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A BILL TO BE ENTITLED
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AN ACT
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relating to the administration of the Texas Windstorm Insurance |
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Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.063 to read as follows: |
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Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The |
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headquarters of the association must be located in a first tier |
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coastal county or second tier coastal county. |
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SECTION 2. Subchapter H, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.3512 to read as follows: |
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Sec. 2210.3512. REQUIREMENT FOR VOTE ON RATE FILING. The |
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board of directors may not vote on a proposed rate filing if there |
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is a vacancy on the board. |
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SECTION 3. Section 2210.452(c), Insurance Code, is amended |
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to read as follows: |
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(c) At the end of each calendar year or policy year, the |
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association shall use the net gain from operations of the |
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association, including all premium and other revenue of the |
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association in excess of incurred losses, operating expenses, |
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public security obligations, and public security administrative |
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expenses, to make payments to the trust fund or pay public security |
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obligations, giving priority to the obligations with the highest |
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interest rates [, procure reinsurance, or use alternative risk |
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financing mechanisms, or to make payments to the trust fund and |
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procure reinsurance or use alternative risk financing mechanisms]. |
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SECTION 4. Subchapter J, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.4522 to read as follows: |
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Sec. 2210.4522. REINSURANCE REQUIRED. (a) Notwithstanding |
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any other provision of this chapter, a member insurer shall provide |
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to the association reinsurance in lieu of reinsurance purchased |
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under Section 2210.453 at no cost to the association. The |
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proportion of the losses that exceed the attachment point for the |
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provided reinsurance is calculated in the manner used to determine |
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each insurer's participation in the association for the year under |
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Section 2210.052. |
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(b) Except as provided by Subsection (c), a member insurer |
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may purchase reinsurance to cover the proportion of losses for |
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which the insurer is responsible under Subsection (a). |
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(c) A member insurer may not purchase reinsurance under this |
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section from an insurer that has prepared the risk model on which |
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the association relies in determining the probable maximum loss |
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applicable for the period covered by the reinsurance. |
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(d) A member insurer may not recoup losses incurred from |
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providing the reinsurance required in Subsection (a) through a |
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premium surcharge. |
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SECTION 5. Section 2210.453, Insurance Code, is amended by |
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adding Subsection (b-1) to read as follows: |
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(b-1) In determining the probable maximum loss under |
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Subsection (b), the association may not consider the cost of |
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providing loss adjustments. |
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SECTION 6. Section 2210.611, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT |
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EARNINGS. Revenue collected in any calendar year from a premium |
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surcharge under Sections 2210.612, 2210.613, and 2210.6131 that |
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exceeds the amount of the public security obligations and public |
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security administrative expenses payable in that calendar year and |
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interest earned on the funds may, in the discretion of the |
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association, be: |
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(1) used to pay public security obligations payable in |
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the subsequent calendar year, offsetting the amount of the premium |
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surcharge that would otherwise be required to be levied for the year |
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under this subchapter; or |
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(2) used to redeem or purchase outstanding public |
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securities [; or |
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[(3) deposited in the catastrophe reserve trust fund]. |
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SECTION 7. Sections 2210.453(d) and (e), Insurance Code, |
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are repealed. |
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SECTION 8. Section 2210.063, Insurance Code, as added by |
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this Act, applies to the Texas Windstorm Insurance Association |
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beginning on January 1, 2022. |
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SECTION 9. The Texas Windstorm Insurance Association shall |
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amend the association's plan of operation to conform to the changes |
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in law made by this Act not later than the 60th day after the |
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effective date of this Act. |
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SECTION 10. This Act takes effect September 1, 2021. |