1-1 By: Eiland, Seaman (Senate Sponsor - Jackson) H.B. No. 1162
1-2 (In the Senate - Received from the House April 11, 2001;
1-3 April 17, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 1, 2001, reported favorably by the
1-5 following vote: Yeas 6, Nays 0; May 1, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the development of Texas Windstorm Insurance
1-9 Association insurance rates.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 8(h), Article 21.49, Insurance Code, is
1-12 amended to read as follows:
1-13 (h)(1) Each [extended coverage benchmark rate, flexibility
1-14 band, and promulgated] rate established by the commissioner in
1-15 accordance with this section [Chapter 5, Insurance Code,] must be
1-16 uniform throughout the first tier of coastal counties.
1-17 (2) [The rates for noncommercial windstorm and hail
1-18 insurance written by the association shall be 90 percent of the
1-19 modified extended coverage rates. For purposes of this section,
1-20 the modified extended coverage rate is the greater of the upper
1-21 flexibility band for extended coverage established by the
1-22 commissioner under Article 5.101 of this code or 25 percent above
1-23 the extended coverage benchmark rate established by the
1-24 commissioner under that article.]
1-25 [(3)] Not later than August 15 [1] of each year, the
1-26 Association shall file with the department for approval by the
1-27 commissioner a proposed manual rate for all types [commercial
1-28 risks] and classes of risks [written by the Association developed
1-29 in accordance with Subchapter C, Chapter 5, Insurance Code, which
1-30 is applicable only to the extent consistent with this article. The
1-31 Association may not make such a filing more than one time in any
1-32 12-month period. The rate for commercial windstorm and hail
1-33 insurance written by the Association shall be 90 percent of the
1-34 rate for extended coverage for commercial risks as developed in
1-35 accordance with Subchapter C, Chapter 5, Insurance Code, to the
1-36 extent consistent with this article. Article 5.13-2, Insurance
1-37 Code, does not apply to the rates of insurance] written by the
1-38 Association. Chapter 40 [Article 1.33B] of this code does not
1-39 apply to a filing made under this [subdivision and Subdivisions
1-40 (4)-(10) of this] subsection[,] or a department action with
1-41 respect to the filing.
1-42 (3) [(4)] Before approving or disapproving a filing,
1-43 or modifying a filing, the commissioner shall provide all
1-44 interested persons a reasonable opportunity to review the filing,
1-45 obtain copies of the filing on payment of any legally required
1-46 copying cost, and submit to the commissioner written comments or
1-47 information related to the filing.
1-48 (4) [(5)] The commissioner shall schedule an open
1-49 meeting not later than the 45th day after the date on which the
1-50 department receives the filing at which interested persons may
1-51 present written or oral comments relating to the filing. An open
1-52 meeting under this subdivision is subject to Chapter 551,
1-53 Government Code, but is not a contested case hearing under Chapter
1-54 2001, Government Code.
1-55 (5) [(6)] The department shall file with the Texas
1-56 Register notice that a filing has been made under Subdivision (2)
1-57 [(3)] of this subsection not later than the seventh day after the
1-58 date the filing is received by the department. The notice must
1-59 include information relating to:
1-60 (A) the availability of the filing for public
1-61 inspection at the department during regular business hours and the
1-62 procedures for obtaining copies of the filing;
1-63 (B) procedures for making written comments
1-64 related to the filing; and
2-1 (C) the time, place, and date of the open
2-2 meeting scheduled under Subdivision (4) [(5)] of this subsection at
2-3 which an interested person may submit either written or oral
2-4 comments relating to the filing.
2-5 (6) [(7)] After the conclusion of the open meeting,
2-6 the commissioner shall approve or disapprove or modify the filing
2-7 in writing on or before November 15 [1] of the year in which the
2-8 filing is made or the filing is deemed approved. If the
2-9 commissioner disapproves a filing, the commissioner shall state in
2-10 writing the reasons for the disapproval and the criteria to be met
2-11 by the Association to obtain approval. The Association may file
2-12 with the commissioner, not later than 30 [ten (10)] days after the
2-13 date on which the Association receives the commissioner's written
2-14 disapproval, an amended filing bringing the filing into conformity
2-15 with all criteria stated in the commissioner's written disapproval.
2-16 (7) [(8)] Before approving or disapproving an amended
2-17 filing, the commissioner shall provide all interested persons a
2-18 reasonable opportunity to review the amended filing, obtain copies
2-19 of the amended filing on payment of any legally required copying
2-20 cost, and submit to the commissioner written comments or
2-21 information related to the amended filing in the manner provided by
2-22 Subdivision (3) [(4)] of this subsection, and may hold a hearing
2-23 not later than the 20th day after the date on which the department
2-24 receives the amended filing in the manner provided by Subdivision
2-25 (4) [(5)] of this subsection. Not later than the 10th day after
2-26 the date on which the hearing on the amended filing is concluded,
2-27 the commissioner shall approve or disapprove the amended filing.
2-28 Within 30 days after the amended filing is received, the
2-29 commissioner shall approve without changes, approve as modified by
2-30 the commissioner, or disapprove an amended filing or it is deemed
2-31 approved. The requirements imposed under Subdivisions (5) and (6)
2-32 [and (7)] of this subsection apply to a hearing conducted under
2-33 this subdivision.
2-34 (8) [(9)] In conjunction with the review of a filing
2-35 or amended filing, the commissioner may request the Association to
2-36 provide additional supporting information relating to the filing or
2-37 amended filing, and any interested person may file a written
2-38 request with the commissioner for additional supporting information
2-39 relating to the filing or amended filing. A request under this
2-40 subdivision must be reasonable and must be directly related to the
2-41 filing or amended filing. The commissioner shall submit to the
2-42 Association all requests for additional supporting information made
2-43 under this subdivision for the commissioner's use and the use of
2-44 any interested person. Unless a different period is requested by
2-45 the Association and approved by the commissioner, the [The]
2-46 Association shall provide the information to the commissioner not
2-47 later than the fifth day after the date on which the written
2-48 request for additional supporting information is delivered to the
2-49 Association. The department shall notify an interested person who
2-50 has requested additional information of the availability of the
2-51 information not later than one business day after the date on which
2-52 the commissioner receives the information from the Association.
2-53 (9) [(10)] A rate established and authorized by the
2-54 commissioner [filing made] under this subsection may not reflect an
2-55 average [annual premium] rate change that is more than 10 [15]
2-56 percent [(]higher or lower than[) of] the rate for commercial or 10
2-57 percent higher or lower than the rate for noncommercial windstorm
2-58 and hail insurance in effect on the date the filing is made. The
2-59 rate may not reflect a rate change for an individual rating class
2-60 that is 15 percent higher or lower than the rate for that
2-61 individual class in effect on the date the filing is made. The [in
2-62 each rate classification in effect on September 1, 1995. This
2-63 subdivision expires January 1, 2003, provided however, that the]
2-64 commissioner may, after notice and hearing, suspend this
2-65 subdivision upon a finding that a catastrophe loss or series of
2-66 occurrences resulting in losses in the catastrophe area justify a
2-67 need to assure rate adequacy in the catastrophe area and also
2-68 justify a need to assure availability of insurance outside the
2-69 catastrophe area. This subdivision expires December 31, 2005.
3-1 (10) [(11)] If valid flood or rising water insurance
3-2 coverage exists and is maintained on any risk being insured in the
3-3 pool, the commissioner may provide for a rate and reduction in rate
3-4 of premium as may be appropriate.
3-5 (11) [(12)] The catastrophe element used to develop
3-6 [of extended coverage] rates [promulgated or filed by the
3-7 commissioner] under this Act applicable to [commercial] risks
3-8 written by the Association shall be uniform throughout the seacoast
3-9 territory. The catastrophe element of the rates must be developed
3-10 using:
3-11 (A) 90 percent of both the [and shall be based
3-12 on all] monoline extended coverage loss experience and related
3-13 premium income for [of] all [regulated] insurers, other than
3-14 [authorized to do business in this state, including] the
3-15 Association, for covered property located in the seacoast
3-16 territory[,] using not less than the most recent 30 years of
3-17 [years'] experience available; and
3-18 (B) 100 percent of both the loss experience and
3-19 related premium income for the Association for covered property
3-20 using not less than the most recent 30 years of experience
3-21 available.
3-22 (12) The noncatastrophe element of the noncommercial
3-23 rates must be developed using:
3-24 (A) 90 percent of both the monoline extended
3-25 coverage loss experience and related premium income for all
3-26 insurers, other than the Association, for covered property located
3-27 in the catastrophe area of the seacoast territory using the most
3-28 recent 10 years of experience available; and
3-29 (B) 100 percent of both the loss experience and
3-30 related premium income for the Association for covered property
3-31 using the most recent 10 years of experience available.
3-32 (13) The noncatastrophe element of the commercial
3-33 rates must be developed using 100 percent of both the loss
3-34 experience and related premium income for the Association for
3-35 covered property using the most recent 10 years of experience
3-36 available.
3-37 (14) Surcharges collected in the past and used in the
3-38 development of current [manual] rates may not be excluded from
3-39 future rate development as long as those surcharges were collected
3-40 during the experience period considered [used] by the commissioner.
3-41 (15) Not earlier than March 31 of the year before the
3-42 year in which a filing is to be made, the department shall value
3-43 the loss and loss adjustment expense data to be used for the
3-44 filing.
3-45 (16) Not later than June 1 of each year, the
3-46 department shall provide the experience data to be used in
3-47 establishing the rates under this subsection in that year to the
3-48 Association and other interested persons. On request from the
3-49 department, an insurer shall provide the data to the department or
3-50 the department may obtain the data from a designated statistical
3-51 agent, as defined by Section 38.201 of this code.
3-52 (17) [(13)] The association shall either establish a
3-53 reinsurance program approved by the Texas Department of Insurance
3-54 or make payments into the catastrophe reserve trust fund
3-55 established under Subsection (i) of this section. With the
3-56 approval of the Texas Department of Insurance, the association may
3-57 establish a reinsurance program that operates in addition to or in
3-58 concert with the catastrophe reserve trust fund established under
3-59 Subsection (i) of this section.
3-60 SECTION 2. This Act takes effect September 1, 2001.
3-61 * * * * *