1-1     By:  Eiland, et al. (Senate Sponsor - Patterson)      H.B. No. 3383

 1-2           (In the Senate - Received from the House May 2, 1997;

 1-3     May 5, 1997, read first time and referred to Committee on Economic

 1-4     Development; May 16, 1997, reported adversely, with favorable

 1-5     Committee Substitute by the following vote:  Yeas 8, Nays 0;

 1-6     May 16, 1997, sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 3383               By:  Patterson

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the operation of the Texas catastrophe property

1-11     insurance pool.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13           SECTION 1.  The legislature finds that:

1-14                 (1)  the cost of housing will increase in the first

1-15     tier coastal counties, as defined by Section 3, Article 21.49,

1-16     Insurance Code, with the implementation of any new building code

1-17     imposed under that article;

1-18                 (2)  increased costs will have a negative effect on

1-19     economic development for all coastal areas, driving growth further

1-20     inland where housing is more affordable;

1-21                 (3)  the new building code standards will lower the

1-22     risk of insurers that write business in the first tier coastal

1-23     counties; and

1-24                 (4)  legislative action in the public interest and

1-25     within the police power of the state is required to eliminate the

1-26     negative impact of new building code standards on consumers through

1-27     insurance rate reductions.

1-28           SECTION 2.  Section 3, Article 21.49, Insurance Code, is

1-29     amended by adding Subsection (o) to read as follows:

1-30           (o)  "New building code" means any new building standard,

1-31     specification, or guideline adopted by the commissioner after May

1-32     1, 1997, that must be met before any new residential construction

1-33     qualifies for a certificate of compliance that is evidence of

1-34     insurability of the structure by the Association.

1-35           SECTION 3.  Article 21.49, Insurance Code, is amended by

1-36     adding Section 8E to read as follows:

1-37           Sec. 8E.  RATE ROLLBACK.  (a)  This section applies only to

1-38     policies or coverages that are issued by the association to cover

1-39     new residential construction, excluding additions or repairs to

1-40     existing structures, built to the standards of a new building code.

1-41           (b)  The commissioner shall hold a rulemaking hearing under

1-42     Chapter 2001, Government Code, to determine the percentage of

1-43     equitable across-the-board reductions in insurance rates required

1-44     for Texas windstorm and hail insurance coverage written by the

1-45     association.

1-46           (c)  Not later than the 180th day after the date a building

1-47     code is implemented, the commissioner shall issue an order

1-48     mandating the appropriate rate reductions.

1-49           (d)  If, before the 181st day after the date a new building

1-50     code is implemented, the commissioner has not issued an order

1-51     establishing rate reductions for Texas windstorm and hail insurance

1-52     on new residential construction built to the standards of a new

1-53     building code, or the order has not become final because of

1-54     judicial intervention or any other reason, the commissioner shall

1-55     require a six-percent across-the-board reduction.

1-56           (e)  Notwithstanding Article 1.33B of this code, a hearing

1-57     under this section shall be held before the commissioner or the

1-58     commissioner's designee.

1-59           SECTION 4.  The importance of this legislation and the

1-60     crowded condition of the calendars in both houses create an

1-61     emergency and an imperative public necessity that the

1-62     constitutional rule requiring bills to be read on three several

1-63     days in each house be suspended, and this rule is hereby suspended,

1-64     and that this Act take effect and be in force from and after its

 2-1     passage, and it is so enacted.

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