Rate Confidentiality Bill Passes Senate, House

SB 978 by Sen. Brandon Creighton (R-Beaumont) passed the house on May 19, 2015 in a record vote. The bill amends current law relating to public information regarding workers’ compensation insurance rate filings. More specifically, the bill amends the workers’ compensation filings statute, Section 2053.004, Insurance Code, to provide proprietary confidentiality protections through Chapter 552, Government Code.  According to Sen. Creighton’s statement of intent:

Existing laws do not adequately protect workers’ compensation filings from competitors that wish to use proprietary information received through disclosure. Filings for property and casualty lines, however, are subject to Chapter 552, Government Code, which protects intellectual property in such filings from public disclosure to those who wish to use the filer’s innovations without having to invest in creating such innovations themselves. Similar protections are needed as the Texas Basic Manual of Rules, Classification and Experience Rating for Workers’ Compensation now includes a company’s modeled rating factor and supportive documents.

One insurer was recently required to file a model used in the pricing of its workers’ compensation products. Another insurer requested the filed model, and under Section 2053.004 (Public Inspection of Information), Insurance Code, it had to be disclosed. The model reflected approximately 6,000 hours of work by that company’s actuaries, statisticians, and analysts. The disclosure of this information allowed competitors to obtain proprietary innovation without a similar expenditure of time, effort, and money.

The bill will now be sent to the Governor’s office for his signature. The bill takes effect September 1, 2015.