By Smithee H.B. No. 2697
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to rates for commercial windstorm and hail insurance in
1-3 the Texas Catastrophe Property Insurance Association.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 21.49, Section 8(h), Insurance Code, is
1-6 amended to read as follows:
1-7 (h) Each extended coverage benchmark rate, flexibility band,
1-8 and promulgated rate established by the Commissioner in accordance
1-9 with Chapter 5, Insurance Code, must be uniform throughout the
1-10 first tier of coastal counties.
1-11 The rates for noncommercial windstorm and hail insurance
1-12 written by the Association <before December 31, 1995,> shall be 90
1-13 percent of the modified extended coverage rates. For purposes of
1-14 this section, the modified extended coverage rate is the greater of
1-15 the upper flexibility band for extended coverage established by the
1-16 Commissioner under Article 5.101 of this code or 25 percent above
1-17 the extended coverage benchmark rate established by the
1-18 Commissioner under that article.
1-19 <The rates for noncommercial windstorm and hail insurance
1-20 written by the Association after December 31, 1995, shall be 90
1-21 percent of the manual rate for monoline extended coverage
1-22 promulgated by the Commissioner for noncommercial risks under
1-23 Subchapter C, Chapter 5, Insurance Code.> Notwithstanding Article
2-1 5.13-2, Insurance Code, the <Board> Association shall <promulgate>
2-2 file for approval by the Commissioner a manual rate for commercial
2-3 risks and classes of risks written by the Association; provided the
2-4 Association may not make such a filing more than one time in any
2-5 12-month period. <in accordance with Subchapter C, Chapter 5,
2-6 Insurance Code.> Article 5.13-2, Insurance Code, does not apply to
2-7 the rates of insurance written by the Association. The Texas
2-8 Department of Insurance shall file with the Texas Register notice
2-9 that a filing has been made by the Association seven days after
2-10 receipt of a filing. An insured under a commercial policy written
2-11 by the Association that is aggrieved with respect to a commercial
2-12 filing or the office of public insurance counsel may make written
2-13 application to the Commissioner for a hearing on a filing. The
2-14 application must specify the grounds on which the insured or office
2-15 of public insurance counsel bases its request for hearing, and the
2-16 application must be accompanied by written, specific facts and
2-17 information supporting the grounds for objection to the filing. An
2-18 interested person shall make such application within 60 days after
2-19 notice appears in the Texas Register. If, after the review of the
2-20 application for hearing and supporting facts and information, the
2-21 Commissioner concludes that the application for hearing is made in
2-22 good faith, that the insured or the public as represented by the
2-23 office of public insurance counsel would be so aggrieved if the
2-24 grounds in the request are established, and that those grounds
2-25 otherwise justify holding the hearing, the Commissioner shall issue
3-1 notice of a hearing to be held not later than the 30th day after
3-2 the date of receipt of the application for hearing. Additionally,
3-3 the Commissioner must give at least 10 days' written notice of the
3-4 hearing to the person or entity making the hearing application and
3-5 to the Association. The notice of hearing must specify which of
3-6 the grounds stated in the request for hearing will be considered
3-7 and whether the hearing is limited to consideration of all or part
3-8 of the grounds stated in the application for hearing.
3-9 If, after the hearing, the Commissioner finds that all or
3-10 part of the filing does not meet the requirements of this article,
3-11 the Commissioner shall issue an order specifying each aspect in
3-12 which the filing fails to meet the requirements of this article.
3-13 Each commercial filing and any information supporting the
3-14 filing that is filed under this article is open to public
3-15 inspection as of the date of the filing. A commercial filing made
3-16 by the Association is considered approved by the Commissioner on
3-17 the 75th day following the date on which it is filed unless the
3-18 Commissioner disapproves the filing before that time or issues
3-19 notice of a hearing in accordance with this section. If the
3-20 Commissioner gives notice of hearing on an application, he may
3-21 extend the date of approval or disapproval until the 60th day
3-22 following the date of the close of the hearing. <The rates for
3-23 commercial windstorm and hail insurance written by the Association
3-24 shall be 90 percent of the manual rates for extended coverage
3-25 promulgated by the Board for commercial risks under Subchapter C,
4-1 Chapter 5, Insurance Code.>
4-2 If valid flood or rising water insurance coverage exists and
4-3 is maintained on any risk being insured in the pool, the
4-4 Commissioner may provide for a rate and reduction in rate of
4-5 premium as may be appropriate.
4-6 The catastrophe element of extended coverage rates
4-7 promulgated or filed by the Commissioner under this Act applicable
4-8 to commercial risks written by the Association shall be uniform
4-9 throughout the seacoast territory and shall be based on all
4-10 monoline extended coverage loss experience of all regulated
4-11 insurers authorized to do business in this state, including the
4-12 Association, for property located in the seacoast territory, using
4-13 the most recent 30 years' experience available. Surcharges
4-14 collected in the past and used in the development of current manual
4-15 rates may not be excluded from future rate development as long as
4-16 those surcharges were collected during the experience period used
4-17 by the Commissioner.
4-18 The Association shall either establish a reinsurance program
4-19 or enter into a contract as provided in Subsection (i) of this
4-20 section. The Texas Department of Insurance may approve any
4-21 reinsurance program.
4-22 SECTION 2. This Act takes effect September 1, 1995.
4-23 SECTION 3. The importance of this legislation and the
4-24 crowded condition of the calendars in both houses create an
4-25 emergency and an imperative public necessity that the
5-1 constitutional rule requiring bills to be read on three several
5-2 days in each house be suspended, and this rule is hereby suspended
5-3 and that this Act take effect and be in force according to its
5-4 terms, and it is so enacted.