecommenterstatedthatthebilldoesnotsay,"each,""every," or"all,"soitwasnotintendedtorequirecontinuousdisclosure; andthatnootherautoinsurancerequirementrequiressuch du-plicationofdisclosures.Thecommenterstatedthatonlythe

writ-tendisclosurerequirementappliestorenewals.Thecommenter

statedthatnameddriverpoliciesareroutinelysoldasmonthly policies,andthatrenewalsofpoliciesthatalreadyhavea compli-antdisclosureandacknowledgmentshouldnotrequireperpetual reconfirmation.

Twocommentersstatedthat requiring disclosuresat each

re-newalisburdensometoconsumers,agents,andinsurers,and

wouldbeanabsurdresult.Thecommentersstatedthat

disclo-sures shouldbe required to be given onlyonce, at policy

is-suance oratthefirstrenewalafterJanuary1, 2014; and that normalpracticeforinsurancepoliciesistoobtainsignaturesand disclosureswhenthepolicyisissued,notateachrenewal.The

commentersstatedthatproposed§5.208(c)shouldbeamended

toeithernotrequirewrittendisclosureandconfirmationateach

renewal,ortoallowcompaniesoragentstoobtainsomekind

ofwaivertokeepfromhavingtorepeatdisclosuresatevery

re-newal. The commenters alsostatedthat proposed§5.208(d)

shouldbeamendedtodelete"aftercomplyingwiththe disclo-surerequirementsforeachnewandrenewalpolicy,"and"after complyingwiththedisclosurerequirementseachtimeapolicyis delivered,issuedfordeliveryorrenewed."

Agency Responseto Comments on RequiringDisclosures at OnlytheFirstRenewal: Asstatedabove,theInsuranceCode's allowanceofa"onceanddone"waiverofthecoveragesrequired

tobeofferedunder§1952.101and§1952.152doesnotcreatea

similar"onceanddone"allowancefornameddriverdisclosures

requiredunderInsuranceCode§1952.0545.

TDIcannotgrantconsumerstheauthoritytowaiveaninsurer's statutoryduty. Thereisadistinctionbetweenastatutoryduty-a

requirementtheLegislatureplacesoninsurers-andaconsumer

right.Aconsumermaychoosetowaivecertainrights,buta con-sumerdoesnothavetheauthoritytowaiveaninsurer's

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statu-toryobligationtoobeythelawbyprovidingoralandwritten dis-closuresandreceivingcontemporaneouswrittenconfirmationof theoraldisclosureateachrenewal.

CommentsonRenewals-Required: Three commentersstated thattheruleshouldrequirenameddriverpolicydisclosures at

eachrenewal.

OnecommenterstatedthatTDIcorrectlyinterpretedthe"or"in theSB1567,Section3statementthatitappliestoaninsurance policythatisdelivered,issuedfordelivery,orrenewedonorafter

January1,2014.Thecommenterstatedthat,becauseSB1567

didnotexplicitlyallowdisclosurestobegivenonceand apply prospectivelyforrenewals,asinInsuranceCode§1952.152(b),

which applies to personalinjury protection coverage, the SB

1567disclosuresmustbegivenateachrenewal.

Anothercommenterstatedthatthebillandintentareclearthat SB1567doesnotallowforanysortofinitialrenewaldisclosure, andthatitisobviousthatthedisclosuresaretocontinuetobe deliveredateachandeveryrenewal.

Anothercommenterstatedthatreadingthebilltoapplytoonly thefirstrenewalwould beinconsistentwith readingthebill to applytonewpoliciesissuedafterJanuary1,2014.

AgencyResponse toComments on Renewals-Required: TDI agreesthat,underSB1567,therulemustrequirenameddriver policydisclosuresateachrenewalofanameddriverpolicy.

CommentsonRulemaking:

One commenter requested that TDIdelay rulemaking on SB

1567becausecompliancewiththeruleasproposedisvirtually impossible.

Another commenter requested that TDI delay rulemaking on

SB1567,andstatedanintenttointroducelegislationaffecting

named driver policies during the 2015 Legislative Session,

whichcouldaffecttheruleasproposed.

Anothercommenterstatedanintenttointroducelegislationinthe comingsessionthatwouldbannameddriverpoliciesaltogether.

Anothercommenterstatedthat theruleshouldproceedto

en-sure that the intent of the law issustained. The commenter

alsostatedthatSB1567,whichhadsignificantbipartisan sup-port,intendedtomakecertainthatTexasconsumersunderstand thelackofcoverageinnameddriverpoliciesandtokeepTexas

roadwayssafe.

AgencyResponsetoCommentsonRulemaking: TDIdeclines todelaytherule.Itispossiblethatlegislationpassedinthe2015

sessionmaychangeInsuranceCode§1952.0545suchthatTDI

wouldneedtoamendtherule. However,§1952.0545hasbeen

effectivesinceJanuary1, 2014,andtheruledoesnotimpose

anycoststhatarenotalreadyrequiredbythestatute.

The rule clarifies the statutory requirements, guides insurers

to uniformlycomplywith thoserequirements, and promotesa

level playing field among insurers and agents selling named

driverpolicies.Allowingtheuncertaintyaboutwhat§1952.0545

requires to persist simply because those requirements may

changemayharmconsumers. TheLegislaturemandatedthat

insurersmustgivetherequired disclosurestoconsumerswho

purchase named driver policies, regardless of the insurer or

agent from whomthey purchase their policies. Insurersand

agents who are providing disclosures on every renewal of a

nameddriverpolicyshouldnothavetocompeteagainstinsurers andagentswhoarenotprovidingdisclosuresoneveryrenewal.

TDIimplementsSB1567, andpart ofimplementing thebillis

promulgatingrulestoclarifythestatutes.

Commentsonthe"FailuretoComply"Provision-DeleteorRevert toInformalDraftLanguage:

CommentsonUsingApril3,2014,Language:Fourcommenters statedthatTDIshouldeitherreverttothe"Failureto Comply" languageintheinformaldrafttextTDIpostedonApril3,2014, ordeletetheprovisionentirely.

AgencyResponsetoCommentson UsingApril3, 2014, Lan-guage: The Failure to Complyprovision in theinformal draft

read: Whenanagentorinsurerdoesnotcomplywiththe

dis-closurerequirements, theinsurermaynotavoidliability under thepolicy. Thislanguagecouldbereadtosaythattheinsurer couldnotavoidliabilityunderthepolicyforanyreason,evenif thereisalegitimatereasonfordenyingtheclaim. Thatwasnot theintentoftheprovision,soTDIrevisedthelanguage.

CommentonCancellation:Onecommenterstatedthatthe pro-posed"Failure to Comply" provision could preventan insurer fromcancelingapolicyforotherappropriateunderwritingor

non-paymentreasons forfear of the cancellationappearing to be

basedonapretext.

Agency Response to Comment on Cancellation: Nothing in §5.208(e)prohibitscancelinganameddriverpolicyfora

legiti-matereason.

Comment thatthePolicy ShouldNotbe Treatedas a Named DriverPolicy:Acommenterstatedthatfailuretocomplyshould

result in the policy beingtreated as not including the named

driverprovisions, andthat, untilthepolicy iscompliant, an in-surerhasnotacceptedapremiumorfeeforanameddriver pol-icy.

Agency Response to Comment that the Policy Should Not be Treated as a Named Driver Policy: Regarding the

com-menter's assertion that a named driver policy contract that

lackstheproperdisclosuresisnota nameddriverpolicyuntil thedisclosures areprovided: a nameddriverpolicyisdefined

by InsuranceCode §1952.0545basedon whetheritprovides

coverage forall householddrivers. Acontract isthebasis of thebusinessofinsurance.Tochangethetermsofaninsurance contract,theparties mustformally modifythecontractin

writ-ing. Contractsaregenerallynotmodifiedbyoralagreements,

outsideinfluences,oractions. Forexample,changingadjuster

behavior does not change the contract-merely telling an

ad-justertoadjustaclaimasthoughanameddriverpolicywerea

standard policydoes notchangea nameddriverpolicyintoa

standardpolicy.

TDIconsideredwhethertherulecouldchangethepolicycontract

basedonaconditionsubsequent. Section1952.0545doesnot

providethatauthority;asaresult,therulewillnotrequirethatan executedinsurancepolicycontractwouldbeautomatically con-vertedintoadifferentcontractwithdifferentratesandactuarial justificationofthoseratessimplybecausetheinsureroragent hasnotcompliedwiththestatutorydisclosurerequirements.

Commentthat§5.208(e)DoesNotAddAnythingUseful,andis TooBroad:Anothercommenterstatedthatproposed§5.208(e)

wouldsparkunnecessarylitigation anddoesnotaddanything

to TDI'senforcementauthority. The commenterrecommends

removingornarrowingtheprovision.

Agency Responseto Comment that §5.208(e)Does Not Add AnythingUseful,andisTooBroad:Theruleclarifiesthatfailing

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tocomplywiththestatutedoesnotallowaninsurertoavoid con-tractualobligationsunderthepolicy. Aswritten,thissubsection oftherulelimitsitsscopetononcompliancewithInsuranceCode §1952.0545or§5.208. Aspreviouslydiscussed,TDIretainsits enforcementauthoritytoenforceviolationsundertheInsurance Codeandanyotherapplicablestatutesandrules.

Comments on the "Failure to Comply" Provision-Strengthen:

FivecommentersstatedthatTDIshouldstrengthenthe"Failure toComply"language.

One commenterstatedthat theproposed "Failureto Comply"

language sends the messagethat noncompliance isokay as

longastheinsureroragentdoesnotvoidtheinsurancepolicy. ThecommenterstatedthatTDIshouldtiefailuretocomplywith

theruletoInsuranceCode Chapter541, especially§541.060;

andthattheruleshouldstatethatviolatorswillbesubjectto ad-ministrativeprocess,sanctions,andpenaltiesunderSubchapter CorChapter541,andsubjecttoallotheradministrativeactions availabletoTDI.

Onecommenterstatedthateachnoncompliantpolicyshouldbe

aseparateviolation.

One commenter stated that the "Failure to Comply" section shouldbeeitherdeletedorrevisedtostatethatfailuretocomply triggersaChapter541violation.

One commenterstatedthat TDIshouldamend the"Failureto Comply"provisiontoincludethepossibledisciplinaryactionTDI mighttake.

One commenter statedthat the "Failureto Comply" provision

should contain specific penalties, and mentioned Insurance

CodeChapter541.

Agency Response to Comments on the "Failure to Comply" Provision-Strengthen: TDIdisagreesthat the"Failureto Com-ply"languagesuggeststhatnoncomplianceisacceptable. TDI declines to list specific Insurance Code provisions, including

Chapter541,becauseTDI'senforcementoptionsandauthority

encompass all the enforcement authority granted under the

Insurance Code to address any violations, including, but not

limited to, violations of Insurance Code §1952.0545 and the

rule.NotlistingspecificprovisionsdoesnotlimitTDI'sauthority, andrulestypicallydonotlistallrelatedenforcementprovisions. Whethereachnoncompliantpolicyconstitutesaseparate viola-tionof§1952.0545isdeterminedonacase-by-casebasisafter investigatingallallegationsandevidenceavailabletoTDI.TDI willaddressviolationsofthestatuteandruleonacase-by-case basis,consideringallapplicablestatutes,sanctions,and penal-ties.

CommentonSignatureRequirements: Onecommenterstated thatTDIshouldclarifytherequirementsforsignaturesintherule byadding"referencedto"toproposed§5.208(c)(6)(B)(ii);adding "withoutpositivelyconfirmingtheydoinfactexist"toproposed §5.208(c)(6)(B)(iii);andadding"orstateinanyfashion"to

pro-posed§5.208(c)(6)(C).

Agency Response to Comment on Signature Requirements:

TDIhasamendedtherulebyadding"referencedto"toproposed §5.208(c)(6)(B)(ii) and adding "state" to §5.208(c)(6)(C). TDI consideredadding"withoutpositivelyconfirmingtheydoinfact exist,"butdeterminedthattheresultingtextmaybeconfusing andisnotnecessary.

CommentonUnevenPlayingField:Onecommenterstatedthat companiessellingnameddriverpoliciesandnotcomplyingwith

§1952.0545ortheproposedrulearemakingithardforthe

com-mentertocompete.

AgencyResponseto CommentonUnevenPlayingField: TDI

enforces statutes and rules in a variety of ways, including

throughmarketconductexaminationsandenforcementactions.

TDIwilltakeappropriate actionwhenspecificviolationscome

to its attention, and encourages thecommenter to reportany

specificviolations.

Comments on Excluded Driver Policies: Three commenters statedthat TDIshouldclarifythat excludeddriverpoliciesare notsubjecttotherule.

One commenterstatedthat TDIshouldrevisethedefinitionof

"nameddriverpolicy"intheruletoclarifythatmerelyattaching anendorsementtospecificallyexcludeadriverdoesnot neces-sarilymakeapolicyanameddriverpolicy.

Another commenter statedthat TDIshouldamendtherule to

definean"excludeddriverpolicy"andmakeitclearthattheyare notnameddriverpolicies.

Agency Responseto Commentson Excluded DriverPolicies:

TDIhasrevisedthedefinitionof"nameddriverpolicy"intherule toclarifythatexcludeddriverpoliciesarenotnecessar