Texas Approves Additional ISO Commercial Auto Tools

The Texas Department of Insurance (TDI) has cleared the way for insurers to make filings immediately using Insurance Services Office Inc.‘s (ISO) commercial auto advisory information.

According to ISO, its advisory service for the commercial auto insurance program in Texas now includes advisory prospective loss costs and manual rules for applying those loss costs. Loss costs are insurers’ anticipated losses, based on aggregated data, from underwriting a particular class of risks. Rules are sets of conditions under which insurers underwrite a specific risk or a class of risks.

The TDI has approved for insurers’ use ISO’s commercial auto loss costs and rules for:
· Texas-specific liability, medical payments, personal injury protection, uninsured/underinsured motorists, and physical damage advisory loss costs for trucks, tractors and trailers, garage dealers classes and garage keepers coverage;
· Texas-specific loss costs for private passenger types using the standard ISO multistate program;
· Multistate classifications and relativity factors for classes including, but not limited to, trucks, tractors and trailers, and publics; and
· Loss costs for miscellaneous classes and coverages found in other states.

The TDI has also approved the following ISO rating plans for insurers’ use as additional tools to reflect the unique characteristics of individual risks:
· Commercial automobile liability experience and schedule rating plan;
· Commercial automobile physical damage experience and schedule rating plan;
· Composite rating plan; and
· Retrospective rating plan.

In addition, the TDI has approved ISO’s standardized multistate commercial auto policy forms. ISO has maintained a commercial auto forms-only program in Texas that differed from the countrywide multistate program to comply with TDI’s “equivalency requirement.” The Texas insurance code only permitted insurers to use commercial auto policy forms and endorsements that provided coverage at least equivalent to the state-mandated forms.

“TDI’s approval of ISO’s commercial auto loss costs, rules and policy forms will benefit both carriers and insurance buyers. It will open up the state to greater competition among existing insurers, encourage new players to enter the market and allow commercial auto insurance buyers to comparison shop for the best coverage at competitive prices,” said Kevin B. Thompson, ISO senior vice president of Insurance Services.

“Instead of maintaining a separate Texas-specific company program, carriers can use ISO’s loss costs information, policy forms and rating systems for more informed underwriting and pricing decisions,” he added.

Texas is the third-largest commercial auto market in the U.S., with annual premium volume of nearly $2 billion. Commercial auto includes rental fleets, public vehicles (taxi, bus and limo), trucks, tractors and trailers, private passenger types, special type vehicles (such as fire trucks) and auto dealers.

Topics Carriers Texas Auto Profit Loss Commercial Lines Business Insurance