H.B. No. 2593
1-1 AN ACT
1-2 relating to rates for commercial windstorm and hail insurance
1-3 coverage through the Texas Catastrophe Property Insurance
1-4 Association.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 3(h), Texas Catastrophe Property
1-7 Insurance Pool Act (Article 21.49, Insurance Code), is amended to
1-8 read as follows:
1-9 (h) "Catastrophe Area" means a city or a part of a city or a
1-10 county or a part of a county in which it may be determined by the
1-11 commissioner <Board>, after notice of not less than 10 days and a
1-12 hearing, that windstorm and hail insurance is not reasonably
1-13 available to a substantial number of owners of insurable property
1-14 within that <such> city or a part of that city or a county or a
1-15 part of that county, due to such insurable property being located
1-16 within a city or a part of that city or a county or a part of that
1-17 county that is subject to unusually frequent and severe damage
1-18 resulting from windstorms and/or hailstorms. Such designation
1-19 shall be revoked by the commissioner <Board> if the commissioner
1-20 <it> determines, after notice of not less than 10 days and a
1-21 hearing, that windstorm and hail insurance in such catastrophe area
1-22 is no longer reasonably unavailable to a substantial number of
1-23 owners of insurable property within such designated city or a part
2-1 of that city or county or a part of that county. If the
2-2 Association shall determine that windstorm and hail insurance is no
2-3 longer reasonably unavailable to a substantial number of owners of
2-4 insurable property in any designated catastrophe area or areas,
2-5 then the Association may request in writing that the commissioner
2-6 <Board> revoke the designation of any or all of such catastrophe
2-7 areas and, after notice of not less than 10 days and a hearing, but
2-8 within 30 days of such hearing, the commissioner <Board> shall
2-9 either approve or reject the Association's request and shall, if
2-10 such request be approved, revoke such designation or designations.
2-11 SECTION 2. Section 8(h), Texas Catastrophe Property
2-12 Insurance Pool Act (Article 21.49, Insurance Code), is amended to
2-13 read as follows:
2-14 (h)(1) Each extended coverage benchmark rate, flexibility
2-15 band, and promulgated rate established by the commissioner <Board>
2-16 in accordance with Chapter 5, Insurance Code, must be uniform
2-17 throughout the first tier of coastal counties.
2-18 (2) The rates for noncommercial windstorm and hail
2-19 insurance written by the association <before December 31, 1995,>
2-20 shall be 90 percent of the modified extended coverage rates. For
2-21 purposes of this section, the modified extended coverage rate is
2-22 the greater of the upper flexibility band for extended coverage
2-23 established by the commissioner <board> under Article 5.101 of this
2-24 code or 25 percent above the extended coverage benchmark rate
2-25 established by the commissioner <board> under that article.
3-1 (3) Not later than August 1 of each year, the
3-2 Association <The rates for noncommercial windstorm and hail
3-3 insurance written by the association after December 31, 1995, shall
3-4 be 90 percent of the manual rate for monoline extended coverage
3-5 promulgated by the Board for noncommercial risks under Subchapter
3-6 C, Chapter 5, Insurance Code. Notwithstanding Article 5.13-2,
3-7 Insurance Code, the Board> shall file with the department for
3-8 approval by the commissioner <promulgate> a manual rate for
3-9 commercial risks and classes of risks written by the Association
3-10 developed in accordance with Subchapter C, Chapter 5, Insurance
3-11 Code, which is applicable only to the extent consistent with this
3-12 article. The Association may not make such a filing more than one
3-13 time in any 12-month period. The rate for commercial windstorm and
3-14 hail insurance written by the Association shall be 90 percent of
3-15 the rate for extended coverage for commercial risks as developed in
3-16 accordance with Subchapter C, Chapter 5, Insurance Code, to the
3-17 extent consistent with this article. Article 5.13-2, Insurance
3-18 Code, does not apply to the rates of insurance written by the
3-19 Association. Article 1.33B of this code does not apply to a filing
3-20 made under this subdivision and Subdivisions (4)-(10) of this
3-21 subsection, or a department action with respect to the filing.
3-22 <The rates for commercial windstorm and hail insurance written by
3-23 the Association shall be 90 percent of the manual rates for
3-24 extended coverage promulgated by the Board for commercial risks
3-25 under Subchapter C, Chapter 5, Insurance Code.>
4-1 (4) Before approving or disapproving a filing, or
4-2 modifying a filing, the commissioner shall provide all interested
4-3 persons a reasonable opportunity to review the filing, obtain
4-4 copies of the filing on payment of any legally required copying
4-5 cost, and submit to the commissioner written comments or
4-6 information related to the filing.
4-7 (5) The commissioner shall schedule an open meeting
4-8 not later than the 45th day after the date on which the department
4-9 receives the filing at which interested persons may present written
4-10 or oral comments relating to the filing. An open meeting under
4-11 this subdivision is subject to Chapter 551, Government Code, but is
4-12 not a contested case hearing under Chapter 2001, Government Code.
4-13 (6) The department shall file with the Texas Register
4-14 notice that a filing has been made under Subdivision (3) of this
4-15 subsection not later than the seventh day after the date the filing
4-16 is received by the department. The notice must include information
4-17 relating to:
4-18 (A) the availability of the filing for public
4-19 inspection at the department during regular business hours and the
4-20 procedures for obtaining copies of the filing;
4-21 (B) procedures for making written comments
4-22 related to the filing; and
4-23 (C) the time, place, and date of the open
4-24 meeting scheduled under Subdivision (5) of this subsection at which
4-25 an interested person may submit either written or oral comments
5-1 relating to the filing.
5-2 (7) After the conclusion of the open meeting, the
5-3 commissioner shall approve or disapprove or modify the filing in
5-4 writing on or before November 1 of the year in which the filing is
5-5 made or the filing is deemed approved. If the commissioner
5-6 disapproves a filing, the commissioner shall state in writing the
5-7 reasons for the disapproval and the criteria to be met by the
5-8 Association to obtain approval. The Association may file with the
5-9 commissioner, not later than ten (10) days after the date on which
5-10 the Association receives the commissioner's written disapproval, an
5-11 amended filing bringing the filing into conformity with all
5-12 criteria stated in the commissioner's written disapproval.
5-13 (8) Before approving or disapproving an amended
5-14 filing, the commissioner shall provide all interested persons a
5-15 reasonable opportunity to review the amended filing, obtain copies
5-16 of the amended filing on payment of any legally required copying
5-17 cost, and submit to the commissioner written comments or
5-18 information related to the amended filing in the manner provided by
5-19 Subdivision (4) of this subsection, and may hold a hearing not
5-20 later than the 20th day after the date on which the department
5-21 receives the amended filing in the manner provided by Subdivision
5-22 (5) of this subsection. Not later than the 10th day after the date
5-23 on which the hearing on the amended filing is concluded, the
5-24 commissioner shall approve or disapprove the amended filing.
5-25 Within 30 days after the amended filing is received, the
6-1 commissioner shall approve or disapprove an amended filing or it is
6-2 deemed approved. The requirements imposed under Subdivisions (6)
6-3 and (7) of this subsection apply to a hearing conducted under this
6-4 subdivision.
6-5 (9) In conjunction with the review of a filing or
6-6 amended filing, the commissioner may request the Association to
6-7 provide additional supporting information relating to the filing or
6-8 amended filing, and any interested person may file a written
6-9 request with the commissioner for additional supporting information
6-10 relating to the filing or amended filing. A request under this
6-11 subdivision must be reasonable and must be directly related to the
6-12 filing or amended filing. The commissioner shall submit to the
6-13 Association all requests for additional supporting information made
6-14 under this subdivision for the commissioner's use and the use of
6-15 any interested person. The Association shall provide the
6-16 information to the commissioner not later than the fifth day after
6-17 the date on which the written request for additional supporting
6-18 information is delivered to the Association. The department shall
6-19 notify an interested person who has requested additional
6-20 information of the availability of the information not later than
6-21 one business day after the date on which the commissioner receives
6-22 the information from the Association.
6-23 (10) A filing made under this subsection may not
6-24 reflect an annual premium rate change that is more than 15 percent
6-25 (higher or lower) of the rate for commercial windstorm and hail
7-1 insurance in each rate classification in effect on September 1,
7-2 1995. This subdivision expires January 1, 2001, provided however,
7-3 that the commissioner may, after notice and hearing, suspend this
7-4 subdivision upon a finding that a catastrophe loss or series of
7-5 occurrences resulting in losses in the catastrophe area justify a
7-6 need to assure rate adequacy in the catastrophe area and also
7-7 justify a need to assure availability of insurance outside the
7-8 catastrophe area.
7-9 (11) If valid flood or rising water insurance coverage
7-10 exists and is maintained on any risk being insured in the pool, the
7-11 commissioner <State Board of Insurance> may provide for a rate and
7-12 reduction in rate of premium as may be appropriate.
7-13 (12) The catastrophe element of extended coverage
7-14 rates promulgated or filed by the commissioner <Board> under this
7-15 Act applicable to commercial risks written by the Association shall
7-16 be uniform throughout the seacoast territory and shall be based on
7-17 all monoline extended coverage loss experience of all regulated
7-18 insurers authorized to do business in this state, including the
7-19 Association, for property located in the seacoast territory, using
7-20 the most recent 30 years' experience available. Surcharges
7-21 collected in the past and used in the development of current manual
7-22 rates may not be excluded from future rate development as long as
7-23 those surcharges were collected during the experience period used
7-24 by the commissioner <Board>.
7-25 (13) The association shall either establish a
8-1 reinsurance program or enter into a contract as provided in
8-2 Subsection (i) of this section. The Texas Department of Insurance
8-3 may approve any reinsurance program.
8-4 SECTION 3. Not later than December 31, 1995, the
8-5 commissioner of insurance shall submit to the governor, lieutenant
8-6 governor, and speaker of the house of representatives a report
8-7 containing the commissioner's conclusions and recommendations for
8-8 further action regarding the treatment of claims resulting from a
8-9 significant natural catastrophe. The report must include:
8-10 (1) necessary administrative and legislative measures
8-11 to adequately respond to a substantial volume of claims resulting
8-12 from a significant natural catastrophe;
8-13 (2) administrative and legislative measures for
8-14 coordination and cooperation among applicable state agencies as
8-15 necessary to:
8-16 (A) ensure prompt and fair payment of claims
8-17 resulting from a significant natural catastrophe; and
8-18 (B) protect the Texas Catastrophe Property
8-19 Insurance Association from fraudulent claims; and
8-20 (3) an analysis of the adequacy of the rate structure
8-21 of the Texas Catastrophe Property Insurance Association to ensure
8-22 recovery by the association from financial losses resulting from a
8-23 significant natural catastrophe.
8-24 SECTION 4. This Act takes effect on September 1, 1995, and
8-25 applies only to an insurance policy that is delivered, issued for
9-1 delivery, or renewed on or after January 1, 1996. A policy that is
9-2 delivered, issued for delivery, or renewed before January 1, 1996,
9-3 is governed by the law as it existed immediately before the
9-4 effective date of this Act, and that law is continued in effect for
9-5 that purpose.
9-6 SECTION 5. The importance of this legislation and the
9-7 crowded condition of the calendars in both houses create an
9-8 emergency and an imperative public necessity that the
9-9 constitutional rule requiring bills to be read on three several
9-10 days in each house be suspended, and this rule is hereby suspended.