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. 2-2 * * * * *