By Eiland H.B. No. 1162
77R4159 MXM-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the setting of catastrophe property insurance pool
1-3 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 first tier of coastal counties.
1-11 (2) [The rates for noncommercial windstorm and hail
1-12 insurance written by the association shall be 90 percent of the
1-13 modified extended coverage rates. For purposes of this section,
1-14 the modified extended coverage rate is the greater of the upper
1-15 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 [(3)] Not later than August 1 of each year, the
1-20 Association shall file with the department for approval by the
1-21 commissioner a proposed manual rate for all types [commercial
1-22 risks] and classes of risks [written by the Association developed
1-23 in accordance with Subchapter C, Chapter 5, Insurance Code, which
1-24 is applicable only to the extent consistent with this article. The
2-1 Association may not make such a filing more than one time in any
2-2 12-month period. The rate for commercial windstorm and hail
2-3 insurance written by the Association shall be 90 percent of the
2-4 rate for extended coverage for commercial risks as developed in
2-5 accordance with Subchapter C, Chapter 5, Insurance Code, to the
2-6 extent consistent with this article. Article 5.13-2, Insurance
2-7 Code, does not apply to the rates of insurance] written by the
2-8 Association. Chapter 40 [Article 1.33B] of this code does not
2-9 apply to a filing made under this [subdivision and Subdivisions
2-10 (4)-(10) of this] subsection[,] or a department action with
2-11 respect to the filing.
2-12 (3) [(4)] Before approving or disapproving a filing,
2-13 or modifying a filing, the commissioner shall provide all
2-14 interested persons a reasonable opportunity to review the filing,
2-15 obtain copies of the filing on payment of any legally required
2-16 copying cost, and submit to the commissioner written comments or
2-17 information related to the filing.
2-18 (4) [(5)] The commissioner shall schedule an open
2-19 meeting not later than the 45th day after the date on which the
2-20 department receives the filing at which interested persons may
2-21 present written or oral comments relating to the filing. An open
2-22 meeting under this subdivision is subject to Chapter 551,
2-23 Government Code, but is not a contested case hearing under Chapter
2-24 2001, Government Code.
2-25 (5) [(6)] The department shall file with the Texas
2-26 Register notice that a filing has been made under Subdivision (2)
2-27 [(3)] of this subsection not later than the seventh day after the
3-1 date the filing is received by the department. The notice must
3-2 include information relating to:
3-3 (A) the availability of the filing for public
3-4 inspection at the department during regular business hours and the
3-5 procedures for obtaining copies of the filing;
3-6 (B) procedures for making written comments
3-7 related to the filing; and
3-8 (C) the time, place, and date of the open
3-9 meeting scheduled under Subdivision (4) [(5)] of this subsection at
3-10 which an interested person may submit either written or oral
3-11 comments relating to the filing.
3-12 (6) [(7)] After the conclusion of the open meeting,
3-13 the commissioner shall approve or disapprove or modify the filing
3-14 in writing on or before November 1 of the year in which the filing
3-15 is made or the filing is deemed approved. If the commissioner
3-16 disapproves a filing, the commissioner shall state in writing the
3-17 reasons for the disapproval and the criteria to be met by the
3-18 Association to obtain approval. The Association may file with the
3-19 commissioner, not later than ten (10) days after the date on which
3-20 the Association receives the commissioner's written disapproval, an
3-21 amended filing bringing the filing into conformity with all
3-22 criteria stated in the commissioner's written disapproval.
3-23 (7) [(8)] Before approving or disapproving an amended
3-24 filing, the commissioner shall provide all interested persons a
3-25 reasonable opportunity to review the amended filing, obtain copies
3-26 of the amended filing on payment of any legally required copying
3-27 cost, and submit to the commissioner written comments or
4-1 information related to the amended filing in the manner provided by
4-2 Subdivision (3) [(4)] of this subsection, and may hold a hearing
4-3 not later than the 20th day after the date on which the department
4-4 receives the amended filing in the manner provided by Subdivision
4-5 (4) [(5)] of this subsection. Not later than the 10th day after
4-6 the date on which the hearing on the amended filing is concluded,
4-7 the commissioner shall approve or disapprove the amended filing.
4-8 Within 30 days after the amended filing is received, the
4-9 commissioner shall approve without changes, approve as modified by
4-10 the commissioner, or disapprove an amended filing or it is deemed
4-11 approved. The requirements imposed under Subdivisions (5) and (6)
4-12 [and (7)] of this subsection apply to a hearing conducted under
4-13 this subdivision.
4-14 (8) [(9)] In conjunction with the review of a filing
4-15 or amended filing, the commissioner may request the Association to
4-16 provide additional supporting information relating to the filing or
4-17 amended filing, and any interested person may file a written
4-18 request with the commissioner for additional supporting information
4-19 relating to the filing or amended filing. A request under this
4-20 subdivision must be reasonable and must be directly related to the
4-21 filing or amended filing. The commissioner shall submit to the
4-22 Association all requests for additional supporting information made
4-23 under this subdivision for the commissioner's use and the use of
4-24 any interested person. Unless a different period is requested by
4-25 the Association and approved by the commissioner, the [The]
4-26 Association shall provide the information to the commissioner not
4-27 later than the fifth day after the date on which the written
5-1 request for additional supporting information is delivered to the
5-2 Association. The department shall notify an interested person who
5-3 has requested additional information of the availability of the
5-4 information not later than one business day after the date on which
5-5 the commissioner receives the information from the Association.
5-6 (9) [(10)] A rate established and authorized by the
5-7 commissioner [filing made] under this subsection may not reflect an
5-8 average [annual premium] rate change that is more than 10 [15]
5-9 percent [(]higher or lower than[) of] the rate for commercial or
5-10 noncommercial windstorm and hail insurance, as appropriate, in
5-11 effect on the date the filing is made. The rate may not reflect an
5-12 aggregate average rate change that is more than 25 percent higher
5-13 or lower than the average rate for commercial windstorm and hail
5-14 insurance and the average rate for noncommercial windstorm and hail
5-15 insurance in effect on August 1 of the third year before the filing
5-16 is made. The [in each rate classification in effect on September
5-17 1, 1995. This subdivision expires January 1, 2003, provided
5-18 however, that the] commissioner may, after notice and hearing,
5-19 suspend this subdivision upon a finding that a catastrophe loss or
5-20 series of occurrences resulting in losses in the catastrophe area
5-21 justify a need to assure rate adequacy in the catastrophe area and
5-22 also justify a need to assure availability of insurance outside the
5-23 catastrophe area.
5-24 (10) [(11)] If valid flood or rising water insurance
5-25 coverage exists and is maintained on any risk being insured in the
5-26 pool, the commissioner may provide for a rate and reduction in rate
5-27 of premium as may be appropriate.
6-1 (11) [(12)] The catastrophe element used to develop
6-2 [of extended coverage] rates promulgated [or filed by the
6-3 commissioner] under this Act applicable to [commercial] risks
6-4 written by the Association shall be uniform throughout the seacoast
6-5 territory. The catastrophe element of the rates must be developed
6-6 using:
6-7 (A) 90 percent of both the [and shall be based
6-8 on all monoline extended coverage] loss experience and related
6-9 premium income for [of] all [regulated] insurers [authorized to do
6-10 business in this state], other than [including] the Association,
6-11 for covered property located in the seacoast territory[,] using the
6-12 most recent 30 years of [years'] experience available; and
6-13 (B) 100 percent of both the loss experience and
6-14 related premium income for the Association for covered property
6-15 using the most recent 30 years of experience available.
6-16 (12) The non-catastrophe element of the rates must be
6-17 developed using:
6-18 (A) 90 percent of both the loss experience and
6-19 related premium income for all insurers, other than the
6-20 Association, for covered property located in the seacoast territory
6-21 using the most recent 10 years of experience available; and
6-22 (B) 100 percent of both the loss experience and
6-23 related premium income for the Association for covered property
6-24 using the most recent 10 years of experience available.
6-25 (13) Surcharges collected in the past and used in the
6-26 development of current [manual] rates may not be excluded from
6-27 future rate development as long as those surcharges were collected
7-1 during the experience period considered [used] by the commissioner.
7-2 (14) Rates promulgated under this article shall be
7-3 developed in accordance with the usual and customary actuarial
7-4 methodology used by the commissioner to promulgate property
7-5 insurance rates under Chapter 5 of this code.
7-6 (15) Not earlier than March 31 of the year before the
7-7 year in which a filing is to be made, the department shall value
7-8 the loss and loss adjustment expense data to be used for the
7-9 filing.
7-10 (16) Not later than March 31 of each year, the
7-11 department shall provide the experience data to be used in
7-12 establishing the rates under this subsection in that year to the
7-13 Association and other interested persons. This data must include
7-14 total earned premium, total earned premium adjusted to a common
7-15 Association rate level, paid losses, paid loss adjustment expense,
7-16 case basis loss reserves, and case basis loss adjustment experience
7-17 reserves. The department shall organize this data by county and by
7-18 accident year. On request from the department, an insurer shall
7-19 provide the data to the department or the department may obtain the
7-20 data from any insurance rating agency.
7-21 (17) [(13)] The association shall either establish a
7-22 reinsurance program approved by the Texas Department of Insurance
7-23 or make payments into the catastrophe reserve trust fund
7-24 established under Subsection (i) of this section. With the
7-25 approval of the Texas Department of Insurance, the association may
7-26 establish a reinsurance program that operates in addition to or in
7-27 concert with the catastrophe reserve trust fund established under
8-1 Subsection (i) of this section.
8-2 SECTION 2. This Act takes effect September 1, 2001.