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Amend the proposed floor substitute to CSHB 1890 as follows:
(1) Insert the following new SECTIONS, appropriately
numbered:
SECTION ___. Section 19, Article 21.49, Insurance Code, is
amended to read as follows:
Sec. 19. PAYMENT OF LOSSES; PREMIUM TAX CREDIT. (a) If, in
any calendar year, an occurrence or series of occurrences within
the defined catastrophe area results in insured losses and
operating expenses of the association in excess of premium and
other revenue of the association, any excess losses shall be paid as
provided by this section.
(b) After application of available revenue to losses,
[follows:
[(1)] $100 million, per catastrophic event, shall be
assessed to the members of the association with the proportion of
the loss allocable to each insurer determined in the same manner as
its participation in the association has been determined for the
year under Section 5(b) [5(c)] of this Act. A member of the
association may not directly or indirectly recover the amount of
any assessment made under this subsection from additional premium
charges on any insurance policy written on property that is not
located within the first tier coastal counties. [;]
(c) Any losses that exceed the amounts available under
Subsection (b) of this section, but not to exceed an additional $300
million, per catastrophic event, shall be funded through public
securities issued, without regard to whether an occurrence or
series of occurrences within a defined catastrophe area has
occurred, under the revenue bond program established under Section
20 of this Act.
(d) Any [(2) any] losses in excess of the amounts
authorized under Subsections (b) and (c) of this section [$100
million] shall be paid from the catastrophe reserve trust fund
established under Section 8(h) [8(i)] of this Act, not to exceed an
amount equal to 50 percent of the balance of that fund.
(e) If the amount available under Subsection (d) of this
section is insufficient to pay the excess losses, an additional
amount not to exceed $500 million shall be funded through the
issuance of additional public securities under the revenue bond
program established under Section 20 of this Act.
(f) If the amount available under Subsection (e) of this
section is insufficient to pay the excess losses, reinsurance
proceeds recoverable by the association and available under [and]
any reinsurance program established by the association shall be
used to pay the losses.
(g) Any [;
[(3) for losses in excess of those paid under
Subdivisions (1) and (2) of this subsection, an additional $200
million shall be assessed to the members of the association with the
proportion of the loss allocable to each insurer determined in the
same manner as its participation in the association has been
determined for the year under Section 5(c) of this Act;
[(4) any] losses in excess of those paid under
Subsections (b)-(f) [Subdivisions (1), (2), and (3)] of this
section [subsection] shall be assessed against members of the
association, with the proportion of the total loss allocable to
each insurer determined in the same manner as its participation in
the association has been determined for the year under Section 5(b)
[5(c)] of this Act.
(h) [(b)] An insurer may credit any amount paid in
accordance with Subsection (g) [(a)(4)] of this section in a
calendar year against its premium tax under Section 221.002
[Article 4.10] of this code. The tax credit herein authorized shall
be allowed at a rate not to exceed 20 percent per year for five or
more successive years following the year of payment of the claims.
The balance of payments paid by the insurer and not claimed as such
tax credit may be reflected in the books and records of the insurer
as an admitted asset of the insurer for all purposes, including
exhibition in annual statements pursuant to Section 862.001
[Article 6.12] of this code.
(i) The commissioner may adopt rules as necessary to
implement this section.
SECTION ____. Article 21.49, Insurance Code, is amended by
adding Section 20 to read as follows:
Sec. 20. REVENUE BOND PROGRAM FOR OPERATIONS AND PAYMENT OF
CLAIMS. (a) In this section:
(1) "Board" means the board of directors of the Texas
Public Finance Authority.
(2) "Bond" means any debt instrument or public
security issued by the Texas Public Finance Authority.
(3) "Public security resolution" means the resolution
or order authorizing public securities to be issued under this
section.
(b) The legislature finds that the issuance of public
securities to provide a method to raise funds to provide windstorm,
hail, and fire insurance through the Texas Windstorm Insurance
Association in certain designated portions of the state is for the
benefit of the public and in furtherance of a public purpose.
(c) At the request of the association and with the approval
of the commissioner, the Texas Public Finance Authority shall
issue, on behalf of the association, public securities in a total
amount not to exceed $800 million in accordance with Subsection (d)
and (e) of this Act.
(d) Without regard to whether an occurrence or series of
occurrences within the defined catastrophe area has occurred, the
board shall issue public securities equal to the amount specified
under Section 19(c) of this Act.
(e) After an occurrence or series of occurences within the
defined catastrophe area has occurred, the board shall issue public
securities in an amount not to exeed the amount specified under
Section 19(e) of this Act as necessary to fund the payment of excess
losses under that subsection.
(f) Public securities issued under this section shall be
used to:
(1) fund the association, including funding necessary
to:
(A) establish and maintain reserves to pay
claims;
(B) pay incurred and future claims; and
(C) pay operating expenses;
(2) pay costs related to the issuance of the public
securities; and
(3) pay other costs related to the public securities
as may be determined by the board.
(g) To the extent consistent with this section, Chapter
1232, Government Code, applies to public securities issued under
this section. In the event of a conflict, this section controls.
The following laws also apply to public securities issued under
this section to the extent consistent with this section:
(1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371,
Government Code; and
(2) Subchapter A, Chapter 1206, Government Code.
(h) Public securities issued under this section:
(1) may be issued at public or private sale; and
(2) must:
(A) be issued in the name of the association; and
(B) mature not more than 10 years after the date
issued.
(i) In a public security resolution, the board may:
(1) make additional covenants with respect to the
public securities and the designated income and receipts of the
association pledged to the payment of the public securities; and
(2) provide for the flow of funds and the
establishment, maintenance, and investment of funds and accounts
with respect to the public securities.
(j) Funds generated through the issuance of public
securities shall be held outside the state treasury in the custody
of the comptroller. The association may request disbursement of
the funds for the purposes set forth in Subsection (f) of this
section.
(k) A public security resolution may establish special
accounts, including an interest and sinking fund account, reserve
account, and other accounts. The association shall administer the
accounts in accordance with this section.
(l) Public securities are payable only from the premium
surcharges established under Subsection (m) or (n) of this section,
as applicable, or from other amounts that the association is
authorized to levy, charge, and collect. Public securities are
obligations solely of the association, and do not create a
pledging, giving, or lending of the faith, credit, or taxing
authority of this state. Each public security must include a
statement that this state is not obligated to pay any amount on the
public security and that the faith, credit, and taxing authority of
this state are not pledged, given, or lent to those payments. Each
public security issued under this section must state on its face
that the public security is payable solely from the revenues
pledged for that purpose and that the public security does not and
may not constitute a legal or moral obligation of the state.
(m) The public securities and all debt service on the public
securities issued in accordance with Subsection (d) shall be paid
by premium surcharges in an amount approved by the commissioner and
applied to insurance policies written through the association in
the first tier coastal counties.
(n) The public securities and all debt service on the public
securities issued in accordance with Subsection (e) shall be paid
by premium surcharges in amounts approved by the commissioner and
applied to each property and casualty insurance policy written by
an insurer in this state or by the FAIR Plan Association. The
premium surcharges applicable under this subsection to insurance
policies written on property located in first tier coastal
counties, including policies issued through the association must be
equal to two times the premium surcharges applicable to insurance
policies written on property located in counties that are not first
tier coastal counties. A premium surcharge under this subsection
may not be applied to a workers' compensation insurance policy, an
accident and health insurance policy, or a medical malpractice
insurance policy.
(o) As a condition of engaging in the business of insurance
in this state, an insurer that engages in the business of property
insurance in this state agrees that if the insurer leaves the
insurance market in this state the insurer remains obligated to
pay, until the public securities are retired, the insurer's share
of the premium surcharges assessed under Subsection (m) or (n) of
this section, as applicable, in an amount proportionate to that
insurer's share of the insurance market in this state, as of the
last complete reporting period before the date on which the insurer
ceases to engage in that insurance business in this state. The
proportion assessed against the insurer shall be based on the
insurer's gross written premiums for insurance for the insurer's
last reporting period.
(p) The association shall deposit all premium surcharges
collected under Subsection (m) or (n) of this section, as
applicable, in a fund to be held outside the state treasury in the
custody of the comptroller. Money deposited in the fund may be
invested as permitted by general law. Money in the fund required to
be used to pay bond obligations and bond administrative expenses
shall be transferred to the Texas Public Finance Authority or used
by the comptroller in the manner and at the time specified in the
resolution adopted in connection with the bond issue to ensure
timely payment of obligations and expenses, or as otherwise
provided by the bond documents. For bonds issued by the Texas
Public Finance Authority for the association, the association shall
provide for the payment of the bond obligations and the bond
administrative expenses by irrevocably pledging revenues received
from the premium surcharges and amounts on deposit in the fund,
together with any bond reserve fund, as provided in the proceedings
authorizing the bonds and related credit agreements.
(q) Revenue collected from the premium surcharges assessed
under Subsection (m) or (n) of this section, as applicable, in any
year that exceeds the amount of the bond obligations and bond
administrative expenses payable in that year and interest earned on
the premium surcharges may, in the discretion of the association
and with the approval of the commissioner, be used to:
(1) pay bond obligations payable in the subsequent
year, offsetting the amount that would otherwise have to be levied
for the year under this section; or
(2) redeem or purchase outstanding bonds.
(r) The public securities issued under this section, any
interest from those public securities, and all assets pledged to
secure the payment of the public securities are free from taxation
by this state or a political subdivision of this state.
(s) The public securities issued under this section
constitute authorized investments under Articles 2.10 and 3.33 and
Subpart A, Part I, Article 3.39 of this code.
(t) The state pledges to and agrees with the owners of any
public securities issued in accordance with this section that the
state will not limit or alter the rights vested in the association
to fulfill the terms of any agreements made with the owners of the
public securities or in any way impair the rights and remedies of
those owners until the public securities, bond premium, if any, or
interest, and all costs and expenses in connection with any action
or proceeding by or on behalf of those owners, are fully met and
discharged. The association may include this pledge and agreement
of the state in any agreement with the owners of the public
securities.
(u) A party at interest may use mandamus and all other legal
and equitable remedies to require the association and any other
party to carry out agreements and to perform functions and duties
established under this section, the Texas Constitution, or a public
security resolution.
(v) This section expires September 1, 2011.
(2) Renumber the SECTIONS of the bill appropriately.