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A BILL TO BE ENTITLED
|
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AN ACT
|
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relating to the operation and funding of the Texas Windstorm |
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Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.001, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.001. PURPOSE. (a) An adequate market for |
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windstorm and[,] hail[, and fire] insurance in the seacoast |
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territory is necessary to the economic welfare of this state, and |
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without that insurance, the orderly growth and development of this |
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state would be severely impeded. This chapter provides a method by |
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which adequate windstorm and[,] hail[, and fire] insurance may be |
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obtained in certain designated portions of the seacoast territory |
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of this state. |
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(b) The purpose of the Texas Windstorm Insurance |
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Association is to serve as a residual insurer of last resort for |
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windstorm and hail insurance in the seacoast territory. The |
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association shall function in such a manner as to not be a direct |
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competitor in the private market and shall provide insurance |
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coverage to persons who are unable to obtain insurance coverage in |
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the private market. |
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SECTION 2. Section 2210.003(6), Insurance Code, is amended |
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to read as follows: |
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(6) "Insurance" means Texas [fire and explosion
|
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insurance and Texas] windstorm and hail insurance. |
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SECTION 3. Sections 2210.004(a) and (g), Insurance Code, |
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are amended to read as follows: |
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(a) For purposes of this chapter and subject to this |
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section, "insurable property" means immovable property at a fixed |
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location in a catastrophe area or corporeal movable property |
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located in that immovable property, as designated in the plan of |
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operation, that is determined by the association according to the |
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criteria specified in the plan of operation to be in an insurable |
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condition against windstorm and hail [or fire and explosion, as
|
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appropriate], as determined by normal underwriting standards. |
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(g) For purposes of this chapter, a residential structure is |
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insurable property if: |
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(1) the residential structure is not: |
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(A) a condominium, apartment, duplex, or other |
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multifamily residence; or |
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(B) a hotel or resort facility; and |
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(2) the residential structure is located within an |
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area designated as a unit under the Coastal Barrier Resources Act |
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(Pub. L. No. 97-348)[; and
|
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[(3)
a building permit or plat for the residential
|
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structure was filed with the municipality, the county, or the
|
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United States Army Corps of Engineers before January 1, 2004]. |
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SECTION 4. Section 2210.005, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.005. DESIGNATION AS CATASTROPHE AREA [OR
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INADEQUATE FIRE INSURANCE AREA]; REVOCATION OF DESIGNATION. (a) |
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After at least 10 days' notice and a hearing, the commissioner may |
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designate an area of the seacoast area of this state as a |
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catastrophe area if the commissioner determines that windstorm and |
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hail insurance is not reasonably available to a substantial number |
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of the owners of insurable property located in that territory |
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because the territory is subject to unusually frequent and severe |
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damage resulting from windstorms or hailstorms. |
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(b) [After at least 10 days' notice and a hearing, the
|
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commissioner may designate an area of this state as an inadequate
|
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fire insurance area if the commissioner determines that fire and
|
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explosion insurance is not reasonably available to a substantial
|
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number of owners of insurable property located in that area.
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[(c)] The commissioner shall revoke a designation made under |
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Subsection (a) [or (b)] if the commissioner determines, after at |
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least 10 days' notice and a hearing, that the applicable insurance |
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coverage is no longer reasonably unavailable to a substantial |
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number of owners of insurable property within the designated |
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territory. |
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(c) [(d)] If the association determines that windstorm and |
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hail insurance [or fire and explosion insurance] is no longer |
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reasonably unavailable to a substantial number of owners of |
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insurable property in a territory designated as a catastrophe area |
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[or inadequate fire insurance area, as applicable], the association |
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may request in writing that the commissioner revoke the |
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designation. After at least 10 days' notice and a hearing, but not |
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later than the 30th day after the date of the hearing, the |
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commissioner shall: |
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(1) approve the request and revoke the designation; or |
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(2) reject the request. |
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SECTION 5. Subchapter A, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.009 to read as follows: |
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Sec. 2210.009. LIST OF PRIVATE INSURERS; INCENTIVE PLAN. |
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(a) The department shall maintain a list of all insurers that |
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engage in the business of property and casualty insurance in the |
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voluntary market in the seacoast territory. |
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(b) The department shall develop incentive programs in the |
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manner described by Section 2210.053(b) to encourage authorized |
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insurers to write insurance on a voluntary basis and to minimize the |
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use of the association as a means to obtain insurance. |
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SECTION 6. Sections 2210.052(a), (c), and (d), Insurance |
|
Code, are amended to read as follows: |
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(a) Each member of the association shall participate in |
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insured losses and operating expenses of the association, in excess |
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of premium and other revenue [the writings, expenses, profits, and
|
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losses] of the association, in the proportion that the net direct |
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premiums of that member during the preceding calendar year bears to |
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the aggregate net direct premiums by all members of the |
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association, as determined using the information provided under |
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Subsection (b). |
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(c) Each member's participation in the association shall be |
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determined annually in the manner provided by the plan of |
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operation. For purposes of determining participation in the |
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association, two or more members that are subject to common |
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ownership or that operate in this state under common management or |
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control shall be treated as a single member. [The determination
|
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shall also include the net direct premiums of an affiliate that is
|
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under that common management or control, including an affiliate
|
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that is not authorized to engage in the business of property
|
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insurance in this state.] |
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(d) Notwithstanding Subsection (a), a member, in accordance |
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with the plan of operation, is entitled to receive credit for |
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similar insurance voluntarily written in an area designated by the |
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commissioner. The member's participation in the insured losses and |
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operating expenses of the association in excess of premium and |
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other revenue [writings] of the association shall be reduced in |
|
accordance with the plan of operation. Incentives adopted under |
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the plan of operation must include a minimum level of participation |
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for an insurer voluntarily writing coverage in a catastrophe area, |
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and may not include a maximum level to cap a member's actual |
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statewide writings compared with other members. |
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SECTION 7. Section 2210.058, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.058. PAYMENT OF EXCESS LOSSES[; PREMIUM TAX
|
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CREDIT]. (a) If, in any calendar year, an occurrence or series of |
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occurrences in a catastrophe area results in insured losses and |
|
operating expenses of the association in excess of premium and |
|
other revenue of the association, the excess losses shall be paid as |
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provided by this section. |
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(b) The association shall pay excess losses from available |
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reserves of the association and available amounts in [follows:
|
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[(1)
$100 million shall be assessed against the
|
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members of the association as provided by Subsection (b);
|
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[(2)
losses in excess of $100 million shall be paid
|
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from] the catastrophe reserve trust fund established under |
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Subchapter J. [and any reinsurance program established by the
|
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association;] |
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(c) For [(3) for] losses in excess of those paid under |
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Subsection (b), catastrophe area public securities may be issued in |
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the manner prescribed by Subchapter M. Catastrophe area public |
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securities issued under this subsection may be issued before or on |
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or after the occurrence of a catastrophic event in amounts |
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necessary to fund not more than 45 percent of the required solvency |
|
level determined under Subchapter N. All catastrophe area public |
|
securities obligations shall be paid in the manner prescribed by |
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Section 2210.609, if applicable, and Section 2210.611. |
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(d) For [Subdivisions (1) and (2), an additional $200
|
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million shall be assessed against the members of the association,
|
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as provided by Subsection (b); and
|
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[(4)] losses in excess of those paid under Subsections |
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(b) and (c), Class 1 public securities may be issued before or on or |
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after the occurrence of a catastrophic event in the manner |
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prescribed by Subchapter M. Class 1 post-event public securities |
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may be issued only on or after a named storm has caused damage in the |
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seacoast territory and the board of directors has determined that |
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the combination of association reserves, amounts available in the |
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catastrophe reserve trust fund, catastrophe area public |
|
securities, and Class 1 pre-event public securities, if any, are |
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insufficient to pay the losses. The board of directors may request |
|
the commissioner to authorize Class 1 public securities in an |
|
amount sufficient to pay projected losses up to an amount not to |
|
exceed 50 percent of the required solvency level determined under |
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Subchapter N. All Class 1 public securities obligations shall be |
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paid in the manner prescribed by Section 2210.609, if applicable, |
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and Section 2210.612. |
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(e) For losses in excess of those paid under Subsections |
|
(b)-(d), the board of directors of the association may request the |
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commissioner to authorize member company public securities, in an |
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amount not to exceed $500 million, to be issued after a catastrophic |
|
event in the manner prescribed by Subchapter M. Member company |
|
public securities obligations shall be paid in the manner |
|
prescribed by Section 2210.613. |
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(f) For losses in excess of those paid under Subsections |
|
(b)-(e), the board of directors may request the commissioner to |
|
authorize Class 2 post-event public securities to be issued under |
|
this subsection on or after a catastrophic event in the manner |
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prescribed by Subchapter M. The commissioner may authorize Class 2 |
|
post-event public securities under this subsection to pay losses |
|
above the required solvency level determined under Subchapter N, in |
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an amount sufficient to pay losses but not to exceed $3 billion. |
|
All Class 2 post-event public securities obligations shall be paid |
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in the manner prescribed by Section 2210.614. |
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(g) Notwithstanding any other provision of this section, |
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the association may pay losses in excess of premium and other |
|
revenue of the association with reinsurance proceeds from |
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reinsurance purchased by the association [Subdivisions (1), (2),
|
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and (3) shall be assessed against members of the association, as
|
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provided by Subsection (b)]. |
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[(b)
The proportion of the losses allocable to each insurer
|
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under Subsections (a)(1), (3), and (4) shall be determined in the
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manner used to determine each insurer's participation in the
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association for the year under Section 2210.052.
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[(c)
An insurer may credit an amount paid in accordance with
|
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Subsection (a)(4) in a calendar year against the insurer's premium
|
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tax under Chapter 221. The tax credit authorized under this
|
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subsection shall be allowed at a rate not to exceed 20 percent per
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year for five or more successive years following the year of payment
|
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of the claims. The balance of payments made by the insurer and not
|
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claimed as a premium tax credit may be reflected in the books and
|
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records of the insurer as an admitted asset of the insurer for all
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purposes, including exhibition in an annual statement under Section
|
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862.001.] |
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SECTION 8. Section 2210.060(c), Insurance Code, is amended |
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to read as follows: |
|
(c) Subsection (a) does not authorize the association to |
|
indemnify a member of the association for participating in the |
|
assessments made by [writings, expenses, profits, and losses of] |
|
the association in the manner provided by this chapter. |
|
SECTION 9. Subchapter B, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.061 to read as follows: |
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Sec. 2210.061. ELIGIBLE SURPLUS LINES INSURERS. (a) An |
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eligible surplus lines insurer may not be a member of the |
|
association and is not subject to assessment as a member of the |
|
association. |
|
(b) Each surplus lines agent placing property insurance |
|
through an eligible surplus lines insurer shall collect from the |
|
policyholder and shall remit to the association a surplus lines |
|
policy fee on all premiums collected after January 1, 2008, for all |
|
insurance written by the surplus lines agent for a policy from an |
|
eligible surplus lines insurer for all risks on real property and |
|
contents in first tier coastal counties. By procuring or selling |
|
insurance on property in this state through an eligible surplus |
|
lines insurer, each surplus lines agent described by this |
|
subsection agrees to be subject to the provisions of this chapter, |
|
and to collect and remit the surplus lines policy fee described by |
|
this section. |
|
(c) The surplus lines policy fee shall be five percent of |
|
the total policy premium, but the fee may not be considered premium |
|
and is not subject to premium taxes or commissions. Failure to pay |
|
the surplus lines policy fee shall be treated as a failure to pay |
|
premium. For purposes of this subsection, "total policy premium" |
|
includes taxes and commissions. |
|
(d) Not later than the 20th day after the last day of each |
|
calendar quarter, each surplus lines agent placing insurance |
|
through an eligible surplus lines insurer shall remit directly to |
|
the association all surplus lines policy fees collected in the |
|
preceding quarter. |
|
SECTION 10. The heading to Subchapter C, Chapter 2210, |
|
Insurance Code, is amended to read as follows: |
|
SUBCHAPTER C. ASSOCIATION BOARD OF DIRECTORS; GENERAL POWERS AND |
|
DUTIES OF BOARD OF DIRECTORS |
|
SECTION 11. Section 2210.101, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.101. ACCOUNTABLE TO GOVERNOR AND COMMISSIONER. |
|
The board of directors is responsible and accountable to the |
|
governor and the commissioner. |
|
SECTION 12. Section 2210.102, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.102. COMPOSITION. (a) The board of directors is |
|
composed of seven [the following nine] members appointed by the |
|
governor in accordance with this section. |
|
(b) Three members must be employed by or affiliated with, |
|
other than as agents, [:
|
|
[(1) five representatives of different] insurers who |
|
are members of the association. |
|
(c) Two members must be [, elected by the members as
|
|
provided by the plan of operation;
|
|
[(2) two] public representatives, one of whom [who are
|
|
nominated by the office of public insurance counsel and who], as of |
|
the date of the appointment, resides[:
|
|
[(A) reside] in or owns property in the seacoast |
|
territory, and one of whom, as of the date of the appointment, does |
|
not reside in or own property in the seacoast territory. |
|
(d) At least two members must, but not more than two members |
|
may, be [a catastrophe area; and
|
|
[(B) are policyholders of the association; and
|
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[(3) two] general property and casualty agents |
|
licensed under this code, one of whom, as of the date of the |
|
appointment, maintains the agent's principal office in the seacoast |
|
territory, and one of whom, as of the date of the appointment, does |
|
not maintain the agent's principal office in the seacoast |
|
territory. |
|
(e) All members must have [:
|
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[(A) who have] demonstrated experience in |
|
insurance, general business, or actuarial principles sufficient to |
|
make the success of the association probable[; and
|
|
[(B)
whose principal offices, as of the date of
|
|
the appointment, are located in a catastrophe area]. |
|
[(b)
The persons appointed under Subsections (a)(2) and (3)
|
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must be from different counties.] |
|
SECTION 13. Section 2210.103, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.103. TERMS. (a) Members of the board of |
|
directors serve two-year [three-year staggered] terms[, with the
|
|
terms of three members expiring on the third Tuesday of March of
|
|
each year]. |
|
(b) A person may serve on the board of directors for not more |
|
than three consecutive full terms[, not to exceed nine years]. |
|
(c) The governor shall appoint a replacement in the manner |
|
provided by Section 2210.102 for a member who leaves or is removed |
|
from the board of directors. |
|
SECTION 14. Section 2210.104, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.104. OFFICERS. The board of directors shall |
|
elect from the board's membership an executive committee consisting |
|
of a presiding officer, assistant presiding officer, and |
|
secretary-treasurer. [At least one of the officers must be a member
|
|
appointed under Section 2210.102(a)(2) or (3).] |
|
SECTION 15. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.1051 to read as follows: |
|
Sec. 2210.1051. MEETINGS OF BOARD OF DIRECTORS. (a) |
|
Notwithstanding Chapter 551, Government Code, or any other law, |
|
members of the board of directors may meet by telephone conference |
|
call, video conference, or other similar telecommunication method. |
|
The board may use telephone conference call, video conference, or |
|
other similar telecommunication method for purposes of |
|
establishing a quorum or voting or for any other meeting purpose in |
|
accordance with this subsection and Subsection (b). This |
|
subsection applies without regard to the subject matter discussed |
|
or considered by the members of the board at the meeting. |
|
(b) A meeting held by telephone conference call, video |
|
conference, or other similar telecommunication method: |
|
(1) is subject to the notice requirements applicable |
|
to other meetings of the board of directors; |
|
(2) may not be held unless notice of the meeting |
|
specifies the location of the meeting; |
|
(3) must be audible to the public at the location |
|
specified in the notice under Subdivision (2); and |
|
(4) must provide two-way audio communication between |
|
all members of the board attending the meeting during the entire |
|
meeting, and if the two-way audio communication link with members |
|
attending the meeting is disrupted so that a quorum of the board is |
|
no longer participating in the meeting, the meeting may not |
|
continue until the two-way audio communication link is |
|
reestablished. |
|
SECTION 16. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.107 to read as follows: |
|
Sec. 2210.107. PRIMARY BOARD OBJECTIVES. The primary |
|
objectives of the board of directors are to ensure that the |
|
association: |
|
(1) operates in accordance with this chapter and |
|
commissioner rules; |
|
(2) complies with sound insurance principles; and |
|
(3) meets the solvency standards imposed under this |
|
chapter. |
|
SECTION 17. Section 2210.151, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.151. ADOPTION OF PLAN OF OPERATION. With the |
|
advice of the board of directors, the commissioner by rule shall |
|
adopt the plan of operation to provide[:
|
|
[(1)] Texas windstorm and hail insurance in a |
|
catastrophe area[; and
|
|
[(2)
Texas fire and explosion insurance in an
|
|
inadequate fire insurance area]. |
|
SECTION 18. Section 2210.202(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) A person who has an insurable interest in insurable |
|
property may apply to the association for insurance coverage |
|
provided under the plan of operation and an inspection of the |
|
property, subject to any rules[, including any inspection fee,] |
|
established by the board of directors and approved by the |
|
commissioner. In order to be eligible for insurance through the |
|
association, an applicant must demonstrate, in the manner |
|
established in the plan of operation, inability to obtain |
|
insurance coverage from insurers authorized to engage in the |
|
business of property and casualty insurance in this state. |
|
SECTION 19. Section 2210.203, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) Notwithstanding Subsection (a), if all or any part of |
|
the property for which an application for new or renewal insurance |
|
coverage is made is located in Zone V or another similar zone with |
|
an additional hazard associated with storm waves, as defined by the |
|
National Flood Insurance Program, and if flood insurance under that |
|
federal program is available, the association may not issue a new or |
|
renewal insurance policy unless evidence that the property is |
|
covered by a flood insurance policy is submitted to the |
|
association. If that flood insurance is unavailable in any portion |
|
of the seacoast territory, an association policy insuring a |
|
residential structure described by Section 2210.004(g) is subject |
|
to a premium surcharge for the insurance coverage obtained through |
|
the association in an amount equal to not less than 10 percent of |
|
the premium, as set by the commissioner after notice and a hearing. |
|
SECTION 20. Subchapter E, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.210 to read as follows: |
|
Sec. 2210.210. NOTICE TO APPLICANTS FOR INSURANCE AND |
|
POLICYHOLDERS; CONSUMER INFORMATION. (a) Each application for |
|
insurance and each policy issued by the association must include a |
|
notice as provided by this section. The commissioner by rule may |
|
prescribe specific requirements for the notice. The notice must be |
|
substantially as follows: |
|
IMPORTANT NOTICE TO TEXAS WINDSTORM INSURANCE |
|
ASSOCIATION POLICYHOLDERS |
|
Insurance policies issued by the Texas Windstorm Insurance |
|
Association are not guaranteed by the state or federal government. |
|
In the event of a major catastrophe, the association may not have |
|
sufficient funding resources to pay all losses to all policyholders |
|
suffering damage. In such an event, you may be paid less than the |
|
full amount of damages that you suffer. You may obtain additional |
|
information as to the association's potential exposure and its |
|
available funding resources at www.tdi.state.tx.us. |
|
(b) The department shall establish a link on the |
|
department's Internet website through which applicants for |
|
insurance coverage through the association and association |
|
policyholders may obtain information in a format easily understood |
|
about the association's exposure and available resources. |
|
SECTION 21. Sections 2210.251(a) through (f), Insurance |
|
Code, are amended to read as follows: |
|
(a) Except as provided by this section, to be considered |
|
insurable property eligible for windstorm and hail insurance |
|
coverage from the association, a structure that is constructed or |
|
repaired or to which additions are made on or after January 1, 1988, |
|
must be inspected [or approved] by the association [department] for |
|
compliance with the plan of operation. |
|
(b) After January 1, 2004, for geographic areas specified by |
|
the commissioner, the board of directors [commissioner by rule] |
|
shall recognize for the purposes of this chapter [adopt] the 2003 |
|
International Residential Code for one- and two-family dwellings |
|
published by the International Code Council. For those geographic |
|
areas, the board of directors [commissioner by rule] may recognize |
|
[adopt] a subsequent edition of that code and [may adopt] any |
|
supplements published by the International Code Council and |
|
amendments to that code. |
|
(c) After January 1, 2004, a person must submit a notice of a |
|
windstorm inspection to the association [unit responsible for
|
|
certification of windstorm inspections at the department] before |
|
beginning to construct, alter, remodel, enlarge, or repair a |
|
structure. |
|
(d) A structure constructed or repaired or to which |
|
additions were made before January 1, 1988, that is located in an |
|
area that was governed at the time of the construction, repair, or |
|
addition by a building code recognized by the association is |
|
insurable property eligible for windstorm and hail insurance |
|
coverage from the association without compliance with the |
|
inspection [or approval] requirements of this section or the plan |
|
of operation. |
|
(e) A structure constructed or repaired or to which |
|
additions were made before January 1, 1988, that is located in an |
|
area not governed by a building code recognized by the association |
|
is insurable property eligible for windstorm and hail insurance |
|
coverage from the association without compliance with the |
|
inspection [or approval] requirements of this section or the plan |
|
of operation if the structure was previously insured by an insurer |
|
authorized to engage in the business of insurance in this state and |
|
the structure is in essentially the same condition as when |
|
previously insured, except for normal wear and tear, and is without |
|
any structural change other than a change made according to code. |
|
For purposes of this subsection, evidence of previous insurance |
|
coverage includes: |
|
(1) a copy of a previous insurance policy; |
|
(2) copies of canceled checks or agent's records that |
|
show payments for previous policies; and |
|
(3) a copy of the title to the structure or mortgage |
|
company records that show previous policies. |
|
(f) The association [department] shall issue a certificate |
|
of compliance for each structure that qualifies for coverage. The |
|
certificate is evidence of insurability of the structure by the |
|
association. |
|
SECTION 22. Section 2210.252, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.252. INTERNATIONAL RESIDENTIAL CODE BUILDING |
|
SPECIFICATIONS. (a) After January 1, 2004, for geographic areas |
|
specified by the commissioner, the association [commissioner by
|
|
rule] may supplement the plan of operation building specifications |
|
with the structural provisions of the International Residential |
|
Code for one- and two-family dwellings, as published by the |
|
International Code Council or an analogous entity recognized by the |
|
board of directors [department]. |
|
(b) For a geographic area specified under Subsection (a), |
|
the board of directors [commissioner by rule] may recognize [adopt] |
|
a subsequent edition of the International Residential Code for |
|
one- and two-family dwellings and [may adopt] a supplement |
|
published by the International Code Council or an amendment to that |
|
code. |
|
SECTION 23. Sections 2210.254(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) For purposes of this chapter, a "qualified inspector" |
|
includes: |
|
(1) a person determined by the board of directors |
|
[department] to be qualified because of training or experience to |
|
perform building inspections; |
|
(2) a licensed professional engineer who meets the |
|
requirements specified by the board of directors [commissioner
|
|
rule] for appointment to conduct windstorm inspections; and |
|
(3) an inspector who: |
|
(A) is certified by the International Code |
|
Council, the Building Officials and Code Administrators |
|
International, Inc., the International Conference of Building |
|
Officials, or the Southern Building Code Congress International, |
|
Inc.; |
|
(B) has certifications as a buildings inspector |
|
and coastal construction inspector; and |
|
(C) complies with other requirements specified |
|
by the board of directors [commissioner rule]. |
|
(b) A windstorm inspection may be performed only by a |
|
qualified inspector who is employed by or under contract with the |
|
association. |
|
SECTION 24. Section 2210.255, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.255. APPOINTMENT OF LICENSED ENGINEER AS |
|
INSPECTOR. (a) On request of an engineer licensed by the Texas |
|
Board of Professional Engineers, the association may [commissioner
|
|
shall] appoint the engineer as an inspector under this subchapter |
|
on receipt of information satisfactory to the board of directors |
|
[not later than the 10th day after the date the engineer delivers to
|
|
the commissioner information demonstrating] that the engineer is |
|
qualified to perform windstorm inspections under this subchapter. |
|
(b) The board of directors shall consult with the |
|
commissioner regarding [shall adopt rules establishing] the |
|
information to be considered in appointing engineers under this |
|
section. |
|
SECTION 25. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.258 to read as follows: |
|
Sec. 2210.258. SURCHARGE FOR CERTAIN NONCOMPLIANT |
|
CONSTRUCTION. (a) For purposes of this section, property is not in |
|
compliance with mandatory building codes if: |
|
(1) the property has not been inspected for compliance |
|
with the plan of operation in accordance with Section 2210.251(a); |
|
or |
|
(2) a certificate of compliance has not been issued in |
|
accordance with Section 2210.251(f). |
|
(b) An applicant for coverage from the association or a |
|
policyholder of the association whose property is determined to not |
|
be in compliance as provided by Subsection (a) is subject to a |
|
premium surcharge for insurance coverage obtained through the |
|
association. The surcharge shall be an amount not less than an |
|
amount equal to 10 percent of the premium, as determined by the |
|
commissioner after notice and a hearing. |
|
SECTION 26. Sections 2210.351(a), (c), and (d), Insurance |
|
Code, are amended to read as follows: |
|
(a) The association shall [must] file with the department in |
|
the manner prescribed by Section 2251.101 each manual of |
|
classifications, rules, rates, including condition charges, and |
|
each rating plan, and each modification of those items that the |
|
association proposes to use. |
|
(c) After the filing has been made, the association may use |
|
a filed rate, and a filed rate is subject to disapproval by the |
|
commissioner in the manner prescribed by Subchapter C, Chapter |
|
2251. [As soon as reasonably possible after the filing has been
|
|
made, the commissioner in writing shall approve, modify, or
|
|
disapprove the filing.
A filing is considered approved unless
|
|
modified or disapproved on or before the 30th day after the date of
|
|
the filing.] |
|
(d) If at any time the commissioner determines that a filing |
|
in effect [approved] under Subsection (c) no longer meets the |
|
requirements of this chapter, the commissioner may disapprove [,
|
|
after a hearing held on at least 20 days' notice to the association
|
|
that specifies the matters to be considered at the hearing, issue an
|
|
order withdrawing approval of] the filing in the manner prescribed |
|
by Section 2251.104 for disapproval of a rate. [The order must
|
|
specify in what respects the commissioner determines that the
|
|
filing no longer meets the requirements of this chapter. An order
|
|
issued under this subsection may not take effect before the 30th day
|
|
after the date of issuance of the order.] |
|
SECTION 27. Sections 2210.355(b) and (g), Insurance Code, |
|
are amended to read as follows: |
|
(b) In adopting rates under this chapter, the association |
|
shall: |
|
(1) comply with the rate standards adopted under |
|
Section 2251.052, to the extent that those standards are determined |
|
by the commissioner to be applicable to the purposes of the |
|
association; |
|
(2) ensure that the rates are actuarially sound; and |
|
(3) include rating factors as necessary to: |
|
(A) fund the catastrophe reserve trust fund; |
|
(B) pay any public securities obligations in |
|
accordance with Subchapter M; and |
|
(C) pay all losses and expenses of the |
|
association, regardless of the ultimate source of funding for those |
|
losses and expenses [following must be considered:
|
|
[(1)
the past and prospective loss experience within
|
|
and outside this state of hazards for which insurance is made
|
|
available through the plan of operation, if any;
|
|
[(2)
expenses of operation, including acquisition
|
|
costs;
|
|
[(3)
a reasonable margin for profit and contingencies;
|
|
and
|
|
[(4)
all other relevant factors, within and outside
|
|
this state]. |
|
(g) A commission paid to an agent for an association policy |
|
must be reasonable, adequate, not unfairly discriminatory, and |
|
nonconfiscatory and may not exceed 10 percent with refund for any |
|
unearned portion. |
|
SECTION 28. Section 2210.356, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (b-1) to read as |
|
follows: |
|
(b) The catastrophe element used to develop rates under this |
|
subchapter [applicable to risks written by the association must be
|
|
uniform throughout the seacoast territory. The catastrophe element
|
|
of the rates] must be developed using industry data, association |
|
data, and catastrophe models approved by the department for use in |
|
association filings[:
|
|
[(1)
90 percent of both the monoline extended coverage
|
|
loss experience and related premium income for all insurers, other
|
|
than the association, for covered property located in the seacoast
|
|
territory, using not less than the most recent 30 years of
|
|
experience available; and
|
|
[(2)
100 percent of both the loss experience and
|
|
related premium income for the association for covered property,
|
|
using not less than the most recent 30 years of experience
|
|
available]. |
|
(b-1) The commissioner shall adopt rules establishing: |
|
(1) the procedure for approval by the department of |
|
catastrophe models used by the association in the development of |
|
its rates; and |
|
(2) the methodology of use for those models. |
|
SECTION 29. Subchapter H, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.364 to read as follows: |
|
Sec. 2210.364. REVIEW OF RATES. A person who is aggrieved |
|
by a rate under this subchapter may proceed as provided by Chapter |
|
2251. |
|
SECTION 30. Sections 2210.452(a), (c), and (d), Insurance |
|
Code, are amended to read as follows: |
|
(a) The commissioner shall adopt rules under which the |
|
association makes [members relinquish their net equity on an annual
|
|
basis as provided by those rules by making] payments to the |
|
catastrophe reserve trust fund. The trust fund may be used only to |
|
fund[:
|
|
[(1)] the obligations of the trust fund under Section |
|
2210.058 [2210.058(a); and
|
|
[(2)
the mitigation and preparedness plan established
|
|
under Section 2210.454 to reduce the potential for payments by
|
|
association members that give rise to tax credits in the event of
|
|
loss]. |
|
(c) At the end of each calendar year or policy year, the |
|
association shall pay the net gain from operations [equity] of the |
|
association [a member], including all premium and other revenue of |
|
the association in excess of incurred losses and operating |
|
expenses, to the trust fund or a reinsurance program approved by the |
|
commissioner. |
|
(d) The commissioner by rule shall establish the procedure |
|
relating to the disbursement of money from the trust fund to |
|
policyholders in the event of an occurrence or series of |
|
occurrences within a catastrophe area that results in a |
|
disbursement under Section 2210.058 [2210.058(a)]. |
|
SECTION 31. Section 2210.453, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.453. REINSURANCE PROGRAM. (a) The association may |
|
[shall]: |
|
(1) make payments into the trust fund; and [or] |
|
(2) purchase [establish a] reinsurance as part of the |
|
association's annual operating expenses to the extent [program] |
|
approved by the commissioner [department]. |
|
(b) With the approval of the commissioner [department], the |
|
association may purchase [establish a] reinsurance [program] that |
|
operates in addition to or in concert with the trust fund and with |
|
public securities and assessments authorized by this chapter. |
|
SECTION 32. Section 2210.454(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) Each state fiscal year, the department may fund the |
|
mitigation and preparedness plan using available funds [the
|
|
investment income of the trust fund in an amount not less than $1
|
|
million and not more than 10 percent of the investment income of the
|
|
prior fiscal year. From that amount and as part of that plan, the
|
|
department may use in each fiscal year $1 million for the windstorm
|
|
inspection program established under Section 2210.251]. |
|
SECTION 33. Section 2210.551, Insurance Code, is amended by |
|
adding Subsection (a-1) and amending Subsections (c) and (d) to |
|
read as follows: |
|
(a-1) This section does not apply to a matter subject to |
|
Section 2210.364. |
|
(c) If the association or any interested party is aggrieved |
|
by the action of the commissioner with respect to a ruling, order, |
|
or determination of the commissioner, the association or interested |
|
party may, not later than the 30th day after the date of the action, |
|
make a written request to the commissioner for a hearing on the |
|
action. |
|
(d) On 10 days' written notice of the time and place of the |
|
hearing, the commissioner shall conduct a hearing on the |
|
[association's] request of the association or interested party or |
|
the appeal from an act, ruling, or decision of the association, not |
|
later than the 30th day after the date of receipt of the request or |
|
appeal. |
|
SECTION 34. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapters M and N to read as follows: |
|
SUBCHAPTER M. PUBLIC SECURITIES PROGRAM |
|
Sec. 2210.601. PURPOSE. The legislature finds that issuing |
|
public securities to provide a method to raise funds to provide |
|
windstorm and hail insurance through the association in certain |
|
designated areas of the state is to benefit the public and to |
|
further a public purpose. |
|
Sec. 2210.602. DEFINITIONS. In this subchapter: |
|
(1) "Board" means the board of directors of the Texas |
|
Public Finance Authority. |
|
(2) "Catastrophe area public security" means public |
|
securities authorized to be issued before or on or after the |
|
occurrence of a catastrophic event by Section 2210.058(c). |
|
(3) "Class 1 public securities" means public |
|
securities authorized to be issued before or on or after the |
|
occurrence of a catastrophic event by Section 2210.058(d). |
|
(4) "Class 2 public securities" means public |
|
securities authorized to be issued on or after the occurrence of a |
|
catastrophic event by Section 2210.058(f). |
|
(5) "Credit agreement" has the meaning assigned by |
|
Chapter 1371, Government Code. |
|
(6) "Credit agreement obligation" means any premium, |
|
periodic payment, termination payment, or similar obligation under |
|
a credit agreement. |
|
(7) "Insurer" means each property and casualty insurer |
|
authorized to engage in the business of property and casualty |
|
insurance in this state. The term specifically includes a county |
|
mutual insurance company, a Lloyd's plan, and a reciprocal or |
|
interinsurance exchange. |
|
(8) "Member company public security" means public |
|
securities authorized to be issued after the occurrence of a |
|
catastrophic event by Section 2210.058(e). |
|
(9) "Public security" means a debt instrument or other |
|
public security obligation issued by the Texas Public Finance |
|
Authority for the purposes described by this subchapter and any |
|
credit agreement. |
|
(10) "Public security administrative expenses" means |
|
expenses incurred in issuing and administering public securities |
|
issued under this subchapter, including insurance costs and fees |
|
for paying agents, trustees, and attorneys, and for other |
|
professional services necessary to ensure compliance with |
|
applicable state or federal law. |
|
(11) "Public security obligations" means the |
|
principal, any premium, and interest on a public security, periodic |
|
payments or termination payments, or similar obligations with |
|
respect to a public security. |
|
(12) "Public security obligation revenue fund" means |
|
the dedicated trust fund established by the association outside the |
|
state treasury under this subchapter. |
|
(13) "Public security resolution" means the |
|
resolution or order authorizing public securities to be issued |
|
under this subchapter. |
|
Sec. 2210.603. APPLICABILITY OF OTHER LAWS. The board |
|
shall issue public securities under this subchapter in accordance |
|
with and subject to the requirements of Chapter 1232, Government |
|
Code, and other provisions of Title 9, Government Code, that apply |
|
to issuance of a public security by a state agency. In the event of |
|
a conflict, this subchapter controls. |
|
Sec. 2210.604. ISSUANCE OF PUBLIC SECURITIES AUTHORIZED. |
|
(a) At the request of the board of directors of the association and |
|
with the approval of the commissioner, the board shall issue public |
|
securities to: |
|
(1) fund the association, including funding necessary |
|
to: |
|
(A) establish and maintain reserves to pay |
|
claims; |
|
(B) pay incurred claims; |
|
(C) pay operating expenses; and |
|
(D) purchase reinsurance; |
|
(2) provide a reserve fund for the public securities; |
|
(3) capitalize interest for the period determined by |
|
the association, not to exceed two years; |
|
(4) pay public security administrative expenses; and |
|
(5) pay other costs related to the public securities |
|
as may be determined by the board. |
|
(b) The board may issue, on behalf of the association, |
|
public securities in an amount sufficient to fund the insured |
|
losses and operating expenses of the association as determined by |
|
the association and approved by the commissioner after at least 10 |
|
days' notice and a hearing if a hearing is requested by any person |
|
within the 10-day notice period. |
|
Sec. 2210.605. TERMS OF ISSUANCE. (a) The board shall |
|
determine the method of sale, type and form of public security, |
|
maximum interest rates, and other terms of the public securities |
|
that, in the board's judgment, best achieve the goals of the |
|
association and effect the borrowing at the lowest practicable |
|
cost. The board may enter into a credit agreement in connection |
|
with the public securities. |
|
(b) Public securities must include the name of the |
|
association. |
|
Sec. 2210.606. CONTENTS OF PUBLIC SECURITY RESOLUTION; |
|
ADMINISTRATION OF ACCOUNTS. (a) In a public security resolution, |
|
the board may: |
|
(1) provide for the flow of funds and the |
|
establishment, maintenance, and investment of funds and special |
|
accounts with regard to the public securities; and |
|
(2) make additional covenants with respect to the |
|
public securities and the designated income and receipts of the |
|
association pledged to the payment of the public securities. |
|
(b) The association shall administer the accounts in |
|
accordance with this subchapter. |
|
Sec. 2210.607. PUBLIC SECURITY PROCEEDS. (a) The proceeds |
|
of public securities may be deposited with a trustee selected by the |
|
association in consultation with the commissioner or if no trustee |
|
is selected, held by the comptroller in a dedicated trust fund |
|
outside the state treasury in the custody of the comptroller. |
|
(b) Any excess public security proceeds remaining after the |
|
purposes for which the public securities were issued are satisfied |
|
may be used to pay public security obligations or administrative |
|
expenses or pay, purchase, defease, or redeem outstanding public |
|
securities. If there are no outstanding public security obligations |
|
or public security administrative expenses, the excess proceeds |
|
shall be transferred to the catastrophe reserve trust fund. |
|
Sec. 2210.608. SOURCE OF PAYMENT; REVENUE FUND. (a) Public |
|
security obligations are payable only from the public security |
|
obligation revenue fund, into which the following are deposited: |
|
(1) the service fees on assessments established under |
|
Section 2210.611, 2210.612, 2210.613, or 2210.614, as applicable; |
|
or |
|
(2) other amounts that the association is authorized |
|
to levy, charge, and collect. |
|
(b) The board shall notify the association of the estimated |
|
amount of public security administrative expenses and the amount of |
|
the public security obligations each year in a period sufficient, |
|
as determined by the association, to permit the association to |
|
determine the availability of funds and assess a premium surcharge |
|
or other assessment if necessary. |
|
(c) The association shall deposit all revenue collected |
|
under Sections 2210.611 through 2210.614 in the public security |
|
obligation revenue fund. Money deposited in the fund may be |
|
invested as permitted by general law. Money in the fund required to |
|
be used to pay public security administrative expenses and public |
|
security obligations shall be transferred to the appropriate funds |
|
in the manner and at the time specified in the public security |
|
resolution to ensure timely payment of obligations and expenses. |
|
(d) The association shall provide for the payment of the |
|
public security administrative expenses and the public security |
|
obligations by irrevocably pledging revenues received from |
|
assessments, premiums, premium surcharges, and amounts on deposit |
|
in the public security obligation revenue fund, together with any |
|
reserve fund, as provided in the public security resolution and |
|
amounts realized under related credit agreements. |
|
(e) Revenue deposited into the public security obligation |
|
revenue fund that exceeds the amount of the public security |
|
obligations payable in that year and interest earned on the public |
|
security obligation fund may, in the discretion of the association, |
|
be: |
|
(1) used to pay public security obligations payable in |
|
the subsequent year, offsetting the amount of the premium surcharge |
|
or assessment that would otherwise be required to be levied for the |
|
year under this subchapter; |
|
(2) used to redeem, purchase, or defease outstanding |
|
public securities; or |
|
(3) deposited in the catastrophe reserve trust fund. |
|
(f) The public securities are obligations solely of the |
|
association and do not create a pledge, gift, or loan of the faith, |
|
credit, or taxing authority of this state. |
|
(g) Each public security must: |
|
(1) include a statement that the state is not |
|
obligated to pay any amount on the security and that the faith, |
|
credit, and taxing authority of this state are not pledged, given, |
|
or lent to those payments; and |
|
(2) state on the security's face that the security: |
|
(A) is payable solely from the revenue pledged |
|
for that purpose; and |
|
(B) is not and may not constitute a legal or moral |
|
obligation of the state. |
|
Sec. 2210.609. PAYMENT OF INTEREST; PAYMENT OF PRE-EVENT |
|
PUBLIC SECURITY OBLIGATIONS. (a) Except as provided by |
|
Subsection (b), the association shall pay all interest, and may pay |
|
principal, on any pre-event public security issued as described by |
|
Section 2210.058(c) or (d) from the existing premiums of the |
|
association. |
|
(b) If the association is unable to pay the public security |
|
obligations described by Subsection (a) with existing premiums, |
|
those public security obligations shall be paid from the service |
|
fees collected in accordance with Sections 2210.611 and 2210.612. |
|
Sec. 2210.610. REFINANCING PUBLIC SECURITIES. The |
|
association may request the board to refinance any public |
|
securities issued in accordance with Section 2210.058, whether |
|
pre-event or post-event public securities, with the refinanced |
|
public securities payable from the same sources as the original |
|
public securities. |
|
Sec. 2210.611. CATASTROPHE AREA PUBLIC SECURITY SERVICE |
|
FEE; PREMIUM SURCHARGE AND ASSESSMENT. (a) The catastrophe area |
|
public security obligations and administrative expenses shall be |
|
serviced as provided by this section. |
|
(b) For public securities, the proceeds of which are used to |
|
fund excess losses under Section 2210.058(c), the public security |
|
obligations and administrative expenses shall be collected from |
|
association policyholders each year until all outstanding public |
|
security obligations and administrative expenses have been |
|
satisfied and paid. |
|
(c) The service fee imposed on association policyholders |
|
under this section shall be determined and collected as provided by |
|
this subsection. The association shall determine the amount of a |
|
service fee imposed under this section at least annually. On |
|
approval by the commissioner of the amount of a service fee after at |
|
least 10 days' notice and a hearing, if a hearing is requested by |
|
any person within the 10-day notice period, the association shall |
|
charge the service fee to its policyholders. The service fee must |
|
be set in an amount sufficient to pay all public security |
|
obligations and administrative expenses. The service fee shall be |
|
collected in the form of a premium surcharge and shall be remitted |
|
to the association as required by the commissioner by rule. The |
|
service fees collected under this subsection are separate charges |
|
in addition to premiums collected and are not subject to premium |
|
taxes or commissions. For purposes of policy cancellation, failure |
|
by a policyholder to pay a premium surcharge imposed under this |
|
subsection is equivalent to failure to pay premium. |
|
Sec. 2210.612. SERVICE FEE: CLASS 1 PUBLIC SECURITIES; |
|
PREMIUM SURCHARGE. (a) A fee to service Class 1 public securities |
|
issued by the association in accordance with Section 2210.058(d) |
|
shall be collected by each insurer, the association, and the FAIR |
|
Plan Association from policyholders who reside or have operations |
|
in, or whose insured property is located in, a catastrophe area. |
|
(b) The association shall determine the amount of a service |
|
fee imposed under Subsection (a) at least annually. |
|
(c) On approval by the commissioner after at least 10 days' |
|
notice and a hearing, if a hearing is requested by any person within |
|
the 10-day notice period, each insurer, the association, and the |
|
FAIR Plan Association shall charge the service fee to the |
|
policyholders described by Subsection (a). The service fee must be |
|
set in an amount sufficient to pay all public security obligations |
|
and administrative expenses. The service fee shall be collected in |
|
the form of a premium surcharge and shall be remitted to the |
|
association as required by the commissioner by rule. |
|
(d) The premium surcharge shall apply to all insurance |
|
policies for all property and casualty lines other than workers' |
|
compensation, accident and health, and medical malpractice. The |
|
service fees collected in the form of a premium surcharge under this |
|
section are separate charges in addition to premiums collected and |
|
are not subject to premium taxes or commissions. |
|
(e) For purposes of policy cancellation, failure by a |
|
policyholder to pay a premium surcharge imposed under this section |
|
is equivalent to failure to pay premium. |
|
Sec. 2210.613. POST-EVENT ASSESSMENT: MEMBER COMPANY |
|
PUBLIC SECURITIES. (a) An assessment to service member company |
|
public security obligations and administrative expenses issued by |
|
the association after a catastrophic event shall be assessed to and |
|
collected from each member company. |
|
(b) The association shall determine the amount of each |
|
member company assessment at least annually. The assessment must be |
|
set in an amount sufficient to pay all public security obligations |
|
and administrative expenses. |
|
(c) Each member company shall be assessed with the |
|
proportion of the loss allocable to each member company determined |
|
in the same manner as its participation in the association has been |
|
determined for the year under Section 2210.052. |
|
Sec. 2210.614. POST-EVENT SERVICE FEE: CLASS 2 PUBLIC |
|
SECURITIES; PREMIUM SURCHARGE. (a) A fee to service Class 2 public |
|
securities issued by the association after a catastrophic event |
|
shall be collected by each insurer, the association, and the FAIR |
|
Plan Association from policyholders who reside or have operations |
|
in, or whose insured property is located in, this state. |
|
(b) The association shall determine the amount of a service |
|
fee imposed under Subsection (a) at least annually. |
|
(c) On approval by the commissioner after at least 10 days' |
|
notice and a hearing, if a hearing is requested by any person within |
|
the 10-day notice period, each insurer, the association, and the |
|
FAIR Plan Association shall charge the service fee to the |
|
policyholders described by Subsection (a). The service fee must be |
|
set in an amount sufficient to pay all public security obligations |
|
and administrative expenses. The service fee shall be collected in |
|
the form of a premium surcharge and shall be remitted to the |
|
association as required by the commissioner by rule. |
|
(d) The premium surcharge shall apply to all insurance |
|
policies for all property and casualty lines other than workers' |
|
compensation, accident and health, and medical malpractice. The |
|
service fees collected in the form of a premium surcharge under this |
|
section are separate charges in addition to premiums collected and |
|
are not subject to premium taxes or commissions. |
|
(e) For purposes of policy cancellation, failure by a |
|
policyholder to pay a premium surcharge imposed under this section |
|
is equivalent to failure to pay premium. |
|
Sec. 2210.615. EXEMPTION FROM TAXATION. Public securities |
|
issued under this subchapter, any interest from those public |
|
securities, and all assets pledged to secure the payment of the |
|
public securities are free from taxation by the state or a political |
|
subdivision of this state. |
|
Sec. 2210.616. AUTHORIZED INVESTMENTS. Public securities |
|
issued under this subchapter are authorized investments under |
|
Subchapter B, Chapter 424, and Subchapters C and D, Chapter 425. |
|
Sec. 2210.617. STATE PLEDGE REGARDING PUBLIC SECURITY OWNER |
|
RIGHTS AND REMEDIES. (a) The state pledges to and agrees with the |
|
owners of public securities issued in accordance with this |
|
subchapter that the state will not limit or alter the rights vested |
|
in the association to fulfill the terms of agreements made with the |
|
owners or in any way impair the rights and remedies of those owners |
|
until the public security obligations are fully discharged. |
|
(b) The board may include the state's pledge and agreement |
|
under Subsection (a) in a public security resolution. |
|
Sec. 2210.618. PAYMENT ENFORCEABLE BY MANDAMUS. A writ of |
|
mandamus from any Travis County district court and any other legal |
|
or equitable remedy are available to a party in interest to require |
|
the association or another party to fulfill an agreement or perform |
|
a function or duty under: |
|
(1) this subchapter; |
|
(2) the Texas Constitution; or |
|
(3) a public security resolution. |
|
Sec. 2210.619. NO PERSONAL LIABILITY. The members of the |
|
association, association employees, the board, the employees of the |
|
Texas Public Finance Authority, the commissioner, and department |
|
employees are not personally liable as a result of exercising the |
|
rights and responsibilities granted under this subchapter. |
|
SUBCHAPTER N. ASSOCIATION SOLVENCY REQUIREMENTS |
|
Sec. 2210.651. SOLVENCY DUTIES. The board of directors |
|
shall maintain the required solvency level of the association. |
|
Sec. 2210.652. REQUIRED SOLVENCY LEVEL; FUNDING SOURCES. |
|
(a) For purposes of this chapter, the "required solvency level" is |
|
the level of available internal association funding necessary to |
|
pay 100 percent of losses for which the association is liable and |
|
that result from a probable maximum loss determined by the board of |
|
directors under Section 2210.654. |
|
(b) The board of directors shall maintain the funding of the |
|
association at a level sufficient to achieve the required solvency |
|
level. |
|
(c) The association shall derive the funding to maintain the |
|
required solvency level from a combination of: |
|
(1) association reserves; |
|
(2) available funds in the catastrophe reserve trust |
|
fund; |
|
(3) reinsurance purchased at any level; |
|
(4) catastrophe area public securities; and |
|
(5) Class 1 pre-event and post-event public |
|
securities, to be issued only as required in accordance with |
|
Section 2210.058(d). |
|
(d) As prescribed by Section 2210.058(d), Class 1 pre-event |
|
and post-event public securities may not be used to achieve more |
|
than 50 percent of the required solvency level. |
|
Sec. 2210.653. CERTIFICATION; ANNUAL SOLVENCY REPORT. (a) |
|
The board of directors shall certify to the governor, the |
|
lieutenant governor, the speaker of the house of representatives, |
|
and the commissioner, not later than April 15 of each calendar year, |
|
that the required solvency level of the association is satisfied |
|
for that calendar year. |
|
(b) The board of directors shall make the certification in |
|
the manner prescribed by commissioner rule. |
|
(c) After calendar year 2008, in any calendar year, the |
|
association may not issue any new coverage after April 15 if the |
|
board of directors has not certified the required solvency level in |
|
the annual solvency report. This subsection does not apply to |
|
renewal of a policy issued through the association. |
|
Sec. 2210.654. DETERMINATION OF PROBABLE MAXIMUM LOSS. (a) |
|
Not later than April 1 of each calendar year, to establish the |
|
required solvency level under Section 2210.652, the board of |
|
directors shall determine the association's current probable |
|
maximum loss, based on an average of at least two recognized |
|
catastrophe models, as follows: |
|
(1) for calendar years 2007 and 2008, at not less than |
|
a one in 50 year occurrence; |
|
(2) for calendar year 2009, at not less than a one in |
|
75 year occurrence; and |
|
(3) for each calendar year after calendar year 2009, |
|
at not less than a one in 100 year occurrence. |
|
(b) The board of directors must ensure the ability of the |
|
association to generate funding sufficient to cover the probable |
|
maximum loss without reliance on any member company public |
|
securities or Class 2 post-event public securities. |
|
SECTION 35. Section 2251.003, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) Except as otherwise provided by Chapter 2210, |
|
Subchapters B and C apply to the Texas Windstorm Insurance |
|
Association. |
|
SECTION 36. The following laws are repealed: |
|
(1) Sections 2210.003(5) and (12), Insurance Code; |
|
(2) Section 2210.059, Insurance Code; |
|
(3) Section 2210.351(b), Insurance Code; |
|
(4) Sections 2210.352, 2210.353, and 2210.354, |
|
Insurance Code; |
|
(5) Sections 2210.355(c), (d), and (e), Insurance |
|
Code; |
|
(6) Sections 2210.356(a), (c), and (d), Insurance |
|
Code; |
|
(7) Section 2210.359, Insurance Code; |
|
(8) Section 2210.360, Insurance Code; |
|
(9) Section 2210.502(c), Insurance Code; and |
|
(10) Subchapter I, Chapter 2210, Insurance Code. |
|
SECTION 37. (a) The board of directors of the Texas |
|
Windstorm Insurance Association established under Section |
|
2210.102, Insurance Code, as that section existed before amendment |
|
by this Act, is abolished effective December 31, 2007. |
|
(b) The governor shall appoint the members of the board of |
|
directors of the Texas Windstorm Insurance Association under |
|
Section 2210.102, Insurance Code, as amended by this Act, for terms |
|
beginning on January 1, 2008. |
|
(c) The term of a person who is serving as a member of the |
|
board of directors of the Texas Windstorm Insurance Association |
|
immediately before the abolition of that board under Subsection (a) |
|
of this section expires on December 31, 2007. Such a person is |
|
eligible for appointment by the governor to the new board of |
|
directors of the Texas Windstorm Insurance Association under |
|
Section 2210.102, Insurance Code, as amended by this Act. |
|
SECTION 38. The commissioner of insurance shall adopt rules |
|
as required by Section 2210.356(b-1), Insurance Code, as added by |
|
this Act, not later than the 180th day after the effective date of |
|
this Act. |
|
SECTION 39. An assessment may not be made before the end of |
|
the 2007-2008 state fiscal biennium under Chapter 2210, Insurance |
|
Code, as amended by this Act, against any member of the Texas |
|
Windstorm Insurance Association until the comptroller has |
|
certified that any tax credits allowable to that member under |
|
Chapter 2210, Insurance Code, as that chapter existed immediately |
|
before amendment by this Act, may be taken within available revenue |
|
that has been certified by the comptroller. |
|
SECTION 40. (a) Except as provided by Subsection (b) of |
|
this section, this Act takes effect immediately if it receives a |
|
vote of two-thirds of all the members elected to each house, as |
|
provided by Section 39, Article III, Texas Constitution. If this |
|
Act does not receive the vote necessary for immediate effect, this |
|
Act takes effect September 1, 2007. |
|
(b) The change in law made by this Act to Sections 2210.251, |
|
2210.252, 2210.254, and 2210.255, Insurance Code, takes effect |
|
September 1, 2008. |