77R10036 MXM-F
By Eiland, Seaman H.B. No. 1162
Substitute the following for H.B. No. 1162:
By Seaman C.S.H.B. No. 1162
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the development of Texas Windstorm Insurance
1-3 Association insurance rates.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 8(h), Article 21.49, Insurance Code, is
1-6 amended to read as follows:
1-7 (h)(1) Each [extended coverage benchmark rate, flexibility
1-8 band, and promulgated] rate established by the commissioner in
1-9 accordance with this section [Chapter 5, Insurance Code,] must be
1-10 uniform throughout the catastrophe area in the seacoast territory
1-11 [first tier of coastal counties].
1-12 (2) [The rates for noncommercial windstorm and hail
1-13 insurance written by the association shall be 90 percent of the
1-14 modified extended coverage rates. For purposes of this section,
1-15 the modified extended coverage rate is the greater of the upper
1-16 flexibility band for extended coverage established by the
1-17 commissioner under Article 5.101 of this code or 25 percent above
1-18 the extended coverage benchmark rate established by the
1-19 commissioner under that article.]
1-20 [(3)] Not later than August 15 [1] of each year, the
1-21 Association shall file with the department for approval by the
1-22 commissioner a proposed manual rate for all types [commercial
1-23 risks] and classes of risks [written by the Association developed
1-24 in accordance with Subchapter C, Chapter 5, Insurance Code, which
2-1 is applicable only to the extent consistent with this article. The
2-2 Association may not make such a filing more than one time in any
2-3 12-month period. The rate for commercial windstorm and hail
2-4 insurance written by the Association shall be 90 percent of the
2-5 rate for extended coverage for commercial risks as developed in
2-6 accordance with Subchapter C, Chapter 5, Insurance Code, to the
2-7 extent consistent with this article. Article 5.13-2, Insurance
2-8 Code, does not apply to the rates of insurance] written by the
2-9 Association. Chapter 40 [Article 1.33B] of this code does not
2-10 apply to a filing made under this [subdivision and Subdivisions
2-11 (4)-(10) of this] subsection[,] or a department action with
2-12 respect to the filing.
2-13 (3) [(4)] Before approving or disapproving a filing,
2-14 or modifying a filing, the commissioner shall provide all
2-15 interested persons a reasonable opportunity to review the filing,
2-16 obtain copies of the filing on payment of any legally required
2-17 copying cost, and submit to the commissioner written comments or
2-18 information related to the filing.
2-19 (4) [(5)] The commissioner shall schedule an open
2-20 meeting not later than the 45th day after the date on which the
2-21 department receives the filing at which interested persons may
2-22 present written or oral comments relating to the filing. An open
2-23 meeting under this subdivision is subject to Chapter 551,
2-24 Government Code, but is not a contested case hearing under Chapter
2-25 2001, Government Code.
2-26 (5) [(6)] The department shall file with the Texas
2-27 Register notice that a filing has been made under Subdivision (2)
3-1 [(3)] of this subsection not later than the seventh day after the
3-2 date the filing is received by the department. The notice must
3-3 include information relating to:
3-4 (A) the availability of the filing for public
3-5 inspection at the department during regular business hours and the
3-6 procedures for obtaining copies of the filing;
3-7 (B) procedures for making written comments
3-8 related to the filing; and
3-9 (C) the time, place, and date of the open
3-10 meeting scheduled under Subdivision (4) [(5)] of this subsection at
3-11 which an interested person may submit either written or oral
3-12 comments relating to the filing.
3-13 (6) [(7)] After the conclusion of the open meeting,
3-14 the commissioner shall approve or disapprove or modify the filing
3-15 in writing on or before November 15 [1] of the year in which the
3-16 filing is made or the filing is deemed approved. If the
3-17 commissioner disapproves a filing, the commissioner shall state in
3-18 writing the reasons for the disapproval and the criteria to be met
3-19 by the Association to obtain approval. The Association may file
3-20 with the commissioner, not later than 30 [ten (10)] days after the
3-21 date on which the Association receives the commissioner's written
3-22 disapproval, an amended filing bringing the filing into conformity
3-23 with all criteria stated in the commissioner's written disapproval.
3-24 (7) [(8)] Before approving or disapproving an amended
3-25 filing, the commissioner shall provide all interested persons a
3-26 reasonable opportunity to review the amended filing, obtain copies
3-27 of the amended filing on payment of any legally required copying
4-1 cost, and submit to the commissioner written comments or
4-2 information related to the amended filing in the manner provided by
4-3 Subdivision (3) [(4)] of this subsection, and may hold a hearing
4-4 not later than the 20th day after the date on which the department
4-5 receives the amended filing in the manner provided by Subdivision
4-6 (4) [(5)] of this subsection. Not later than the 10th day after
4-7 the date on which the hearing on the amended filing is concluded,
4-8 the commissioner shall approve or disapprove the amended filing.
4-9 Within 30 days after the amended filing is received, the
4-10 commissioner shall approve without changes, approve as modified by
4-11 the commissioner, or disapprove an amended filing or it is deemed
4-12 approved. The requirements imposed under Subdivisions (5) and (6)
4-13 [and (7)] of this subsection apply to a hearing conducted under
4-14 this subdivision.
4-15 (8) [(9)] In conjunction with the review of a filing
4-16 or amended filing, the commissioner may request the Association to
4-17 provide additional supporting information relating to the filing or
4-18 amended filing, and any interested person may file a written
4-19 request with the commissioner for additional supporting information
4-20 relating to the filing or amended filing. A request under this
4-21 subdivision must be reasonable and must be directly related to the
4-22 filing or amended filing. The commissioner shall submit to the
4-23 Association all requests for additional supporting information made
4-24 under this subdivision for the commissioner's use and the use of
4-25 any interested person. Unless a different period is requested by
4-26 the Association and approved by the commissioner, the [The]
4-27 Association shall provide the information to the commissioner not
5-1 later than the fifth day after the date on which the written
5-2 request for additional supporting information is delivered to the
5-3 Association. The department shall notify an interested person who
5-4 has requested additional information of the availability of the
5-5 information not later than one business day after the date on which
5-6 the commissioner receives the information from the Association.
5-7 (9) [(10)] A rate established and authorized by the
5-8 commissioner [filing made] under this subsection may not reflect an
5-9 average [annual premium] rate change that is more than 10 [15]
5-10 percent [(]higher or lower than[) of] the rate for commercial or 10
5-11 percent higher or lower than the rate for noncommercial windstorm
5-12 and hail insurance in effect on the date the filing is made. The
5-13 rate may not reflect a rate change for an individual rating class
5-14 that is 15 percent higher or lower than the rate for that
5-15 individual class in effect on the date the filing is made. The [in
5-16 each rate classification in effect on September 1, 1995. This
5-17 subdivision expires January 1, 2003, provided however, that the]
5-18 commissioner may, after notice, [and] hearing, and the approval of
5-19 the governor, suspend this subdivision upon a finding that a
5-20 catastrophe loss or series of occurrences resulting in losses in
5-21 the catastrophe area justify a need to assure rate adequacy in the
5-22 catastrophe area and also justify a need to assure availability of
5-23 insurance outside the catastrophe area. This subdivision expires
5-24 December 31, 2005.
5-25 (10) [(11)] If valid flood or rising water insurance
5-26 coverage exists and is maintained on any risk being insured in the
5-27 pool, the commissioner may provide for a rate and reduction in rate
6-1 of premium as may be appropriate.
6-2 (11) [(12)] The catastrophe element used to develop
6-3 [of extended coverage] rates [promulgated or filed by the
6-4 commissioner] under this Act applicable to [commercial] risks
6-5 written by the Association shall be uniform throughout the seacoast
6-6 territory. The catastrophe element of the rates must be developed
6-7 using:
6-8 (A) 90 percent of both the [and shall be based
6-9 on all] monoline extended coverage loss experience and related
6-10 premium income for [of] all [regulated] insurers, other than
6-11 [authorized to do business in this state, including] the
6-12 Association, for covered property located in the seacoast
6-13 territory[,] using not less than the most recent 30 years of
6-14 [years'] experience available; and
6-15 (B) 100 percent of both the loss experience and
6-16 related premium income for the Association for covered property
6-17 using not less than the most recent 30 years of experience
6-18 available.
6-19 (12) The noncatastrophe element of the noncommercial
6-20 rates must be developed using:
6-21 (A) 90 percent of both the monoline extended
6-22 coverage loss experience and related premium income for all
6-23 insurers, other than the Association, for covered property located
6-24 in the catastrophe area of the seacoast territory using the most
6-25 recent 10 years of experience available; and
6-26 (B) 100 percent of both the loss experience and
6-27 related premium income for the Association for covered property
7-1 using the most recent 10 years of experience available.
7-2 (13) The noncatastrophe element of the commercial
7-3 rates must be developed using 100 percent of both the loss
7-4 experience and related premium income for the Association for
7-5 covered property using the most recent 10 years of experience
7-6 available.
7-7 (14) Surcharges collected in the past and used in the
7-8 development of current [manual] rates may not be excluded from
7-9 future rate development as long as those surcharges were collected
7-10 during the experience period considered [used] by the commissioner.
7-11 (15) Not earlier than March 31 of the year before the
7-12 year in which a filing is to be made, the department shall value
7-13 the loss and loss adjustment expense data to be used for the
7-14 filing.
7-15 (16) Not later than June 1 of each year, the
7-16 department shall provide the experience data to be used in
7-17 establishing the rates under this subsection in that year to the
7-18 Association and other interested persons. On request from the
7-19 department, an insurer shall provide the data to the department or
7-20 the department may obtain the data from a designated statistical
7-21 agent, as defined by Section 38.201 of this code.
7-22 (17) [(13)] The association shall either establish a
7-23 reinsurance program approved by the Texas Department of Insurance
7-24 or make payments into the catastrophe reserve trust fund
7-25 established under Subsection (i) of this section. With the
7-26 approval of the Texas Department of Insurance, the association may
7-27 establish a reinsurance program that operates in addition to or in
8-1 concert with the catastrophe reserve trust fund established under
8-2 Subsection (i) of this section.
8-3 SECTION 2. This Act takes effect September 1, 2001.