BILL ANALYSIS

C.S.H.B. 4354

By: Lozano

Insurance

Committee Report (Substituted)

BACKGROUND AND PURPOSE

After consulting stakeholders, including insurance agents, policyholders, coastal legislators, and local officials, the Texas Windstorm Insurance Association (TWIA) board of directors recommended in its biennial report to the legislature that TWIA and the Texas Department of Insurance should be given the flexibility to develop incentives for the most appropriate wind mitigation efforts, such as retrofitting existing construction with upgraded opening protections, roof attachments, and other certified improvements. More resilient construction methods can improve both the availability and affordability of insurance coverage and can lead to less community damage, reduced costs of emergency management and disaster recovery resources, and lower insurance losses after a catastrophic event. Having homes and businesses covered by TWIA built and upgraded to construction standards designed to withstand severe weather will reduce TWIA claims, benefiting TWIA policyholders. C.S.H.B. 4354 seeks to address this issue by authorizing TWIA to administer a mitigation and preparedness program, subject to a plan approved by the commissioner of insurance, and requiring TWIA to design the program to improve preparedness for windstorm and hail catastrophes and reduce potential losses in the event of such a catastrophe.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 4354 amends the Insurance Code to remove the requirement for the commissioner of insurance to annually develop and implement a mitigation and preparedness plan that provides for actions to be taken in the seacoast territory by the commissioner, or other designated entities, to implement certain programs to improve preparedness for windstorm and hail catastrophes, reduce potential losses in the event of such a catastrophe, and provide research into the means to reduce those losses, educate or inform the public in determining the appropriateness of particular upgrades to structures, and protect infrastructure from potential damage from those catastrophes. The bill authorizes the Texas Windstorm Insurance Association (TWIA) instead to administer a mitigation and preparedness program, subject to a plan approved by the commissioner, and requires TWIA to design the program to improve preparedness for windstorm and hail catastrophes and reduce potential losses in the event of such a catastrophe. The bill authorizes TWIA to fund the mitigation and preparedness program using money from the catastrophe reserve trust fund, capped at $500,000 annually, but prohibits money from being used for that purpose if the commissioner determines that an expenditure from the trust fund would jeopardize the actuarial soundness of TWIA or materially impair TWIA's ability to serve the purposes for which it was established.

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4354 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

While both the introduced and the substitute require the mitigation and preparedness program to be designed to improve preparedness for windstorm and hail catastrophes and reduce potential losses in the event of such a catastrophe, the substitute includes a specification absent from the introduced that TWIA is required to design the program for such purposes.