| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to the administration of the Texas Windstorm Insurance |
|
|
Association. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subchapter B, Chapter 2210, Insurance Code, is |
|
|
amended by adding Section 2210.063 to read as follows: |
|
|
Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The |
|
|
headquarters of the association must be located in a first tier |
|
|
coastal county or second tier coastal county. |
|
|
SECTION 2. Subchapter H, Chapter 2210, Insurance Code, is |
|
|
amended by adding Section 2210.3512 to read as follows: |
|
|
Sec. 2210.3512. REQUIREMENT FOR VOTE ON RATE FILING. The |
|
|
board of directors may not vote on a proposed rate filing if there |
|
|
is a vacancy on the board. |
|
|
SECTION 3. Section 2210.452(c), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(c) At the end of each calendar year or policy year, the |
|
|
association shall use the net gain from operations of the |
|
|
association, including all premium and other revenue of the |
|
|
association in excess of incurred losses, operating expenses, |
|
|
public security obligations, and public security administrative |
|
|
expenses, to make payments to the trust fund or pay public security |
|
|
obligations, giving priority to the obligations with the highest |
|
|
interest rates[, procure reinsurance, or use alternative risk |
|
|
financing mechanisms, or to make payments to the trust fund and |
|
|
procure reinsurance or use alternative risk financing mechanisms]. |
|
|
SECTION 4. Section 2210.453, Insurance Code, is amended by |
|
|
adding Subsections (b-1), (b-2), and (f) to read as follows: |
|
|
(b-1) In determining the probable maximum loss under |
|
|
Subsection (b), the association: |
|
|
(1) may not consider the cost of providing loss |
|
|
adjustments; |
|
|
(2) shall, to the extent possible, contract with any |
|
|
disinterested third parties necessary to execute any hurricane risk |
|
|
simulation models that were executed in the preceding storm season; |
|
|
(3) shall, if the association is unable to contract |
|
|
for the execution of a hurricane risk simulation model described by |
|
|
Subdivision (2), contract with any disinterested third party |
|
|
necessary to execute a hurricane risk simulation model that is |
|
|
substantially similar to the model for which the association is |
|
|
unable to contract under Subdivision (2); |
|
|
(4) may contract with any disinterested third parties |
|
|
to execute hurricane risk simulation models in addition to the |
|
|
models required by Subdivisions (2) and (3); |
|
|
(5) shall provide to a third party executing a |
|
|
hurricane risk simulation model any information necessary to comply |
|
|
with this subsection; |
|
|
(6) may not use a combination of hurricane risk |
|
|
simulation models to determine the probable maximum loss; and |
|
|
(7) may use only the hurricane risk simulation model |
|
|
that produces the lowest probable maximum loss. |
|
|
(b-2) Any information produced in compliance with |
|
|
Subsection (b-1) shall be made publicly available on the Internet |
|
|
website of the association. |
|
|
(f) The association may not purchase reinsurance under this |
|
|
section from an insurer or broker involved in the execution of the |
|
|
hurricane risk simulation model on which the association relies in |
|
|
determining the probable maximum loss applicable for the period |
|
|
covered by the reinsurance. |
|
|
SECTION 5. Section 2210.611, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT |
|
|
EARNINGS. Revenue collected in any calendar year from a premium |
|
|
surcharge under Sections 2210.612, 2210.613, and 2210.6131 that |
|
|
exceeds the amount of the public security obligations and public |
|
|
security administrative expenses payable in that calendar year and |
|
|
interest earned on the funds may, in the discretion of the |
|
|
association, be: |
|
|
(1) used to pay public security obligations payable in |
|
|
the subsequent calendar year, offsetting the amount of the premium |
|
|
surcharge that would otherwise be required to be levied for the year |
|
|
under this subchapter; or |
|
|
(2) used to redeem or purchase outstanding public |
|
|
securities[; or |
|
|
[(3) deposited in the catastrophe reserve trust fund]. |
|
|
SECTION 6. Section 2210.664(b), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(b) Not later than November 15, 2022 [2020], the board shall |
|
|
deliver a [the] report prepared under Subsection (a) to: |
|
|
(1) the governor; |
|
|
(2) the lieutenant governor; and |
|
|
(3) the speaker of the house of representatives. |
|
|
SECTION 7. Section 2210.665, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 2210.665. EXPIRATION. This subchapter expires |
|
|
September 1, 2023 [2021]. |
|
|
SECTION 8. Sections 14(c) and (d), Chapter 790 (H.B. 1900), |
|
|
Acts of the 86th Legislature, Regular Session, 2019, are amended to |
|
|
read as follows: |
|
|
(c) Not later than January 1, 2023 [2021], the windstorm |
|
|
insurance legislative oversight board shall submit to the governor, |
|
|
the lieutenant governor, the speaker of the house of |
|
|
representatives, and the Texas Department of Insurance a written |
|
|
report of a [the] study conducted under this section. The report |
|
|
must include the findings and legislative recommendations of the |
|
|
board. |
|
|
(d) This section expires January 1, 2024 [2022]. |
|
|
SECTION 9. Section 2210.063, Insurance Code, as added by |
|
|
this Act, applies to the Texas Windstorm Insurance Association |
|
|
beginning January 1, 2023. |
|
|
SECTION 10. The Texas Department of Insurance shall amend |
|
|
the Texas Windstorm Insurance Association's plan of operation to |
|
|
conform to the changes in law made by this Act not later than the |
|
|
60th day after the effective date of this Act. |
|
|
SECTION 11. This Act takes effect September 1, 2021. |