1-1 AN ACT 1-2 relating to the operation of the Texas catastrophe property 1-3 insurance pool. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. The legislature finds that: 1-6 (1) the cost of housing will increase in the first 1-7 tier coastal counties, as defined by Section 3, Article 21.49, 1-8 Insurance Code, with the implementation of any new building code 1-9 imposed under that article; 1-10 (2) increased costs will have a negative effect on 1-11 economic development for all coastal areas, driving growth further 1-12 inland where housing is more affordable; 1-13 (3) the new building code standards will lower the 1-14 risk of insurers that write business in the first tier coastal 1-15 counties; and 1-16 (4) legislative action in the public interest and 1-17 within the police power of the state is required to eliminate the 1-18 negative impact of new building code standards on consumers through 1-19 insurance rate reductions. 1-20 SECTION 2. Section 3, Article 21.49, Insurance Code, is 1-21 amended by adding Subsection (o) to read as follows: 1-22 (o) "New building code" means any new building standard, 1-23 specification, or guideline adopted by the commissioner after May 1-24 1, 1997, that must be met before any new residential construction 2-1 qualifies for a certificate of compliance that is evidence of 2-2 insurability of the structure by the Association. 2-3 SECTION 3. Article 21.49, Insurance Code, is amended by 2-4 adding Section 8E to read as follows: 2-5 Sec. 8E. RATE ROLLBACK. (a) This section applies only to 2-6 policies or coverages that are issued by the association to cover 2-7 new residential construction, excluding additions or repairs to 2-8 existing structures, built to the standards of a new building code. 2-9 (b) The commissioner shall hold a rulemaking hearing under 2-10 Chapter 2001, Government Code, to determine the percentage of 2-11 equitable across-the-board reductions in insurance rates required 2-12 for Texas windstorm and hail insurance coverage written by the 2-13 association. 2-14 (c) Not later than the 180th day after the date a building 2-15 code is implemented, the commissioner shall issue an order 2-16 mandating the appropriate rate reductions. 2-17 (d) If, before the 181st day after the date a new building 2-18 code is implemented, the commissioner has not issued an order 2-19 establishing rate reductions for Texas windstorm and hail insurance 2-20 on new residential construction built to the standards of a new 2-21 building code, or the order has not become final because of 2-22 judicial intervention or any other reason, the commissioner shall 2-23 require a six percent across-the-board reduction. 2-24 (e) Notwithstanding Article 1.33B of this code, a hearing 2-25 under this section shall be held before the commissioner or the 2-26 commissioner's designee. 2-27 SECTION 4. The importance of this legislation and the 3-1 crowded condition of the calendars in both houses create an 3-2 emergency and an imperative public necessity that the 3-3 constitutional rule requiring bills to be read on three several 3-4 days in each house be suspended, and this rule is hereby suspended, 3-5 and that this Act take effect and be in force from and after its 3-6 passage, and it is so enacted. _______________________________ _______________________________ President of the Senate Speaker of the House I certify that H.B. No. 3383 was passed by the House on May 1, 1997, by a non-record vote; and that the House concurred in Senate amendments to H.B. No. 3383 on May 24, 1997, by a non-record vote. _______________________________ Chief Clerk of the House I certify that H.B. No. 3383 was passed by the Senate, with amendments, on May 21, 1997, by the following vote: Yeas 30, Nays 0. _______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor