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A BILL TO BE ENTITLED
|
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AN ACT
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relating to the operation of the Texas Windstorm Insurance |
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Association and to the resolution of certain disputes concerning |
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claims made to that association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 2210, Insurance Code, is |
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amended by adding Sections 2210.010 and 2210.011 to read as |
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follows: |
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Sec. 2210.010. APPLICABILITY OF CERTAIN OTHER LAW. (a) A |
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person insured under this chapter may not bring an action against |
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the association under Chapter 541. |
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(b) Chapter 542 does not apply to the processing and |
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settlement of claims by the association. |
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Sec. 2210.011. CERTAIN CONDUCT IN DISPUTE RESOLUTION |
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PROHIBITED. A person insured under this chapter may not preside |
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over a matter or action to which the association is a party, |
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including by sitting as a judge or serving as an arbitrator. |
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SECTION 2. Section 2210.104, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.104. OFFICERS; SALARIES AND BONUSES. (a) The |
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board of directors shall elect from the board's membership an |
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executive committee consisting of a presiding officer, assistant |
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presiding officer, and secretary-treasurer. |
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(b) The association shall post on the association's |
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Internet website the salary of each officer of the association and |
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any bonuses paid to an officer of the association. |
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SECTION 3. Section 2210.105, Insurance Code, is amended by |
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amending Subsections (a) and (b) and adding Subsections (b-1) and |
|
(e) to read as follows: |
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(a) Except for an emergency meeting, the association shall: |
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(1) notify the department not later than the 11th day |
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before the date of a meeting of the board of directors or of the |
|
members of the association; and |
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(2) not later than the seventh day before the date of a |
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meeting of the board of directors, post notice of the meeting on the |
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association's Internet website and the department's Internet |
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website. |
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(b) Except for a closed meeting authorized by Subchapter D, |
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Chapter 551, Government Code, a meeting of the board of directors or |
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of the members of the association is open to[:
|
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[(1)
the commissioner or the commissioner's designated
|
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representative; and
|
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[(2)] the public. |
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(b-1) A meeting of the board of directors or the members of |
|
the association, including a closed meeting authorized by |
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Subchapter D, Chapter 551, Government Code, is open to the |
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commissioner or the commissioner's designated representative. |
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(e) The association shall broadcast live on the |
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association's Internet website all meetings of the board of |
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directors. |
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SECTION 4. Section 2210.107, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.107. PRIMARY BOARD OBJECTIVES; REPORT. (a) The |
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primary objectives of the board of directors are to ensure that the |
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association: |
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(1) operates in accordance with this chapter and |
|
commissioner rules; |
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(2) complies with sound insurance principles; and |
|
(3) meets all standards imposed under this chapter. |
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(b) Not later than June 1 of each year, the association |
|
shall submit to the commissioner, the legislative oversight board |
|
established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
evaluating the extent to which the board met the objectives |
|
described by Subsection (a) in the 12-month period immediately |
|
preceding the date of the report. |
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SECTION 5. Subchapter C, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.108 to read as follows: |
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Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. Except as |
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specifically provided by this chapter or another law, the |
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association is subject to Chapters 551 and 552, Government Code. |
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SECTION 6. Section 2210.202, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
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(c) The commissioner shall adopt rules to simplify and |
|
streamline the process through which: |
|
(1) a person who has an insurable interest in |
|
insurable property may apply with the association for insurance |
|
coverage; and |
|
(2) a person insured under this chapter may apply with |
|
the association for renewal of the person's insurance coverage. |
|
SECTION 7. Section 2210.203, Insurance Code, is amended by |
|
amending Subsection (a-1) and adding Subsection (a-2) to read as |
|
follows: |
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(a-1) [This subsection applies only to a structure
|
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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), |
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if all or any part of the property to be insured [which this
|
|
subsection applies] is located in Zone A or another similar zone |
|
with a high level of flood risk or 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
|
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under that federal program is available,] the association may not |
|
issue an insurance policy for initial or renewal coverage unless |
|
evidence is submitted to the association that the property to be |
|
covered under the policy is also covered by a flood insurance policy |
|
issued under the National Flood Insurance Program in an amount |
|
equal to or greater than the amount of coverage under the policy to |
|
be issued by the association. This subsection does not apply to |
|
property for which flood insurance is not available under the |
|
National Flood Insurance Program [is submitted to the association]. |
|
(a-2) 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 |
|
required under Subsection (a-1) to a [the] prospective insured, if |
|
that coverage is available. |
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SECTION 8. The heading to Subchapter E, Chapter 2210, |
|
Insurance Code, is amended to read as follows: |
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SUBCHAPTER E. INSURANCE COVERAGE; CLAIMS SETTLEMENT AND PAYMENT |
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SECTION 9. Subchapter E, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.205, 2210.210, 2210.211, and |
|
2210.212 to read as follows: |
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Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR |
|
FILING CLAIM; NOTICE CONCERNING ARBITRATION. (a) A windstorm and |
|
hail insurance policy issued by the association must: |
|
(1) require an insured to file a claim under the policy |
|
not later than the first anniversary of the date on which the damage |
|
or loss that is the basis of the claim occurs; and |
|
(2) contain, in boldface type, a conspicuous notice |
|
concerning the mandatory arbitration of coverage and claim disputes |
|
under Section 2210.553, including the prerequisites and deadlines |
|
for requesting arbitration described by Sections 2210.212 and |
|
2210.553. |
|
(b) The commissioner, on a showing of good cause by a person |
|
insured under this chapter, may extend the one-year period |
|
described by Subsection (a)(1) for a period not to exceed 90 days. |
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Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED. |
|
The association may not issue coverage for the following |
|
structures, regardless of whether the structure is otherwise |
|
insurable property under this chapter: |
|
(1) a wind turbine; |
|
(2) a structure used primarily as a casino or other |
|
gambling establishment; or |
|
(3) a structure used as a sexually oriented business, |
|
as defined by Section 243.002, Local Government Code. |
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Sec. 2210.211. PROOF OF OTHER COVERAGE REQUIRED FOR |
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SETTLEMENT OF CERTAIN CLAIMS. (a) This section applies only to a |
|
claim filed under an association policy the issuance or renewal of |
|
which, under Section 2210.203(a-1), requires evidence of coverage |
|
by a flood insurance policy. |
|
(b) The association may not pay or settle a claim described |
|
by Subsection (a) unless the person filing the claim provides |
|
evidence satisfactory to the association that, on the date of the |
|
loss that is the basis of the claim, the property insured under the |
|
association policy was also covered by a flood insurance policy in |
|
the amount required for issuance or renewal of the association |
|
policy under Section 2210.203(a-1). |
|
Sec. 2210.212. NOTICE AND APPRAISAL OF CERTAIN CLAIMS. (a) |
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Not later than the 30th day after the date a person insured under |
|
this chapter files a claim with the association, the association |
|
shall provide the person notice of whether the claim is accepted or |
|
denied and, if the claim is accepted, a written appraisal of the |
|
damage to the insured property. |
|
(b) A person who receives notice that a claim is denied may, |
|
after providing the association the notice required by Subsection |
|
(f), request binding arbitration under Section 2210.553. |
|
(c) Not later than the 60th day after the date the |
|
association provides a written appraisal under Subsection (a), the |
|
person shall: |
|
(1) accept the written appraisal and request payment |
|
of the person's claim in accordance with the appraisal; or |
|
(2) request a supplemental review of the claim by the |
|
association. |
|
(d) Not later than the 30th day after the date of a request |
|
for a supplemental review under Subsection (c)(2), the association |
|
shall: |
|
(1) conduct the requested supplemental review and, if |
|
necessary, revise the written appraisal originally provided under |
|
Subsection (b) to reflect any changes resulting from the |
|
supplemental review; or |
|
(2) notify the person who filed the claim that the |
|
association will not conduct the requested supplemental review. |
|
(e) On receipt of the results of a supplemental review |
|
conducted under Subsection (d)(1), or notice under Subsection |
|
(d)(2) that the association will not conduct a supplemental review, |
|
the person who filed the claim may: |
|
(1) accept the written appraisal following the |
|
supplemental review and request payment of the claim in accordance |
|
with that appraisal; or |
|
(2) after providing the association the notice |
|
required under Subsection (f), dispute the written appraisal by |
|
requesting binding arbitration in the manner described by Section |
|
2210.553. |
|
(f) Not later than the 30th day before the date a person |
|
requests binding arbitration under Section 2210.553, the person |
|
shall provide the association with written notice of the person's |
|
intent to request binding arbitration. The notice provided under |
|
this subsection must advise the association of each of the person's |
|
specific complaints concerning the association's denial of the |
|
claim or appraisal of the insured property, including the amount of |
|
damage that the person believes should have been but was not |
|
accounted for in any appraisal performed by the association. |
|
(g) In addition to the notice required under Subsection (f), |
|
not later than the 30th day before the date of an arbitration under |
|
Section 2210.553, the person who filed the disputed claim and the |
|
association shall submit to the department all final offers of |
|
settlement concerning the disputed claim. The department, the |
|
person, and the association may not disclose the settlement offers |
|
received under this subsection to an arbitrator assigned under |
|
Section 2210.553. |
|
SECTION 10. Section 2210.259, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (c) to read as |
|
follows: |
|
(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 determined under Subsection (c) |
|
[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. |
|
(c) The commissioner, after receiving a recommendation from |
|
the board concerning the amount of the annual premium surcharge |
|
required under Subsection (a), by rule shall establish the amount |
|
of the annual premium surcharge. The amount of the surcharge must |
|
be actuarially justifiable and may not be less than 15 percent of |
|
the premium for insurance coverage obtained through the |
|
association. Before the commissioner by rule establishes the |
|
amount of the annual premium surcharge, the commissioner shall |
|
report to the legislative oversight board established under |
|
Subchapter N concerning the methodology the commissioner used to |
|
determine the amount of the annual premium surcharge. |
|
SECTION 11. Section 2210.355(g), Insurance Code, is amended |
|
to read as follows: |
|
(g) A commission paid to an agent must be reasonable, |
|
adequate, not unfairly discriminatory, and nonconfiscatory and |
|
must comply with rules adopted by the commissioner under Section |
|
2210.356. |
|
SECTION 12. Subchapter H, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.356 to read as follows: |
|
Sec. 2210.356. AGENT COMMISSIONS. (a) The commissioner by |
|
rule shall establish a commission structure for payment of an agent |
|
who submits an application for coverage to the association on |
|
behalf of a person who has an insurable interest in insurable |
|
property. |
|
(b) The commission structure adopted by the commissioner |
|
must be fair and reasonable, taking into consideration the amount |
|
of work performed by an agent in submitting an application to the |
|
association and the prevailing commission structure in the private |
|
windstorm insurance market. |
|
SECTION 13. Section 2210.453, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) If the association does not purchase reinsurance as |
|
authorized by this section, the board, not later than June 1 of each |
|
year, shall submit to the commissioner, the legislative oversight |
|
board established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
containing an actuarial plan for paying losses in the event of a |
|
catastrophe with estimated damages of $2.5 billion or more. |
|
SECTION 14. Section 2210.501, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (d) to read as |
|
follows: |
|
(b) Except as provided by Subsection (d) and subject |
|
[Subject] to Section 2210.502, the maximum liability limits for |
|
coverage on a single insurable property may not be less than: |
|
(1) $350,000 for: |
|
(A) a dwelling, including an individually owned |
|
townhouse unit; and |
|
(B) the corporeal movable property located in or |
|
about the dwelling and, as an extension of coverage, away from those |
|
premises, as provided under the policy; |
|
(2) $2,192,000 for a building, and the corporeal |
|
movable property located in the building, if the building is: |
|
(A) owned by, and at least 75 percent of which is |
|
occupied by, a governmental entity; or |
|
(B) not owned by, but is wholly and exclusively |
|
occupied by, a governmental entity; |
|
(3) $125,000 for individually owned corporeal movable |
|
property located in an apartment unit, residential condominium |
|
unit, or townhouse unit that is occupied by the owner of that |
|
property and, as an extension of coverage, away from those |
|
premises, as provided under the policy; and |
|
(4) $1,500,000 for: |
|
(A) a structure other than a dwelling or a public |
|
building; and |
|
(B) the corporeal movable property located in |
|
that structure and, as an extension of coverage, away from those |
|
premises, as provided under the policy. |
|
(d) The maximum liability limits for insurable property the |
|
issuance or renewal of coverage by the association of which |
|
requires evidence of coverage by a flood insurance policy under |
|
Section 2210.203(a-1) may not exceed the maximum liability limits |
|
in effect for the property under the National Flood Insurance |
|
Program on the date the association policy is issued. |
|
SECTION 15. Section 2210.502, Insurance Code, is amended by |
|
adding Subsection (e) to read as follows: |
|
(e) The board of directors may not propose, and the |
|
commissioner may not approve, maximum liability limits for |
|
insurable property described by Section 2210.501(d), and for the |
|
corporeal movable property located in or about that property, that |
|
exceed the maximum liability limits in effect for the property or |
|
contents under the National Flood Insurance Program. |
|
SECTION 16. The heading to Subchapter L, Chapter 2210, |
|
Insurance Code, is amended to read as follows: |
|
SUBCHAPTER L. APPEALS AND OTHER ACTIONS; ARBITRATION |
|
SECTION 17. Sections 2210.551(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) This section: |
|
(1) does not apply to a person insured under this |
|
chapter who is required to resolve a dispute concerning the payment |
|
of, the amount of, or the denial of a particular claim under Section |
|
2210.553; and |
|
(2) applies only to: |
|
(A) [(1)] a person not described by Subdivision |
|
(1) who is insured under this chapter or an authorized |
|
representative of the person; or |
|
(B) [(2)] an affected insurer. |
|
(b) A person or entity described by Subsection (a)(2) [(a)] |
|
who is aggrieved by an act, ruling, or decision of the association |
|
may appeal to the commissioner not later than the 30th day after the |
|
date of that act, ruling, or decision. |
|
SECTION 18. The heading to Section 2210.552, Insurance |
|
Code, is amended to read as follows: |
|
Sec. 2210.552. [CLAIM] DISPUTES OTHER THAN CLAIM AND |
|
COVERAGE DISPUTES; VENUE. |
|
SECTION 19. Section 2210.552, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (e) to read as |
|
follows: |
|
(a) Except as provided by Sections 2210.007, [and] |
|
2210.106, and 2210.553, a person insured under this chapter who is |
|
aggrieved by an act, ruling, or decision of the association |
|
[relating to the payment of, the amount of, or the denial of a
|
|
claim] may: |
|
(1) bring an action against the association[,
|
|
including an action under Chapter 541]; or |
|
(2) appeal the act, ruling, or decision under Section |
|
2210.551. |
|
(e) A person who brings an action against the association |
|
under this section: |
|
(1) may recover the amount of actual damages, plus |
|
court costs and reasonable and necessary attorney's fees; and |
|
(2) may not recover punitive or exemplary damages, |
|
including damages under Section 17.50, Business & Commerce Code. |
|
SECTION 20. Subchapter L, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.553, 2210.554, and 2210.555 to read |
|
as follows: |
|
Sec. 2210.553. ARBITRATION OF COVERAGE AND CLAIM DISPUTES. |
|
(a) A dispute involving an act, ruling, or decision of the |
|
association relating to the payment of, the amount of, or the denial |
|
of a particular claim: |
|
(1) must be resolved through binding arbitration in |
|
accordance with this section; and |
|
(2) may not be resolved in the manner described by |
|
Section 2210.551 or 2210.552. |
|
(b) A person insured under this chapter who is aggrieved by |
|
an act, ruling, or decision of the association relating to the |
|
payment of, the amount of, or the denial of a claim may request |
|
binding arbitration of the person's grievance. |
|
(c) A person insured under this chapter must, in the manner |
|
prescribed by the commissioner by rule, request binding arbitration |
|
under this section not later than the earlier of: |
|
(1) the 90th day after the date the person receives |
|
under Section 2210.212 notice from the association that a claim is |
|
denied or receives notice concerning a supplemental review |
|
requested under Section 2210.212(c); or |
|
(2) the second anniversary of the date on which the |
|
damage or loss that is the basis of the particular claim occurs. |
|
(d) The commissioner, on a showing of good cause by a person |
|
insured under this chapter, may extend each of the deadlines |
|
described by Subsection (c) by a period not to exceed 90 days. |
|
(e) The commissioner by rule shall establish procedures for |
|
the conduct of the arbitration of grievances under this section. |
|
The rules adopted under this subsection must: |
|
(1) be consistent with any applicable rules of the |
|
American Arbitration Association that were in effect on the date on |
|
which the policy under which the denied claim is filed was issued; |
|
(2) establish the qualifications necessary for an |
|
arbitrator to become certified to conduct arbitrations under this |
|
section, including prohibiting a person to whom Section 2210.011 |
|
applies from serving as an arbitrator under this section; |
|
(3) establish a procedure through which arbitrators |
|
may become certified to conduct arbitrations under this section; |
|
(4) require an arbitrator conducting an arbitration |
|
under this section to be certified by the department; |
|
(5) provide that the commissioner will randomly assign |
|
a certified arbitrator to conduct an arbitration under this |
|
section; |
|
(6) establish a procedure through which a certified |
|
arbitrator's fees under this section are paid, including the |
|
maximum allowable rate for those fees, which party or parties are |
|
liable for the payment of those fees, and the manner in which an |
|
arbitrator may seek the commissioner's approval of those fees; |
|
(7) establish the parameters for mandatory and |
|
permissible discovery for an arbitration under this section; and |
|
(8) establish deadlines for an arbitration conducted |
|
under this section and require an arbitrator conducting an |
|
arbitration under this section to issue a scheduling order in |
|
accordance with those deadlines. |
|
(f) If a person insured under this chapter or the |
|
association is not satisfied with the commissioner's assignment of |
|
an arbitrator under Subsection (e)(5), either party may, not later |
|
than the 10th day after the date of assignment, request that the |
|
commissioner randomly assign a different arbitrator to the dispute. |
|
Each party may request one reassignment under this section, and the |
|
commissioner shall grant a request for reassignment authorized |
|
under this subsection. |
|
(g) The procedure established by the commissioner under |
|
Subsection (e)(6) must require that an arbitrator's fees be |
|
approved by the commissioner before those fees are paid. |
|
(h) In addition to the rules required under Subsection (e), |
|
the commissioner may adopt any other rules necessary to implement |
|
this section, including rules that are specific to a particular |
|
storm or particular period and are intended to prevent unfair |
|
deviations in, and to encourage fairness in, arbitration awards |
|
under this section. |
|
(i) The department shall maintain and make publicly |
|
available a list of arbitrators certified to conduct arbitrations |
|
under this section. |
|
(j) Except to the extent of any conflict with this section, |
|
Chapter 171, Civil Practice and Remedies Code, applies to an |
|
arbitration conducted under this section. |
|
(k) A person insured under this chapter who requests binding |
|
arbitration under this section may be represented by an attorney. |
|
Sec. 2210.554. ARBITRATION AWARDS; ATTORNEY'S FEES. (a) |
|
If, after an arbitration under Section 2210.553, the arbitrator |
|
awards damages to a person insured under this chapter in an amount |
|
that is 110 percent or more of the final offer of settlement from |
|
the association, the person insured under this chapter may also |
|
recover from the association reasonable and necessary attorney's |
|
fees. |
|
(b) An arbitrator who awards damages to the person insured |
|
under this chapter may assess interest on the damage recovery owed |
|
the insured, at a rate of six percent per annum from the date of loss |
|
through the date of payment of the arbitration award by the |
|
association. |
|
Sec. 2210.555. ABATEMENT OF ARBITRATION. (a) The |
|
association, not later than the 30th day after the date a person |
|
requests binding arbitration under Section 2210.553, may request |
|
from the commissioner an abatement of the arbitration if the |
|
association does not receive the notice required under Section |
|
2210.212(f). |
|
(b) The commissioner shall abate a requested arbitration if |
|
the commissioner finds that a person insured under this chapter did |
|
not provide the notice required under Section 2210.212(f). |
|
(c) An abatement under this section continues until the 30th |
|
day after the date notice is provided in compliance with Section |
|
2210.212(f). |
|
SECTION 21. Section 2210.551(e), Insurance Code, is |
|
repealed. |
|
SECTION 22. This Act applies only to a Texas windstorm and |
|
hail insurance policy, and a dispute arising under a Texas |
|
windstorm and hail insurance policy, delivered, issued for |
|
delivery, or renewed by the Texas Windstorm Insurance Association |
|
on or after the 30th day after the effective date of this Act. A |
|
Texas windstorm and hail insurance policy, and a dispute arising |
|
under a Texas windstorm and hail insurance policy, delivered, |
|
issued for delivery, or renewed by the Texas Windstorm Insurance |
|
Association before the 30th day after the effective date of this |
|
Act, are governed by the law in effect on the date the policy was |
|
delivered, issued for delivery, or renewed, and the former law is |
|
continued in effect for that purpose. |
|
SECTION 23. The Texas Windstorm Insurance Association shall |
|
amend the association's plan of operation to conform to the changes |
|
in law made by this Act not later than January 1, 2012. |
|
SECTION 24. 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. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2011. |