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  H.B. No. 4409
 
 
 
 
AN ACT
  relating to emergency preparation and management.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter A, Chapter 418, Government Code, is
  amended by adding Section 418.006 to read as follows:
         Sec. 418.006.  CIVIL LIABILITY. An officer or employee of a
  state or local agency, or a volunteer acting at the direction of an
  officer or employee of a state or local agency, is considered for
  purposes of Section 431.085 to be a member of the state military
  forces ordered into active service of the state by proper authority
  and is considered to be discharging a duty in that capacity if the
  person is performing an activity related to sheltering or housing
  individuals in connection with the evacuation of an area stricken
  or threatened by disaster.
         SECTION 2.  Section 418.043, Government Code, is amended to
  read as follows:
         Sec. 418.043.  OTHER POWERS AND DUTIES. The division shall:
               (1)  determine requirements of the state and its
  political subdivisions for food, clothing, and other necessities in
  event of a disaster;
               (2)  procure and position supplies, medicines,
  materials, and equipment;
               (3)  adopt standards and requirements for local and
  interjurisdictional emergency management plans;
               (4)  periodically review local and interjurisdictional
  emergency management plans;
               (5)  coordinate deployment of mobile support units;
               (6)  establish and operate training programs and
  programs of public information or assist political subdivisions and
  emergency management agencies to establish and operate the
  programs;
               (7)  make surveys of public and private industries,
  resources, and facilities in the state that are necessary to carry
  out the purposes of this chapter;
               (8)  plan and make arrangements for the availability
  and use of any private facilities, services, and property and
  provide for payment for use under terms and conditions agreed on if
  the facilities are used and payment is necessary;
               (9)  establish a register of persons with types of
  training and skills important in disaster mitigation,
  preparedness, response, and recovery;
               (10)  establish a register of mobile and construction
  equipment and temporary housing available for use in a disaster;
               (11)  assist political subdivisions in developing
  plans for the humane evacuation, transport, and temporary
  sheltering of service animals and household pets in a disaster;
               (12)  prepare, for issuance by the governor, executive
  orders and regulations necessary or appropriate in coping with
  disasters;
               (13)  cooperate with the federal government and any
  public or private agency or entity in achieving any purpose of this
  chapter and in implementing programs for disaster mitigation,
  preparation, response, and recovery; [and]
               (14)  define "individuals with special needs" in the
  context of a disaster; and
               (15)  do other things necessary, incidental, or
  appropriate for the implementation of this chapter.
         SECTION 3.  Subchapter F, Chapter 418, Government Code, is
  amended by adding Section 418.126 to read as follows:
         Sec. 418.126.  PRE-EVENT DISASTER RESPONSE CONTRACTS. (a)
  The General Land Office shall solicit proposals for and enter into
  one or more pre-event contracts that may be activated by the office
  in the event of a weather-related disaster declaration to obtain
  services for debris removal from beaches as needed following the
  disaster.
         (b)  The Texas Department of Transportation shall solicit
  proposals for and enter into one or more pre-event contracts that
  may be activated by the department in the event of a weather-related
  disaster declaration to obtain services for debris removal from the
  state highway system as needed following the disaster.
         (c)  The Texas Department of Housing and Community Affairs
  shall solicit proposals for and enter into one or more pre-event
  contracts that may be activated by the department in the event of a
  weather-related disaster declaration to obtain temporary or
  emergency housing as needed following the disaster.
         (d)  Services obtained under a pre-event contract under this
  section may be paid for with money from the disaster contingency
  fund under Section 418.073.
         SECTION 4.  Subtitle G, Title 10, Government Code, is
  amended by adding Chapter 2311 to read as follows:
  CHAPTER 2311. ENERGY SECURITY TECHNOLOGIES FOR CRITICAL
  GOVERNMENTAL FACILITIES
         Sec. 2311.001.  DEFINITIONS. In this chapter:
               (1)  "Combined heating and power system" means a system
  that:
                     (A)  is located on the site of a facility;
                     (B)  is the primary source of both electricity and
  thermal energy for the facility;
                     (C)  can provide all of the electricity needed to
  power the facility's critical emergency operations for at least 14
  days; and
                     (D)  has an overall efficiency of energy use that
  exceeds 60 percent.
               (2)  "Critical governmental facility" means a building
  owned by the state or a political subdivision of the state that is
  expected to:
                     (A)  be continuously occupied;
                     (B)  maintain operations for at least 6,000 hours
  each year;
                     (C)  have a peak electricity demand exceeding 500
  kilowatts; and
                     (D)  serve a critical public health or public
  safety function during a natural disaster or other emergency
  situation that may result in a widespread power outage, including
  a:
                           (i)  command and control center;
                           (ii)  shelter;
                           (iii)  prison or jail;
                           (iv)  police or fire station;
                           (v)  communications or data center;
                           (vi)  water or wastewater facility;
                           (vii)  hazardous waste storage facility;
                           (viii)  biological research facility;
                           (ix)  hospital; or
                           (x)  food preparation or food storage
  facility.
         Sec. 2311.002.  COMBINED HEATING AND POWER SYSTEMS. When
  constructing or extensively renovating a critical governmental
  facility or replacing major heating, ventilation, and
  air-conditioning equipment for a critical governmental facility,
  the entity with charge and control of the facility shall evaluate
  whether equipping the facility with a combined heating and power
  system would result in expected energy savings that would exceed
  the expected costs of purchasing, operating, and maintaining the
  system over a 20-year period. The entity may equip the facility
  with a combined heating and power system if the expected energy
  savings exceed the expected costs.
         SECTION 5.  Section 2210.001, Insurance Code, is amended to
  read as follows:
         Sec. 2210.001.  PURPOSE. The primary purpose of the Texas
  Windstorm Insurance Association is the provision of an [An]
  adequate market for windstorm and[,] hail[, and fire] insurance in
  the seacoast territory of this state. The legislature finds that
  the provision of adequate windstorm and hail insurance is necessary
  to the economic welfare of this state, and without that insurance,
  the orderly growth and development of this state would be severely
  impeded. This chapter provides a method by which adequate
  windstorm and[,] hail[, and fire] insurance may be obtained in
  certain designated portions of the seacoast territory of this
  state. The association is intended to serve as a residual insurer
  of last resort for windstorm and hail insurance in the seacoast
  territory. The association shall:
               (1)  function in such a manner as to not be a direct
  competitor in the private market; and
               (2)  provide windstorm and hail insurance coverage to
  those who are unable to obtain that coverage in the private market.
         SECTION 6.  Section 2210.002, Insurance Code, is amended to
  read as follows:
         Sec. 2210.002.  SHORT TITLE; SUNSET PROVISION. (a)  This
  chapter may be cited as the Texas Windstorm Insurance Association
  Act.
         (b)  The association is subject to review under Chapter 325,
  Government Code (Texas Sunset Act), but is not abolished under that
  chapter. The association shall be reviewed during the period in
  which state agencies abolished in 2015 are reviewed. The
  association shall pay the costs incurred by the Sunset Advisory
  Commission in performing the review of the association under this
  subsection. The Sunset Advisory Commission shall determine the
  costs of the review performed under this subsection, and the
  association shall pay the amount of those costs promptly on receipt
  of a statement from the Sunset Advisory Commission regarding those
  costs. This subsection expires September 1, 2015.
         SECTION 7.  Subchapter A, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.0025 to read as follows:
         Sec. 2210.0025.  BIENNIAL REPORT TO LEGISLATURE. On or
  before December 31 of each even-numbered year, the board of
  directors shall submit to the commissioner, the appropriate
  committees of each house of the legislature, and the Sunset
  Advisory Commission a written report relating to the operations of
  the association during the preceding biennium. The report must
  include:
               (1)  any proposed changes in the laws relating to
  regulation of the association and a statement of the reasons for the
  changes; and
               (2)  any information regarding association operations
  or procedures that is requested by the department to be addressed in
  the report.
         SECTION 8.  Section 2210.003, Insurance Code, is amended by
  adding Subdivision (3-a) and amending Subdivision (6) to read as
  follows:
               (3-a)  "Catastrophe reserve trust fund" means the trust
  fund established under Subchapter J.
               (6)  "Insurance" means Texas [fire and explosion
  insurance and Texas] windstorm and hail insurance.
         SECTION 9.  Subsection (a), Section 2210.004, Insurance
  Code, is amended to read as follows:
         (a)  Except as provided by Subsection (h), for purposes of
  this chapter and subject to this section, "insurable property"
  means immovable property at a fixed location in a catastrophe area
  or corporeal movable property located in that immovable property,
  as designated in the plan of operation, that is determined by the
  association according to the criteria specified in the plan of
  operation to be in an insurable condition against windstorm and
  hail [or fire and explosion, as appropriate], as determined by
  normal underwriting standards. The term includes property
  described by Section 2210.209.
         SECTION 10.  Section 2210.005, Insurance Code, is amended to
  read as follows:
         Sec. 2210.005.  DESIGNATION AS CATASTROPHE AREA [OR
  INADEQUATE FIRE INSURANCE AREA]; REVOCATION OF DESIGNATION.
  (a)  After at least 10 days' notice and a hearing, the commissioner
  may designate an area of the seacoast territory of this state as a
  catastrophe area if the commissioner determines, unless such a
  determination results in an adverse impact to the exposure of the
  association, that windstorm and hail insurance is not reasonably
  available to a substantial number of the owners of insurable
  property located in that territory because the territory is subject
  to unusually frequent and severe damage resulting from windstorms
  or hailstorms.
         (b)  [After at least 10 days' notice and a hearing, the
  commissioner may designate an area of this state as an inadequate
  fire insurance area if the commissioner determines that fire and
  explosion insurance is not reasonably available to a substantial
  number of owners of insurable property located in that area.
         [(c)]  The commissioner shall revoke a designation made
  under Subsection (a) [or (b)] if the commissioner determines, after
  at least 10 days' notice and a hearing, that the applicable
  insurance coverage is no longer reasonably unavailable to a
  substantial number of owners of insurable property within the
  designated territory.
         (c) [(d)]  If the association determines that windstorm and
  hail insurance [or fire and explosion insurance] is no longer
  reasonably unavailable to a substantial number of owners of
  insurable property in a territory designated as a catastrophe area
  [or inadequate fire insurance area, as applicable], the association
  may request in writing that the commissioner revoke the
  designation. After at least 10 days' notice and a hearing, but not
  later than the 30th day after the date of the hearing, the
  commissioner shall:
               (1)  approve the request and revoke the designation; or
               (2)  reject the request.
         SECTION 11.  Section 2210.008, Insurance Code, is amended to
  read as follows:
         Sec. 2210.008.  DEPARTMENT ORDERS; GENERAL RULEMAKING
  AUTHORITY. (a)  The [After notice and hearing as provided by
  Subsection (b), the] commissioner may issue any orders that the
  commissioner considers necessary to implement this chapter[,
  including orders regarding maximum rates, competitive rates, and
  policy forms].
         (b)  The commissioner may adopt rules in the manner
  prescribed by Subchapter A, Chapter 36, as reasonable and necessary
  to implement this chapter [Before the commissioner adopts an order,
  the department shall post notice of the hearing on the order at the
  secretary of state's office in Austin and shall hold a hearing to
  consider the proposed order. Any person may appear at the hearing
  and testify for or against the adoption of the order].
         (c)  In rules adopted under this chapter, the commissioner
  shall define the meaning of "alter" and "alteration" for purposes
  of this chapter, specifically as used in Subchapters E and F.
         SECTION 12.  Subchapter A, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.009 to read as follows:
         Sec. 2210.009.  LIST OF PRIVATE INSURERS; INCENTIVE PLAN.
  (a)  The department shall maintain a list of all insurers that
  engage in the business of property and casualty insurance in the
  voluntary market in the seacoast territory.
         (b)  The department shall develop incentive programs in the
  manner described by Section 2210.053(b) to encourage authorized
  insurers to write insurance on a voluntary basis and to minimize the
  use of the association as a means to obtain insurance.
         SECTION 13.  Section 2210.052, Insurance Code, is amended by
  amending Subsections (a) and (d) and adding Subsection (e) to read
  as follows:
         (a)  Each member of the association shall participate in
  insured losses and operating expenses of the association, in excess
  of premium and other revenue [the writings, expenses, profits, and
  losses] of the association, in the proportion that the net direct
  premiums of that member during the preceding calendar year bears to
  the aggregate net direct premiums by all members of the
  association, as determined using the information provided under
  Subsection (b).
         (d)  Notwithstanding Subsection (a), a member, in accordance
  with the plan of operation, is entitled to receive credit for
  similar insurance voluntarily written in areas [an area] designated
  by the commissioner. The member's participation in the insured
  losses and operating expenses of the association in excess of
  premium and other revenue [writings] of the association shall be
  reduced in accordance with the plan of operation.
         (e)  Notwithstanding Subsections (a)-(d), an insurer that
  becomes a member of the association and that has not previously been
  a member of the association is not subject to participation in any
  insured losses and operating expenses of the association in excess
  of premium and other revenue of the association until the second
  anniversary of the date on which the insurer first becomes a member
  of the association.
         SECTION 14.  Subsection (b), Section 2210.056, Insurance
  Code, is amended to read as follows:
         (b)  The association's assets may not be used for or diverted
  to any purpose other than to:
               (1)  satisfy, in whole or in part, the liability of the
  association on claims made on policies written by the association;
               (2)  make investments authorized under applicable law;
               (3)  pay reasonable and necessary administrative
  expenses incurred in connection with the operation of the
  association and the processing of claims against the association;
  [or]
               (4)  satisfy, in whole or in part, the obligations of
  the association incurred in connection with Subchapters B-1, J, and
  M, including reinsurance, public securities, and financial
  instruments; or
               (5)  make remittance under the laws of this state to be
  used by this state to:
                     (A)  pay claims made on policies written by the
  association;
                     (B)  purchase reinsurance covering losses under
  those policies; or
                     (C)  prepare for or mitigate the effects of
  catastrophic natural events.
         SECTION 15.  Subsection (c), Section 2210.060, Insurance
  Code, is amended 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 16.  Chapter 2210, Insurance Code, is amended by
  adding Subchapter B-1 to read as follows:
  SUBCHAPTER B-1. PAYMENT OF LOSSES
         Sec. 2210.071.  PAYMENT OF EXCESS LOSSES; PAYMENT FROM
  RESERVES AND TRUST FUND. (a) If an occurrence or series of
  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 and operating
  expenses shall be paid as provided by this subchapter.
         (b)  The association shall pay losses in excess of premium
  and other revenue of the association from available reserves of the
  association and available amounts in the catastrophe reserve trust
  fund.
         Sec. 2210.072.  PAYMENT FROM CLASS 1 PUBLIC SECURITIES;
  FINANCIAL INSTRUMENTS. (a) Losses not paid under Section 2210.071
  shall be paid as provided by this section from the proceeds from
  Class 1 public securities authorized to be issued in accordance
  with Subchapter M on or after the date of any occurrence or series
  of occurrences that results in insured losses.  Public securities
  issued under this section must be repaid within a period not to
  exceed 10 years, and may be repaid sooner if the board of directors
  elects to do so and the commissioner approves.
         (b)  Public securities described by Subsection (a) shall be
  issued as necessary in a principal amount not to exceed $1 billion
  per year.
         (c)  If the losses are paid with public securities described
  by this section, the public securities shall be repaid in the manner
  prescribed by Subchapter M from association premium revenue.
         (d)  The association may borrow from, or enter into other
  financing arrangements with, any market source, under which the
  market source makes interest-bearing loans or other financial
  instruments to the association to enable the association to pay
  losses under this section or to obtain public securities under this
  section. For purposes of this subsection, financial instruments
  includes commercial paper.
         Sec. 2210.073.  PAYMENT FROM CLASS 2 PUBLIC SECURITIES. (a)
  Losses not paid under Sections 2210.071 and 2210.072 shall be paid
  as provided by this section from proceeds from Class 2 public
  securities authorized to be issued in accordance with Subchapter M
  on or after the date of any occurrence that results in insured
  losses under this subsection. Public securities issued under this
  section must be repaid within a period not to exceed 10 years, and
  may be repaid sooner if the board of directors elects to do so and
  the commissioner approves.
         (b)  Public securities described by Subsection (a) may be
  issued as necessary in a principal amount not to exceed $1 billion
  per year. If the losses are paid with public securities described
  by this section, the public securities shall be repaid in the manner
  prescribed by Subchapter M.
         Sec. 2210.074.  PAYMENT THROUGH CLASS 3 PUBLIC SECURITIES.
  (a) Losses not paid under Sections 2210.071, 2210.072, and
  2210.073 shall be paid as provided by this section from proceeds
  from public securities authorized to be issued in accordance with
  Subchapter M on or after the date of any occurrence that results in
  insured losses under this subsection or through reinsurance as
  described by Section 2210.075.  Public securities issued under this
  section must be repaid within a period not to exceed 10 years, and
  may be repaid sooner if the board of directors elects to do so and
  the commissioner approves.
         (b)  Public securities described by Subsection (a) may be
  issued as necessary in a principal amount not to exceed $500 million
  per year. If the losses are paid with public securities described by
  this section, the public securities shall be repaid in the manner
  prescribed by Subchapter M through member assessments as provided
  by this section. The association shall notify each member of the
  association of the amount of the member's assessment under this
  section. The proportion of the losses allocable to each insurer
  under this section shall be determined in the manner used to
  determine each insurer's participation in the association for the
  year under Section 2210.052. A member of the association may not
  recoup an assessment paid under this subsection through a premium
  surcharge or tax credit.
         Sec. 2210.075.  REINSURANCE. (a) Before any occurrence or
  series of occurrences, an insurer may elect to purchase reinsurance
  to cover an assessment for which the insurer would otherwise be
  liable under Section 2210.074(b).
         (b)  An insurer must notify the board of directors, in the
  manner prescribed by the association whether the insurer will be
  purchasing reinsurance. If the insurer does not elect to purchase
  reinsurance under this section, the insurer remains liable for any
  assessment imposed under Section 2210.074(b).
         SECTION 17.  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 18.  Section 2210.102, Insurance Code, is amended to
  read as follows:
         Sec. 2210.102.  COMPOSITION. (a)  The board of directors is
  composed of [the following] nine members appointed by the
  commissioner in accordance with this section.
         (b)  Four members must be [: (1)  five] representatives of
  the insurance industry.
         (c)  Four members must [different insurers who are members of
  the association, elected by the members as provided by the plan of
  operation;
               [(2)     two public representatives who are nominated by
  the office of public insurance counsel and who], as of the date of
  the appointment, [:
               [(A)]  reside in the first tier coastal counties. At
  least one of the members appointed under this subsection must be a
  [catastrophe area; and
                     [(B)  are policyholders of the association; and
               [(3)  two] property and casualty agent who is licensed
  under this code and is not a captive agent.
         (d)  One member must be a representative of an area of this
  state that is not located in the seacoast territory with
  demonstrated expertise in insurance and actuarial principles.
         (e)  All members must [agents, each of whom must:
                     [(A)]  have demonstrated experience in insurance,
  general business, or actuarial principles sufficient to make the
  success of the association probable[;
                     [(B)     maintain the agent's principal office, as of
  the date of the appointment, in a catastrophe area; and
                     [(C)     hold a license under Chapter 4051 as a
  general property and casualty agent or a personal lines property
  and casualty agent].
         (f)  Insurers who are members of the association shall
  nominate, from among those members, persons to fill any vacancy in
  the four board of director seats reserved for representatives of
  the insurance industry. The board of directors shall solicit
  nominations from the members and submit the nominations to the
  commissioner. The nominee slate submitted to the commissioner
  under this subsection must include at least three more names than
  the number of vacancies. The commissioner shall appoint
  replacement insurance industry representatives from the nominee
  slate.
         (g)  The commissioner shall appoint one person to serve as a
  nonvoting member of the board to advise the board regarding issues
  relating to the inspection process. The commissioner may give
  preference in an appointment under this subsection to a person who
  is a qualified inspector under Section 2210.254. The nonvoting
  member appointed under this section must:
               (1)  be an engineer licensed by, and in good standing
  with, the Texas Board of Professional Engineers;
               (2)  reside in a first tier coastal county; and
               (3)  be knowledgeable of, and have professional
  expertise in, wind-related design and construction practices in
  coastal areas that are subject to high winds and hurricanes.
         (h) [(b)]  The persons appointed under Subsection (c)
  [Subsections (a)(2) and (3)] must be from different counties.
         SECTION 19.  Section 2210.103, Insurance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  A member of the board of directors may be removed by the
  commissioner with cause stated in writing and posted on the
  association's website. The commissioner 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 20.  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 21.  Section 2210.105, Insurance Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Except for an emergency meeting, a meeting of the board
  of directors shall be held at a location as determined by the board
  of directors.
         SECTION 22.  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, videoconference, or other similar
  telecommunication method. The board may use telephone conference
  call, videoconference, 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,
  videoconference, 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 and a recording of the meeting
  is posted on the association's website;
               (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 23.  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 all standards imposed under this chapter.
         SECTION 24.  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 25.  Subsection (a), Section 2210.152, Insurance
  Code, is amended to read as follows:
         (a)  The plan of operation must:
               (1)  provide for the efficient, economical, fair, and
  nondiscriminatory administration of the association; and
               (2)  include:
                     (A)  a plan for the equitable assessment of the
  members of the association to defray losses and expenses;
                     (B)  underwriting standards;
                     (C)  procedures for accepting and ceding
  reinsurance;
                     (D)  procedures for obtaining and repaying
  amounts under any financial instruments authorized under this
  chapter;
                     (E)  procedures for determining the amount of
  insurance to be provided to specific risks;
                     (F) [(E)]  time limits and procedures for
  processing applications for insurance; and
                     (G) [(F)]  other provisions as considered
  necessary by the department to implement the purposes of this
  chapter.
         SECTION 26.  Section 2210.202, Insurance Code, is amended to
  read as follows:
         Sec. 2210.202.  APPLICATION FOR COVERAGE. (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. The association shall
  make insurance available to each applicant in the catastrophe area
  whose property is insurable property but who, after diligent
  efforts, is unable to obtain property insurance through the
  voluntary market, as evidenced by one declination from an insurer
  authorized to engage in the business of, and writing, property
  insurance providing windstorm and hail coverage in the first tier
  coastal counties. For purposes of this section, "declination" has
  the meaning assigned by the plan of operation and shall include a
  refusal to offer coverage for the perils of windstorm and hail and
  the inability to obtain substantially equivalent insurance
  coverage for the perils of windstorm and hail. Notwithstanding
  Section 2210.203(c), evidence of one declination is also required
  with an application for renewal of an association policy.
         (b)  A [general] property and casualty agent [or a personal
  lines property and casualty agent] must submit an application for
  the insurance coverage on behalf of the applicant on forms
  prescribed by the association.  The application must contain a
  statement as to whether the applicant has submitted or will submit
  the premium in full from personal funds or, if not, to whom a
  balance is or will be due. Each application for initial or renewal
  coverage must also contain a statement that the agent possesses
  proof of the declination described by Subsection (a) and proof of
  flood insurance coverage or unavailability of that coverage as
  described by Section 2210.203(a-1).
         SECTION 27.  Section 2210.203, Insurance Code, is amended by
  adding Subsection (a-1) to read as follows:
         (a-1)  This subsection applies only to a structure
  constructed, altered, remodeled, or enlarged on or after September
  1, 2009, and only for insurable property located in areas
  designated by the commissioner. Notwithstanding Subsection (a), if
  all or any part of the property to which this subsection applies 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 an insurance
  policy for initial or renewal coverage unless evidence that the
  property is covered by a flood insurance policy is submitted to the
  association. An agent offering or selling a Texas windstorm and
  hail insurance policy in any area designated by the commissioner
  under this subsection shall offer flood insurance coverage to the
  prospective insured, if that coverage is available.
         SECTION 28.  Section 2210.204, Insurance Code, is amended by
  amending Subsection (d) and adding Subsection (e) to read as
  follows:
         (d)  If an insured requests cancellation of the insurance
  coverage, the association shall refund the unearned premium, less
  any minimum retained premium set forth in the plan of operation,
  payable to the insured and the holder of an unpaid balance. The
  property and casualty agent who submitted the application shall
  refund the agent's commission on any unearned premium in the same
  manner.
         (e)  For cancellation of insurance coverage under this
  section, the minimum retained premium in the plan of operation must
  be for a period of not less than 180 days, except for events
  specified in the plan of operation that reflect a significant
  change in the exposure or the policyholder concerning the insured
  property, including:
               (1)  the purchase of similar coverage in the voluntary
  market;
               (2)  sale of the property to an unrelated party;
               (3)  death of the policyholder; or
               (4)  total loss of the property.
         SECTION 29.  Subchapter E, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.2041 to read as follows:
         Sec. 2210.2041.  NONREFUNDABLE SURCHARGE. A nonrefundable
  surcharge established under this chapter is not refundable under
  this code for any reason or purpose.
         SECTION 30.  Section 2210.251, Insurance Code, is amended to
  read as follows:
         Sec. 2210.251.  INSPECTION REQUIREMENTS. (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, altered, remodeled,
  enlarged, or repaired or to which additions are made on or after
  January 1, 1988, must be inspected or approved by the department for
  compliance with the plan of operation.
         (b)  After January 1, 2004, for geographic areas specified by
  the commissioner, the commissioner by rule shall adopt the 2003
  International Residential Code for one- and two-family dwellings
  published by the International Code Council. For those geographic
  areas, the commissioner by rule may 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 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, altered, remodeled, enlarged,
  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, alteration, remodeling, enlargement, 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, altered, remodeled, enlarged,
  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 must reflect coverage for the perils of
  windstorm and hail for the property within the 12-month period
  immediately preceding the date of the application for coverage
  through the association and 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)  Notwithstanding any other provision of this section, a
  residential structure insured by the association as of September
  1, 2009, may continue coverage through the association subject to
  the inspection requirements imposed under Section 2210.258.
         (g)  The 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.
         (h) [(g)]  The department may enter into agreements and
  contracts as necessary to implement this section.
         (i)  [(h)]  The department may charge a reasonable fee to
  cover the cost of making building requirements and inspection
  standards available to the public.
         (j)  The department shall charge a reasonable fee for each
  inspection of each structure in an amount set by the commissioner.
         (k)  Without limitation of the department's authority to
  otherwise enforce this chapter, the department shall monitor the
  association's compliance with this subchapter.
         (l)  Except as otherwise provided by this subchapter, the
  department may not consider any request that a structure be
  certified as insurable property if, within six months after the
  final inspection of a structure, the department has not received:
               (1)  fully completed documentation verifying that the
  structure has been constructed, altered, remodeled, enlarged, or
  repaired, or any addition to the structure has been made, in
  compliance with the plan of operation; and
               (2)  full payment of all inspection fees owed to the
  department, including any fees related to prior department
  inspections.
         (m)  If a structure is rejected for coverage under Subsection
  (l), a person may make a new request for certification and the
  structure may be reinspected for compliance with the plan of
  operation. A request for certification brought under this
  subsection must meet the requirements of Subsection (l).
         SECTION 31.  Subchapter F, Chapter 2210, Insurance Code, is
  amended by adding Sections 2210.258 and 2210.259 to read as
  follows:
         Sec. 2210.258.  MANDATORY COMPLIANCE WITH BUILDING CODES;
  ELIGIBILITY. (a)  Notwithstanding any other provision of this
  chapter, to be eligible for insurance through the association, all
  construction, alteration, remodeling, enlargement, and repair of,
  or addition to, any structure located in the catastrophe area that
  is begun on or after the effective date of Sections 5 through 49,
  H.B. No. 4409, Acts of the 81st Legislature, Regular Session, 2009,
  must be performed in compliance with the applicable building code
  standards, as set forth in the plan of operation.
         (b)  The association may not insure a structure described by
  Subsection (a) until:
               (1)  the structure has been inspected for compliance
  with the plan of operation in accordance with Section 2210.251(a);
  and
               (2)  a certificate of compliance has been issued for
  the structure in accordance with Section 2210.251(g).
         Sec. 2210.259.  SURCHARGE FOR CERTAIN NONCOMPLIANT
  STRUCTURES. (a)  A noncompliant residential structure insured by
  the association as of September 1, 2009, under Section 2210.251(f)
  that had been approved for insurability under the approval process
  regulations in effect on September 1, 2009, is subject to an annual
  premium surcharge in an amount equal to 15 percent of the premium
  for insurance coverage obtained through the association. The
  surcharge under this subsection applies to each policy issued or
  renewed by the association on or after the effective date of
  Sections 5 through 49, H.B. No. 4409, Acts of the 81st Legislature,
  Regular Session, 2009, and is due on the issuance or renewal of the
  policy.
         (b)  A premium surcharge collected under this section shall
  be deposited in the catastrophe reserve trust fund. A premium
  surcharge under this section is a separate nonrefundable charge in
  addition to the premiums collected and is not subject to premium tax
  or commissions. Failure to pay the surcharge by a policyholder
  constitutes failure to pay premium for purposes of policy
  cancellation.
         SECTION 32.  Subsections (c) and (d), Section 2210.351,
  Insurance Code, are amended to read as follows:
         (c)  Except as provided by Subsection (d), as [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.
  If the commissioner disapproves a filing, the commissioner shall
  state in writing the reasons for the disapproval and the criteria
  the association is required to meet to obtain approval.
         (d)  The association may use a rate filed by the association
  without prior commissioner approval if:
               (1)  the filing is made not later than the 30th day
  before the date of any use or delivery for use of the rate;
               (2)  the filed rate does not exceed 105 percent of the
  rate in effect on the date on which the filing is made;
               (3)  the filed rate does not reflect a rate change for
  an individual rating class that is 10 percent higher than the rate
  in effect for that rating class on the date on which the filing is
  made; and
               (4)  the commissioner has not disapproved the filing in
  writing, advising of the reasons for the disapproval and the
  criteria the association is required to meet to obtain approval [If
  at any time the commissioner determines that a filing approved
  under Subsection (c) no longer meets the requirements of this
  chapter, the commissioner may, 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.     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 33.  Section 2210.352, Insurance Code, is amended to
  read as follows:
         Sec. 2210.352.  MANUAL RATE FILINGS: ANNUAL FILING.
  (a)  Not later than August 15 of each year, the association shall
  file with the department [for approval by the commissioner] a
  proposed manual rate for all types and classes of risks written by
  the association[. Chapter 40 does not apply to:
               [(1)  a filing made under this subsection; or
               [(2)  a department action with respect to the filing].
         (a-1)  The association may use a rate filed by the
  association under this section without prior commissioner approval
  if:
               (1)  the filing is made not later than the 30th day
  before the date of any use or delivery for use of the rate;
               (2)  the filed rate does not exceed 105 percent of the
  rate used by the association in effect on the date on which the
  filing is made; and
               (3)  the filed rate does not reflect a rate change for
  an individual rating class that is 10 percent higher than the rate
  in effect for that rating class on the date on which the filing is
  made.
         (a-2)  The association may not file to use a rate described
  by Subsection (a-1) more than once per year.
         (b)  Except as provided by Subsection (a-1), before [Before]
  approving or[,] disapproving[, or modifying] a filing under this
  section, the commissioner shall provide all interested persons a
  reasonable opportunity to:
               (1)  review the filing;
               (2)  obtain copies of the filing on payment of any
  legally required copying cost; and
               (3)  submit to the commissioner written comments or
  information related to the filing.
         (c)  Except as provided by Subsection (a-1), [The
  commissioner shall schedule an open meeting not later than the 45th
  day after the date the department receives a filing at which
  interested persons may present written or oral comments relating to
  the filing.
         [(d)     An open meeting under Subsection (c) is subject to
  Chapter 551, Government Code, but is not a contested case hearing
  under Chapter 2001, Government Code.
         [(e)     The department shall file with the secretary of state
  for publication in the Texas Register notice that a filing has been
  made under Subsection (a) not later than the seventh day after the
  date the department receives the filing.     The notice must include
  information relating to:
               [(1)     the availability of the filing for public
  inspection at the department during regular business hours and the
  procedures for obtaining copies of the filing;
               [(2)     procedures for making written comments related to
  the filing; and
               [(3)     the time, place, and date of the open meeting
  scheduled under Subsection (c) at which interested persons may
  present written or oral comments relating to the filing.
         [(f)  After the conclusion of the open meeting,] the
  commissioner shall approve or[,] disapprove[, or modify] the filing
  in writing not later than October [November] 15 of the year in which
  the filing was made. If the filing is not approved or[,]
  disapproved[, or modified] on or before that date, the filing is
  considered approved.
         (d)  Except as provided by Subsection (a-1), if [(g)  If] the
  commissioner disapproves a filing, the commissioner shall state in
  writing the reasons for the disapproval and the criteria the
  association is required to meet to obtain approval.
         SECTION 34.  Section 2210.353, Insurance Code, is amended to
  read as follows:
         Sec. 2210.353.  MANUAL RATE FILINGS: AMENDED ANNUAL FILING.
  (a)  Not later than the 30th day after the date the association
  receives the commissioner's written disapproval under Section
  2210.352(c) [2210.352(f)], the association may file with the
  commissioner an amended annual filing that conforms to all criteria
  stated in that written disapproval.
         (b)  Not later than the 30th day after the date an amended
  filing made under Subsection (a) is received, the commissioner
  shall approve [the amended filing with or without modifications] or
  disapprove the amended filing. If the filing is not [modified or]
  disapproved on or before the 30th day after the date of receipt, the
  filing is considered approved [without modification]. If the
  commissioner disapproves a filing, the commissioner shall state in
  writing the reasons for the disapproval and the criteria the
  association is required to meet to obtain approval.
         (c)  Before approving or disapproving an amended annual
  filing under this section, the commissioner shall, in the manner
  provided by Section 2210.352(b), provide all interested persons a
  reasonable opportunity to:
               (1)  review the amended annual filing;
               (2)  obtain copies of the amended annual filing on
  payment of any legally required copying cost; and
               (3)  submit to the commissioner written comments or
  information related to the amended annual filing.
         [(d)     The commissioner may, in the manner provided by
  Sections 2210.352(c) and (d), hold a hearing regarding an amended
  filing not later than the 20th day after the date the department
  receives the amended filing.
         [(e)     Not later than the 10th day after the date the hearing
  is concluded, the commissioner shall approve or disapprove the
  amended filing.
         [(f)     The requirements imposed under Subsection (a) and
  under Sections 2210.352(e), (f), and (g) apply to a hearing
  conducted under this section and the commissioner's decision
  resulting from that hearing.]
         SECTION 35.  Subsections (a), (c), and (d), Section
  2210.354, Insurance Code, are amended to read as follows:
         (a)  In conjunction with the review of a filing under Section
  2210.352, other than a filing made under Subsection (a-1) of that
  section [or 2210.353]:
               (1)  the commissioner may request the association to
  provide additional supporting information relating to the filing;
  and
               (2)  any interested person may file a written request
  with the commissioner, during a period specified by the
  commissioner by rule, for additional supporting information
  relating to the filing.
         (c)  The commissioner shall submit to the association all
  requests for additional supporting information made under this
  section for the commissioner's use and the use of any interested
  person not later than the 21st day after the date of receipt of the
  filing.
         (d)  Unless a different period is requested by the
  association and approved by the commissioner, the association shall
  provide the information to the commissioner not later than the
  fifth day after the date the written request for additional
  supporting information is delivered to the association. [The
  department shall notify an interested person who has requested
  additional information of the availability of the information not
  later than one business day after the date the commissioner
  receives the information from the association.]
         SECTION 36.  Section 2210.355, Insurance Code, is amended by
  adding Subsections (h) and (i) to read as follows:
         (h)  In adopting rates under this chapter, recognized
  catastrophe models may be considered.
         (i)  The association may establish rating territories and
  may vary rates among the territories as provided by this
  subsection. A rating territory that subdivides a county may be used
  only if the rate for any subdivision in the county is not more than:
               (A)  five percent higher than the rate used by the
  association in 2009 in any other subdivision in the county;
               (B)  six percent higher than the rate used by the
  association in 2010 in any other subdivision in the county;
               (C)  seven percent higher than the rate used by the
  association in 2011 in any other subdivision in the county; and
               (D)  eight percent higher than the rate used by the
  association in 2012 in any other subdivision in the county.
         SECTION 37.  Subsection (b), Section 2210.361, Insurance
  Code, is amended to read as follows:
         (b)  After notice and hearing, the commissioner may accept[,
  modify,] or reject a recommendation made by the association under
  this section. [Chapter 40 does not apply to an action taken under
  this section.]
         SECTION 38.  Subsections (a), (c), and (d), Section
  2210.452, 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
  Subchapter B-1 [Section 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 use [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 make payments to the trust fund, to procure
  [or a] reinsurance, or to make payments to the trust fund and to
  procure 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 Subchapter B-1 [Section 2210.058(a)].
         SECTION 39.  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 [program
  approved by the department].
         (b)  The [With the approval of the department, the]
  association may purchase [establish a] reinsurance [program] that
  operates in addition to or in concert with the trust fund, public
  securities, financial instruments, and assessments authorized by
  this chapter.
         SECTION 40.  Subsection (b), Section 2210.454, 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 41.  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
  authorizing the issuance of public securities to provide a method
  to raise funds to provide windstorm and hail insurance through the
  association in certain designated portions of the state is for the
  benefit of the public and in furtherance of a public purpose.
         Sec. 2210.602.  DEFINITIONS. In this subchapter:
               (1)  "Board" means the board of directors of the Texas
  Public Finance Authority.
               (2)  "Class 1 public securities" means public
  securities authorized to be issued on or after an occurrence or
  series of occurrences by Section 2210.072, including a commercial
  paper program authorized before the occurrence of a catastrophic
  event so long as no tranche of commercial paper is issued under the
  program until after the catastrophic event.
               (3)  "Class 2 public securities" means public
  securities authorized to be issued on or after the occurrence of a
  catastrophic event by Section 2210.073.
               (4)  "Class 3 public securities" means public
  securities authorized to be issued on or after the occurrence of a
  catastrophic event by Section 2210.074.
               (5)  "Credit agreement" has the meaning assigned by
  Chapter 1371, Government Code.
               (6)  "Insurer" means each property and casualty insurer
  authorized to engage in the business of property and casualty
  insurance in this state and an affiliate of such an insurer, as
  described by Section 823.003, including an affiliate that is not
  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.
               (7)  "Public security" means a debt instrument or other
  public security issued by the Texas Public Finance Authority.
               (8)  "Public security administrative expenses" means
  expenses incurred to administer public securities issued under this
  subchapter, including fees for credit enhancement, paying agents,
  trustees, and attorneys, and for other professional services.
               (9)  "Public security obligations" means the principal
  of a public security and any premium and interest on a public
  security issued under this subchapter, together with any amount
  owed under a related credit agreement.
               (10)  "Public security obligation revenue fund" means
  the dedicated trust fund established by the association and held by
  the Texas Safekeeping Trust Company outside the state treasury
  under this subchapter.
               (11)  "Public security resolution" means the
  resolution or order authorizing public securities to be issued
  under this subchapter.
         Sec. 2210.603.  APPLICABILITY OF OTHER LAWS. (a) The board
  shall issue the public securities as described by Section 2210.604
  in accordance with and subject to the requirements of Chapter 1232,
  Government Code, other than Section 1232.108 of that chapter, and
  in accordance with and subject to 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.
         (b)  A purpose for which public securities are issued under
  this chapter constitutes an eligible project for purposes of
  Chapter 1371, Government Code.
         Sec. 2210.604.  ISSUANCE OF PUBLIC SECURITIES AUTHORIZED.
  (a) At the request of the association and with the approval of the
  commissioner, the Texas Public Finance Authority shall issue Class
  1, Class 2, or Class 3 public securities. The association and the
  commissioner must approve each tranche of commercial paper issued
  under a commercial paper program established under this chapter.
         (b)  The association shall specify in the association's
  request to the board the maximum principal amount of the public
  securities and the maximum term of the public securities.
         (c)  The principal amount determined by the association
  under Subsection (b) may be increased to include an amount
  sufficient to:
               (1)  pay the costs related to issuance of the public
  securities;
               (2)  provide a public security reserve fund; and
               (3)  capitalize interest for the period determined
  necessary by the association, not to exceed two years.
         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 be issued by the board on behalf
  of the association.
         (c)  Public securities issued under this chapter are
  eligible obligations under Section 404.027, Government Code.
         Sec. 2210.606.  ADDITIONAL COVENANTS. The board may make
  additional covenants with respect to the public securities and the
  designated income and receipts of the association pledged to their
  payment, and provide for the flow of funds and the establishment,
  maintenance, and investment of funds and accounts with respect to
  the public securities, and the administration of those funds and
  accounts, as provided in the proceedings authorizing the public
  securities.
         Sec. 2210.607.  PUBLIC SECURITY PROCEEDS. The proceeds of
  public securities issued by the board under this subchapter may be
  deposited with the Texas Treasury Safekeeping Trust Company.
         Sec. 2210.608.  USE OF PUBLIC SECURITY PROCEEDS. (a) Public
  security proceeds, including investment income, shall be held in
  trust for the exclusive use and benefit of the association. The
  association may use the proceeds to:
               (1)  pay incurred claims and operating expenses of the
  association;
               (2)  purchase reinsurance for the association;
               (3)  pay the costs of issuing the public securities,
  and public security administrative expenses, if any;
               (4)  provide a public security reserve; and
               (5)  pay capitalized interest and principal on the
  public securities for the period determined necessary by the
  association.
         (b)  Any excess public security proceeds remaining after the
  purposes for which the public securities were issued are satisfied
  may be used to purchase 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. 2210.609.  REPAYMENT OF ASSOCIATION'S PUBLIC SECURITY
  OBLIGATIONS. (a)  The board and the association shall enter into
  an agreement under which the association shall provide for the
  payment of all public security obligations from available funds
  collected by the association and deposited into the public security
  obligation revenue fund. If the association determines that it is
  unable to pay the public security obligations and public security
  administrative expenses, if any, with available funds, the
  association shall pay those obligations and expenses in accordance
  with Sections 2210.612, 2210.613, and 2210.6135 as applicable.
  Class 1, Class 2, or Class 3 public securities may be issued on a
  parity or subordinate lien basis with other Class 1, Class 2, or
  Class 3 public securities, respectively.
         (b)  The board shall notify the association of the amount of
  the public security obligations and the estimated amount of public
  security administrative expenses, if any, 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 if necessary.
         (c)  The association shall deposit all revenue collected
  under Sections 2210.612, 2210.613, and 2210.6135 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 obligations and public security
  administrative expenses, if any, shall be transferred to the
  appropriate funds in the manner and at the time specified in the
  proceedings authorizing the public securities to ensure timely
  payment of obligations and expenses. This may include the board
  establishing funds and accounts with the comptroller that the board
  determines are necessary to administer and repay the public
  security obligations. If the association has not transferred
  amounts sufficient to pay the public security obligations to the
  board's designated interest and sinking fund in a timely manner,
  the board may direct the Texas Treasury Safekeeping Trust Company
  to transfer from the public security obligation revenue fund to the
  appropriate account the amount necessary to pay the public security
  obligation.
         (d)  The association shall provide for the payment of the
  public security obligations and the public security administrative
  expenses by irrevocably pledging revenues received from premiums,
  premium surcharges, and amounts on deposit in the public security
  obligation revenue fund, together with any public security reserve
  fund, as provided in the proceedings authorizing the public
  securities and related credit agreements.
         (e)  An amount owed by the board under a credit agreement
  shall be payable from and secured by a pledge of revenues received
  by the association or amounts from the obligation trust fund to the
  extent provided in the proceedings authorizing the credit
  agreement.
         Sec. 2210.610.  PUBLIC SECURITY PAYMENTS. (a) Revenues
  received from the premium surcharges under Section 2210.613 may be
  applied only as provided by this subchapter.
         (b)  The association may pay public security obligations
  with other legally available funds.
         (c)  Public security obligations are payable only from
  sources provided for payment in this subchapter.
         Sec. 2210.611.  EXCESS REVENUE COLLECTIONS AND INVESTMENT
  EARNINGS. Revenue collected in any year from a premium surcharge
  under Section 2210.613 that exceeds the amount of the public
  security obligations and public security administrative expenses
  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
  that would otherwise be required to be levied for the year under
  this subchapter;
               (2)  used to redeem or purchase outstanding public
  securities; or
               (3)  deposited in the catastrophe reserve trust fund.
         Sec. 2210.612.  PAYMENT OF CLASS 1 PUBLIC SECURITIES. (a)
  The association shall pay Class 1 public securities issued under
  Section 2210.072 from its premium and other revenue.
         (b)  The association may enter financing arrangements as
  described by Section 2210.072(d) as necessary to obtain public
  securities issued under that section. Nothing in this subsection
  shall prevent the authorization and creation of one or more
  programs for the issuance of commercial paper before the date of an
  occurrence that results in insured losses under Section 2210.072(a)
  so long as no tranche of commercial paper is issued under a
  commercial paper program until after such an occurrence.
         Sec. 2210.613.  PAYMENT OF CLASS 2 PUBLIC SECURITIES. (a)
  The association shall pay Class 2 public securities issued under
  Section 2210.073 as provided by this section. Thirty percent of the
  cost of the public securities shall be paid through member
  assessments as provided by this section. The association shall
  notify each member of the association of the amount of the member's
  assessment under this section. The proportion of the losses
  allocable to each insurer under this section shall be determined in
  the manner used to determine each insurer's participation in the
  association for the year under Section 2210.052. A member of the
  association may not recoup an assessment paid under this subsection
  through a premium surcharge or tax credit.
         (b)  Seventy percent of the cost of the public securities
  shall be paid by a nonrefundable premium surcharge collected under
  this section in an amount set by the commissioner. On approval by
  the commissioner, each insurer, the association, and the Texas FAIR
  Plan Association shall assess a premium surcharge to its
  policyholders as provided by this section. The premium surcharge
  must be set in an amount sufficient to pay all debt service not
  already covered by available funds and all related expenses on the
  public securities.
         (c)  The premium surcharge under Subsection (b) shall be
  assessed on all policyholders who reside or have operations in, or
  whose insured property is located in a catastrophe area for each
  Texas windstorm and hail insurance policy and each property and
  casualty insurance policy issued for property located in the
  catastrophe area. A premium surcharge under Subsection (b) applies
  to all policies that provide coverage on any premises, locations,
  operations, or property located in the area described by this
  subsection for all property and casualty lines of insurance, other
  than federal flood insurance, workers' compensation insurance,
  accident and health insurance, and medical malpractice insurance.
         (d)  A premium surcharge under Subsection (b) is a separate
  nonrefundable charge in addition to the premiums collected and is
  not subject to premium tax or commissions. Failure by a
  policyholder to pay the surcharge constitutes failure to pay
  premium for purposes of policy cancellation.
         Sec. 2210.6135.  PAYMENT OF CLASS 3 PUBLIC SECURITIES. (a)
  The association shall pay Class 3 public securities issued under
  Section 2210.074 as provided by this section through member
  assessments. The association shall assess the members of the
  association an amount not to exceed $500 million per year for the
  payment of the losses. The association shall notify each member of
  the association of the amount of the member's assessment under this
  section.
         (b)  The proportion of the losses allocable to each insurer
  under this section shall be determined in the manner used to
  determine each insurer's participation in the association for the
  year under Section 2210.052.
         (c)  A member of the association may not recoup an assessment
  paid under this section through a premium surcharge or tax credit.
         Sec. 2210.614.  REFINANCING PUBLIC SECURITIES. The
  association may request the board to refinance any public
  securities issued in accordance with Subchapter B-1, whether Class
  1, Class 2, or Class 3 public securities, with public securities
  payable from the same sources as the original public securities.
         Sec. 2210.615.  SOURCE OF PAYMENT; STATE DEBT NOT CREATED.
  (a) A public security or credit agreement is payable solely from
  revenue as provided by this subchapter.
         (b)  A public security issued under this subchapter, and any
  related credit agreement, is not a debt of this state or any state
  agency or political subdivision of this state, and does not
  constitute a pledge of the faith and credit of this state or any
  state agency or political subdivision of this state.
         (c)  Each public security, and any related credit agreement,
  issued under this subchapter must state on the security's face
  that:
               (1)  neither the state nor a state agency, political
  corporation, or political subdivision of the state is obligated to
  pay the principal of or interest on the public security except as
  provided by this subchapter; and
               (2)  neither the faith and credit nor the taxing power
  of the state or any state agency, political corporation, or
  political subdivision of the state is pledged to the payment of the
  principal of or interest on the public security.
         Sec. 2210.616.  STATE NOT TO IMPAIR PUBLIC SECURITY
  OBLIGATIONS. If public securities under this subchapter are
  outstanding, the state may not:
               (1)  take action to limit or restrict the rights of the
  association to fulfill its responsibility to pay public security
  obligations; or
               (2)  in any way impair the rights and remedies of the
  public security owners until the public securities are fully
  discharged.
         Sec. 2210.617.  ENFORCEMENT BY MANDAMUS. A writ of mandamus
  and any other legal and equitable remedies are available to a party
  at interest to require the association or another party to fulfill
  an agreement and to perform functions and duties under:
               (1)  this subchapter;
               (2)  the Texas Constitution; or
               (3)  a relevant public security resolution.
         Sec. 2210.618.  EXEMPTION FROM TAXATION. A public security
  issued under this subchapter, any transaction relating to the
  public security, and profits made from the sale of the public
  security are exempt from taxation by this state or by a municipality
  or other political subdivision of this state.
         Sec. 2210.619.  NO PERSONAL LIABILITY. The members of the
  association, members of the association board of directors,
  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.
         Sec. 2210.620.  AUTHORIZED INVESTMENTS. Public securities
  issued under this subchapter are authorized investments under:
               (1)  Subchapter B, Chapter 424;
               (2)  Subchapter C, Chapter 425; and
               (3)  Sections 425.203-425.213.
  SUBCHAPTER N. LEGISLATIVE OVERSIGHT BOARD
         Sec. 2210.651.  DEFINITION. In this subchapter, "board"
  means the windstorm insurance legislative oversight board.
         Sec. 2210.652.  COMPOSITION OF BOARD. The windstorm
  insurance legislative oversight board is composed of eight members
  as follows:
               (1)  four members of the senate appointed by the
  lieutenant governor, including the chairperson of the Senate
  Business and Commerce Committee, who shall serve as co-chairperson
  of the board; and
               (2)  four members of the house of representatives
  appointed by the speaker of the house of representatives.
         Sec. 2210.653.  POWERS AND DUTIES OF BOARD. (a) The board
  shall:
               (1)  receive information about rules proposed by the
  department relating to windstorm insurance and may submit comments
  to the commissioner on the proposed rules;
               (2)  monitor windstorm insurance in this state,
  including:
                     (A)  the adequacy of rates;
                     (B)  the operation of the association; and
                     (C)  the availability of coverage; and
               (3)  review recommendations for legislation proposed
  by the department or the association.
         (b)  The board may request reports and other information from
  the department and the association as necessary to implement this
  subchapter.
         Sec. 2210.654.  REPORT. (a) Not later than November 15 of
  each even-numbered year, the board shall report on the board's
  activities under Section 2210.653 to:
               (1)  the governor;
               (2)  the lieutenant governor; and
               (3)  the speaker of the house of representatives.
         (b)  The report must include:
               (1)  an analysis of any problems identified; and
               (2)  recommendations for any legislative action
  necessary to address those problems and to foster stability,
  availability, and competition within the windstorm insurance
  industry.
         SECTION 42.  Section 941.003, Insurance Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  A Lloyd's plan is subject to Chapter 2210, as provided
  by that chapter.
         SECTION 43.  Section 942.003, Insurance Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  An exchange is subject to Chapter 2210, as provided by
  that chapter.
         SECTION 44.  The following laws are repealed:
               (1)  Subdivisions (5) and (12), Section 2210.003,
  Insurance Code;
               (2)  Sections 2210.058 and 2210.059, Insurance Code;
               (3)  Sections 2210.205 and 2210.206, Insurance Code;
               (4)  Sections 2210.356, 2210.360, and 2210.363,
  Insurance Code; and
               (6)  Subchapter G, Chapter 2210, Insurance Code.
         SECTION 45.  (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, 2009.
         (b)  The commissioner of insurance 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, not later than December 31, 2009.
         (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, 2009. Such a person is
  eligible for appointment by the commissioner of insurance to the
  new board of directors of the Texas Windstorm Insurance Association
  under Section 2210.102, Insurance Code, as amended by this Act.
         SECTION 46.  (a)  The commissioner of insurance shall adopt
  rules as required by Chapter 2210, Insurance Code, as amended by
  this Act, as soon as possible after the effective date of this Act,
  but not later than the 30th day after the effective date of this
  Act.
         (b)  The Texas Windstorm Insurance Association, through the
  board of directors of that association, shall propose to the
  commissioner of insurance amendments to the association's plan of
  operation as required by Chapter 2210, Insurance Code, as amended
  by this Act, not later than March 1, 2010.
         SECTION 47.  Sections 2210.202 and 2210.203, Insurance Code,
  as amended by this Act, apply to an application for insurance
  coverage submitted to the Texas Windstorm Insurance Association on
  or after the effective date of this Act.
         SECTION 48.  Section 2210.251, Insurance Code, as amended by
  this Act, applies to an inspection conducted on or after September
  1, 2009. Except as otherwise specifically provided by that
  section, a structure that has been inspected and is the subject of a
  certificate of compliance issued by the Texas Department of
  Insurance under Subsection (g), Section 2210.251, Insurance Code,
  as that section existed immediately before September 1, 2009, is
  not required to obtain a new inspection certificate to remain
  eligible for insurance coverage through the Texas Windstorm
  Insurance Association unless the structure is altered, remodeled,
  enlarged, or repaired on or after September 1, 2009.
         SECTION 49.  The changes in law made by this Act in amending
  Section 2210.251, Insurance Code, take effect September 1, 2009.
         SECTION 50.  Not later than January 1, 2010, the relevant
  state agencies shall adopt the contracts required by Section
  418.126, Government Code, as added by this Act.
         SECTION 51.  (a) Except as provided by Subsection (b) of
  this section or otherwise provided by this Act, 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,
  2009.
         (b)  Sections 1 through 4 and 50 of this Act take effect
  September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 4409 was passed by the House on May 6,
  2009, by the following vote:  Yeas 147, Nays 0, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 4409 on May 29, 2009, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; that the House adopted the conference committee report on
  H.B. No. 4409 on May 31, 2009, by the following vote:  Yeas 147,
  Nays 0, 1 present, not voting; and that the House adopted H.C.R. No.
  287 authorizing certain corrections in H.B. No. 4409 on June 1,
  2009, by the following vote:  Yeas 147, Nays 0, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 4409 was passed by the Senate, with
  amendments, on May 27, 2009, by the following vote:  Yeas 31, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; that
  the Senate adopted the conference committee report on H.B. No. 4409
  on June 1, 2009, by the following vote:  Yeas 31, Nays 0; and that
  the Senate adopted H.C.R. No. 287 authorizing certain corrections
  in H.B. No. 4409 on June 1, 2009, by the following vote:  Yeas 31,
  Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor