BILL ANALYSIS



Insurance Committee
C.S.H.B. 2676
By: T. Hunter
04-26-95
Committee Report (Substituted)



BACKGROUND

     The Texas Catastrophe Property Insurance Association Act,
(Article 21.49, Insurance Code) establishes a mechanism for
providing coverage for windstorm and hail insurance in designated
catastrophe areas.  Article 21.49 of the Insurance Code is the
statute governing the operation of the Texas Catastrophe Property
Insurance Association (TCPIA) and its authority to issue windstorm
and hail insurance in designated catastrophe areas.

PURPOSE

     As substituted, H.B. 2676 would amend Article 21.49 of the
Insurance Code to clarify the adjustment of the maximum limits of
liability that can be offered through the TCPIA.  Additionally,
this bill would allow the Commissioner of Insurance to designate a
city or county, in whole or in part, as a catastrophe area if a
substantial number of owners of insurable properties are unable to
obtain windstorm and hail insurance.  Finally, as substituted, the
bill clarifies the replacement cost coverage available through the
TCPIA so that TCPIA replacement cost coverage is consistent with
forms promulgated by the Commissioner of Insurance for other
residential property insurers.

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.

SECTION BY SECTION ANALYSIS

SECTION 1.

Amends Article 21.49, §8D, to allow the TCPIA board of directors to
adjust the maximum limits of liability that can be purchased
through TCPIA annually.  Present law requires the Commissioner make
this adjustment as part of an annual rate hearing.  The maximum
limits must be adjusted not later than September 1st of each year
and adjusted for inflation reflecting any changes in the BOECKH
Index.  Additionally, the board of directors may make additional
increases in the limits of liability as necessary for the purposes
of the Act.  Finally, any adjustment made by the board of directors
must be filed with the Commissioner of Insurance who has the
authority to disapprove such calculations by the TCPIA board.

SECTION 2.

Amends Article 21.49, §3(h), by allowing the Commissioner of
Insurance to designate a city, "in whole or in part," or a county,
"in whole or in part," as a catastrophe area.  Under current law,
the Commissioner may only designate an entire city or county as a
catastrophe area.  The standard is that a substantial number of
owners of insurable property have been unable to obtain windstorm
and hail insurance in the voluntary market.  This section would
allow the Commissioner to designate part of the city or part of the
county as a catastrophe area.



SECTION 3.

Amends Article 21.49, §8A, dealing with replacement cost coverage. 
Replacement cost coverage in the statute provides certain
limitations that are not consistent with the limitations set forth
in forms promulgated by the Commissioner for residential property
insurers.  This amendment conforms the TCPIA replacement cost
coverage to that coverage available in the Texas Personal Lines
Manual and consistent with forms promulgated by the Commissioner
for residential property insurers.

SECTION 4.  Effective Date

SECTION 5.  Emergency Clause

COMPARISON OF ORIGINAL TO SUBSTITUTE

     The substitute bill differs from the original bill by
clarifying SECTION 1 to require the board of directors of TCPIA to
make a filing of its adjusted limits of liability with the
Commissioner of Insurance and provides that the filing is deemed
approved unless disapproved by the Commissioner within 30 days.

     The substitute bill also adds an amendment in SECTION 2
allowing the Commissioner to designate a city or county, in whole
or in part.

     Finally, the substitute bill adds a SECTION 3 dealing with
replacement cost coverage that allows TCPIA to issue replacement
cost coverage on forms consistent with forms promulgated by the
Commissioner for residential property insurers.

SUMMARY OF COMMITTEE ACTION

     In accordance with House rules, H.B. 2676 was heard in a
public hearing on April 19, 1995.  There being a quorum present the
Chair announced at the request of the author, H.B. 2676 by Rep.
Hunter be left as pending business before the Committee.

     There being a quorum present on April 26, 1995, the Chair laid
out H.B. 2676 as pending business and recognized Counts who laid
out a substitute to H.B. 2676.  The Chair recognized Representative
Shields who offered an amendment to the substitute to H.B. 2676. 
The Chair heard no objections and the amendment was adopted.

     The Chair recognized Representative Shields who moved the
Committee redraft a substitute to H.B. 2676 incorporating the
adopted amendment.  The Chair heard no objections and the motion to
redraft a substitute to H.B. 2676 was adopted.  The Chair
recognized Rep. Shields who moved the Committee adopt the redrafted
substitute of H.B. 2676. The Chair heard no objections and the
motion was adopted.

     The Chair recognized Representative Shields who moved the
Committee report the redrafted substitute of H.B. 2676 to the full
House with the recommendation that it do pass, be printed, and sent
to the Committee on Local and Consent.  Representative Counts
seconded the motion and the motion prevailed by the following vote:
AYES (7); NAYES (0); ABSENT (2); PNV (0).