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A BILL TO BE ENTITLED
|
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AN ACT
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relating to operation of the Texas Windstorm Insurance Association |
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and the Texas FAIR Plan Association, including funding of coverage |
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for certain catastrophic events through the issuance of public |
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securities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.002, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.002. SHORT TITLE; SUNSET PROVISION. (a) This |
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chapter may be cited as the Texas Windstorm Insurance Association |
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Act. |
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(b) The association is subject to review under Chapter 325, |
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Government Code (Texas Sunset Act), but is not abolished under that |
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chapter. The association shall be reviewed during the period in |
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which state agencies abolished in 2013 are reviewed. This |
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subsection expires September 1, 2013. |
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SECTION 1A. Section 2210.001, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.001. PURPOSE. An adequate market for windstorm |
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and[,] hail[, and fire] insurance in the seacoast territory is |
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necessary to the economic welfare of this state, and without that |
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insurance, the orderly growth and development of this state would |
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be severely impeded. This chapter provides a method by which |
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adequate windstorm and[,] hail[, and fire] insurance may be |
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obtained in certain designated portions of the seacoast territory |
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of this state. |
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SECTION 2. Section 2210.003(6), Insurance Code, is amended |
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to read as follows: |
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(6) "Insurance" means Texas [fire and explosion
|
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insurance and Texas] windstorm and hail insurance. |
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SECTION 3. Sections 2210.004(a) and (g), Insurance Code, |
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are amended to read as follows: |
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(a) For purposes of this chapter and subject to this |
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section, "insurable property" means immovable property at a fixed |
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location in a catastrophe area or corporeal movable property |
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located in that immovable property, as designated in the plan of |
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operation, that is determined by the association according to the |
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criteria specified in the plan of operation to be in an insurable |
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condition against windstorm and hail [or fire and explosion, as
|
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appropriate], as determined by normal underwriting standards. |
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(g) For purposes of this chapter, a residential structure is |
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insurable property if: |
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(1) the residential structure is not: |
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(A) a condominium, apartment, duplex, or other |
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multifamily residence; or |
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(B) a hotel or resort facility; and |
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(2) the residential structure is located within an |
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area designated as a unit under the Coastal Barrier Resources Act |
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(Pub. L. No. 97-348)[; and
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[(3)
a building permit or plat for the residential
|
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structure was filed with the municipality, the county, or the
|
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United States Army Corps of Engineers before January 1, 2004]. |
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SECTION 4. Section 2210.005, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.005. DESIGNATION AS CATASTROPHE AREA [OR
|
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INADEQUATE FIRE INSURANCE AREA]; REVOCATION OF DESIGNATION. (a) |
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After at least 10 days' notice and a hearing, the commissioner may |
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designate an area of this state as a catastrophe area if the |
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commissioner determines that windstorm and hail insurance is not |
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reasonably available to a substantial number of the owners of |
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insurable property located in that territory because the territory |
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is subject to unusually frequent and severe damage resulting from |
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windstorms or hailstorms. |
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(b) [After at least 10 days' notice and a hearing, the
|
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commissioner may designate an area of this state as an inadequate
|
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fire insurance area if the commissioner determines that fire and
|
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explosion insurance is not reasonably available to a substantial
|
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number of owners of insurable property located in that area.
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[(c)] The commissioner shall revoke a designation made under |
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Subsection (a) [or (b)] if the commissioner determines, after at |
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least 10 days' notice and a hearing, that the applicable insurance |
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coverage is no longer reasonably unavailable to a substantial |
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number of owners of insurable property within the designated |
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territory. |
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(c) [(d)] If the association determines that windstorm and |
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hail insurance [or fire and explosion insurance] is no longer |
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reasonably unavailable to a substantial number of owners of |
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insurable property in a territory designated as a catastrophe area |
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[or inadequate fire insurance area, as applicable], the association |
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may request in writing that the commissioner revoke the |
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designation. After at least 10 days' notice and a hearing, but not |
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later than the 30th day after the date of the hearing, the |
|
commissioner shall: |
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(1) approve the request and revoke the designation; or |
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(2) reject the request. |
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(d) After at least 10 days' notice and a hearing, the |
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commissioner may determine, unless such a determination creates an |
|
adverse impact to the exposure of the association, that windstorm |
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and hail insurance is not reasonably available to a group that is |
|
located in a specified area of the state and that has similar risk |
|
characteristics. On such a determination by the commissioner, that |
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group of risks shall be considered the same as a risk that is |
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located in a catastrophe area for all purposes under this chapter. |
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(e) The commissioner shall revoke a determination made |
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under Subsection (d) if the commissioner determines, after at least |
|
10 days' notice and a hearing, that the applicable insurance |
|
coverage is no longer reasonably unavailable to a group determined |
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to be eligible under Subsection (d). |
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(f) If the association determines that windstorm and hail |
|
insurance is no longer reasonably unavailable to a group determined |
|
to be eligible under Subsection (d), the association may request in |
|
writing that the commissioner revoke the determination. After at |
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least 10 days' notice and a hearing, but not later than the 30th day |
|
after the date of the hearing, the commissioner shall: |
|
(1) approve the request and revoke the determination; |
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or |
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(2) reject the request. |
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(g) The commissioner may adopt reasonable and necessary |
|
rules in the manner prescribed by Subchapter A, Chapter 36, to |
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implement this section. |
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SECTION 5. Section 2210.008, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.008. DEPARTMENT ORDERS; RULEMAKING AUTHORITY. |
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(a) The [After notice and hearing as provided by Subsection (b),
|
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the] commissioner may issue any orders that the commissioner |
|
considers necessary to implement this chapter [, including orders
|
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regarding maximum rates, competitive rates, and policy forms]. |
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(b) The commissioner may adopt rules in the manner |
|
prescribed by Subchapter A, Chapter 36, as reasonable and necessary |
|
to implement this chapter. [Before the commissioner adopts an
|
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order, the department shall post notice of the hearing on the order
|
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at the secretary of state's office in Austin and shall hold a
|
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hearing to consider the proposed order. Any person may appear at
|
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the hearing and testify for or against the adoption of the order.] |
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SECTION 6. Subchapter A, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.009 to read as follows: |
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Sec. 2210.009. LIST OF PRIVATE INSURERS; INCENTIVE PLAN. |
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(a) The department shall maintain a list of all insurers that |
|
engage in the business of property and casualty insurance in the |
|
voluntary market in the seacoast territory. |
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(b) The department shall develop incentive programs in the |
|
manner described by Section 2210.053(b) to encourage authorized |
|
insurers to write insurance on a voluntary basis and to minimize the |
|
use of the association as a means to obtain insurance. |
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SECTION 7. Section 2210.052, Insurance Code, is amended by |
|
amending Subsections (a) and (d) and adding Subsection (e) to read |
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as follows: |
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(a) Each member of the association shall participate in |
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insured losses and operating expenses of the association, in excess |
|
of premium and other revenue [the writings, expenses, profits, and
|
|
losses] of the association, in the proportion that the net direct |
|
premiums of that member during the preceding calendar year bears to |
|
the aggregate net direct premiums by all members of the |
|
association, as determined using the information provided under |
|
Subsection (b). |
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(d) Notwithstanding Subsection (a), a member, in accordance |
|
with the plan of operation, is entitled to receive credit for |
|
similar insurance voluntarily written in areas [an area] designated |
|
by the commissioner. The member's participation in the insured |
|
losses and operating expenses of the association in excess of |
|
premium and other revenue [writings] of the association shall be |
|
reduced in accordance with the plan of operation. |
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(e) Notwithstanding Subsections (a)-(d), an insurer that |
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becomes a member of the association and that has not previously been |
|
a member of the association is not subject to participation in any |
|
insured losses and operating expenses of the association in excess |
|
of premium and other revenue of the association until the second |
|
anniversary of the date on which the insurer first becomes a member |
|
of the association. The commissioner may adopt procedures in the |
|
plan of operation for reduced assessments for such an insurer for an |
|
additional period, not to exceed three years, beyond the initial |
|
exemption under this subsection. |
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SECTION 8. Section 2210.053, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
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(c) As directed by the commissioner, after notice and |
|
hearing, the association shall assume reinsurance from a county |
|
mutual insurance company issuing industrial fire insurance |
|
policies as described by Section 912.310. |
|
SECTION 9. Section 2210.058, Insurance Code, is amended to |
|
read as follows: |
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Sec. 2210.058. PAYMENT OF EXCESS LOSSES[; PREMIUM TAX
|
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CREDIT]. (a) If[, in any calendar year,] an occurrence or series |
|
of occurrences in a catastrophe area results in insured losses and |
|
operating expenses of the association in excess of premium and |
|
other revenue of the association, the excess losses and operating |
|
expenses shall be paid as provided by this section. |
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(b) For each occurrence, [follows:
|
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[(1)
$100 million shall be assessed against the
|
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members of the association as provided by Subsection (b);
|
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[(2)] losses [in excess of $100 million] shall be paid |
|
as provided by this section from the catastrophe reserve trust fund |
|
established under Subchapter J. For each occurrence, not more than |
|
50 percent of the amount in the catastrophe reserve trust fund as of |
|
the date of the occurrence, reduced by anticipated payments from |
|
prior occurrences, may be used unless the commissioner determines |
|
that a greater percentage should be applied after at least 10 days' |
|
notice and a hearing, if a hearing is requested by any person within |
|
the 10-day notice period. If the trust fund is reduced by more than |
|
50 percent in any calendar year, the association may, with the |
|
approval of the commissioner, require each member of the |
|
association and the Texas FAIR Plan Association to collect a |
|
premium surcharge for one year from their respective policyholders |
|
who reside or have operations in, or whose insured property is |
|
located in, the catastrophe area. The premium surcharge may not |
|
exceed two percent of premium and applies to all policies of |
|
insurance for all property and casualty lines, other than workers' |
|
compensation insurance, accident and health insurance, and medical |
|
malpractice insurance. The premium surcharge collected under this |
|
subsection shall be deposited in the catastrophe reserve trust |
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fund. |
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(c) Losses [and any reinsurance program established by the
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association;
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[(3) for losses] in excess of those paid under |
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Subsection (b) [Subdivisions (1) and (2), an additional $200
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million] shall be paid as provided by this subsection. For each |
|
occurrence, an amount equal to a maximum of 2.5 percent of all the |
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direct premiums written by all the members of the association and |
|
the Texas FAIR Plan Association, as reported in the annual |
|
statement filed with the department for the calendar year |
|
immediately preceding the year in which the assessment is made for |
|
fire insurance and allied lines insurance, homeowners insurance, |
|
farm and ranch insurance, and commercial multiperil insurance, |
|
shall be computed and assessed against the members of the |
|
association and the Texas FAIR Plan Association, as provided by |
|
Subsection (h). The association may not assess members of the |
|
association and the Texas FAIR Plan Association under this |
|
subsection more than twice in any calendar year. |
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(d) Any [(b); and
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[(4)] losses in excess of those paid under |
|
Subsections (b) and (c) [Subdivisions (1), (2), and (3)] shall be |
|
paid with proceeds from Class 1 public securities issued by the |
|
association in accordance with Subchapter M before the date of any |
|
occurrence that results in insured losses under Subsection (a), as |
|
provided by Subsection (i). |
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(e) For losses in excess of those paid under Subsections |
|
(a), (b), and (c), an amount equal to a maximum of four percent of |
|
all the direct premiums written by all the members of the |
|
association and the Texas FAIR Plan Association, as reported in the |
|
annual statement filed with the department for the calendar year |
|
immediately preceding the year in which the assessment is made for |
|
fire insurance and allied lines insurance, homeowners insurance, |
|
farm and ranch insurance, and commercial multiperil insurance, |
|
shall be computed and assessed against the members of the |
|
association and the Texas FAIR Plan Association, as provided by |
|
Subsection (h). The association may not assess members of the |
|
association and the Texas FAIR Plan Association under this |
|
subsection more than twice in any calendar year [assessed against
|
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members of the association, as provided by Subsection (b)]. |
|
(f) Any losses in excess of those paid under Subsections |
|
(b)-(e) shall be paid from proceeds from Class 2 public securities |
|
issued by the association in accordance with Subchapter M on or |
|
after the date of any occurrence that results in insured losses |
|
under Subsection (a). |
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(g) Any losses in excess of those paid under Subsections |
|
(b)-(f) shall be assessed against members of the association and |
|
the Texas FAIR Plan Association, as provided by Subsection (h). |
|
(h) [(b)] The proportion of the losses allocable to each |
|
insurer and the Texas FAIR Plan Association under Subsections (c), |
|
(e), and (g) [(a)(1), (3), and (4)] shall be determined in the |
|
manner used to determine each insurer's participation in the |
|
association for the year under Section 2210.052, and as to the Texas |
|
FAIR Plan Association, as provided by the plan of operation. |
|
(i) Public securities described by Subsection (d) may be |
|
issued in principal amounts not to exceed $1.2 billion. Any public |
|
securities proceeds received under Subsection (d) must be used |
|
before the proceeds of any public securities that the association |
|
authorizes to be issued under Subsection (f) on or after any |
|
catastrophic event, and may not be used to fund losses of any |
|
catastrophic event occurring before the date on which public |
|
securities described by Subsection (d) are authorized to be issued. |
|
(j) In addition to the funding described by Subsections |
|
(b)-(g), the association may also borrow from, or enter into other |
|
financing arrangements with, any market sources at prevailing |
|
interest rates. |
|
(k) The commissioner may adopt rules in the manner provided |
|
by Subchapter A, Chapter 36, as necessary to implement this |
|
section. |
|
[(c)
An insurer may credit an amount paid in accordance with
|
|
Subsection (a)(4) in a calendar year against the insurer's premium
|
|
tax under Chapter 221.
The tax credit authorized under this
|
|
subsection 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 made by the insurer and not
|
|
claimed as a premium 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 an annual statement under Section
|
|
862.001.] |
|
SECTION 10. Section 2210.060(c), Insurance Code, is amended |
|
to read as follows: |
|
(c) Subsection (a) does not authorize the association to |
|
indemnify a member of the association for participating in the |
|
assessments made by [writings, expenses, profits, and losses of] |
|
the association in the manner provided by this chapter. |
|
SECTION 11. The heading to Subchapter C, Chapter 2210, |
|
Insurance Code, is amended to read as follows: |
|
SUBCHAPTER C. ASSOCIATION BOARD OF DIRECTORS; GENERAL POWERS AND |
|
DUTIES OF BOARD OF DIRECTORS |
|
SECTION 12. Section 2210.102, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.102. COMPOSITION. (a) The board of directors is |
|
composed of [the following] nine members appointed by the |
|
commissioner in accordance with this section. |
|
(b) Four members must be [:
|
|
[(1) five] representatives of different insurers who |
|
are members of the association. |
|
(c) Three members must be [, elected by the members as
|
|
provided by the plan of operation;
|
|
[(2) two] public representatives: |
|
(1) at least one of whom [who are nominated by the
|
|
office of public insurance counsel and who], as of the date of the |
|
appointment, resides[:
|
|
[(A) reside] in or owns property in a first tier |
|
coastal county and at least one of whom, as of the date of the |
|
appointment, does not reside in or own property in the seacoast |
|
territory [a catastrophe area]; and |
|
(2) who [(B)] are policyholders of the association. |
|
(d) Two members must be [; and
|
|
[(3) two] general property and casualty agents who are |
|
licensed under this code and are not captive agents. One of the |
|
agents, as of the date of the appointment, must maintain the agent's |
|
principal office in a first tier coastal county. The second agent, |
|
as of the date of the appointment, may not maintain the agent's |
|
principal office in the seacoast territory. |
|
(e) All members must have [:
|
|
[(A) who have] demonstrated experience in |
|
insurance, general business, or actuarial principles sufficient to |
|
make the success of the association probable[; and
|
|
[(B)
whose principal offices, as of the date of
|
|
the appointment, are located in a catastrophe area]. |
|
[(b)
The persons appointed under Subsections (a)(2) and (3)
|
|
must be from different counties.] |
|
SECTION 13. Section 2210.103, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The commissioner shall appoint a replacement in the |
|
manner provided by Section 2210.102 for a member who leaves or is |
|
removed from the board of directors. |
|
SECTION 14. Section 2210.104, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.104. OFFICERS. The board of directors shall |
|
elect from the board's membership an executive committee consisting |
|
of a presiding officer, assistant presiding officer, and |
|
secretary-treasurer. [At least one of the officers must be a member
|
|
appointed under Section 2210.102(a)(2) or (3).] |
|
SECTION 15. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.1051 to read as follows: |
|
Sec. 2210.1051. MEETINGS OF BOARD OF DIRECTORS. (a) |
|
Notwithstanding Chapter 551, Government Code, or any other law, |
|
members of the board of directors may meet by telephone conference |
|
call, video conference, or other similar telecommunication method. |
|
The board may use telephone conference call, video conference, or |
|
other similar telecommunication method for purposes of |
|
establishing a quorum or voting or for any other meeting purpose in |
|
accordance with this subsection and Subsection (b). This |
|
subsection applies without regard to the subject matter discussed |
|
or considered by the members of the board at the meeting. |
|
(b) A meeting held by telephone conference call, video |
|
conference, or other similar telecommunication method: |
|
(1) is subject to the notice requirements applicable |
|
to other meetings of the board of directors; |
|
(2) may not be held unless notice of the meeting |
|
specifies the location of the meeting; |
|
(3) must be audible to the public at the location |
|
specified in the notice under Subdivision (2); and |
|
(4) must provide two-way audio communication between |
|
all members of the board attending the meeting during the entire |
|
meeting, and if the two-way audio communication link with members |
|
attending the meeting is disrupted so that a quorum of the board is |
|
no longer participating in the meeting, the meeting may not |
|
continue until the two-way audio communication link is |
|
reestablished. |
|
SECTION 16. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.107 to read as follows: |
|
Sec. 2210.107. PRIMARY BOARD OBJECTIVES. The primary |
|
objectives of the board of directors are to ensure that the |
|
association: |
|
(1) operates in accordance with this chapter and |
|
commissioner rules; |
|
(2) complies with sound insurance principles; and |
|
(3) meets all standards imposed under this chapter. |
|
SECTION 17. Section 2210.151, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.151. ADOPTION OF PLAN OF OPERATION. With the |
|
advice of the board of directors, the commissioner by rule shall |
|
adopt the plan of operation to provide[:
|
|
[(1)] Texas windstorm and hail insurance in a |
|
catastrophe area[; and
|
|
[(2)
Texas fire and explosion insurance in an
|
|
inadequate fire insurance area]. |
|
SECTION 18. Section 2210.152(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) The plan of operation must: |
|
(1) provide for the efficient, economical, fair, and |
|
nondiscriminatory administration of the association; and |
|
(2) include: |
|
(A) a plan for the equitable assessment of the |
|
members of the association to defray losses and expenses; |
|
(B) underwriting standards; |
|
(C) procedures for accepting and ceding |
|
reinsurance; |
|
(D) procedures for determining the amount of |
|
insurance to be provided to specific risks; |
|
(E) time limits and procedures for processing |
|
applications for insurance; [and] |
|
(F) a plan for the assessment of the Texas FAIR |
|
Plan Association; and |
|
(G) other provisions as considered necessary by |
|
the department to implement the purposes of this chapter. |
|
SECTION 19. Section 2210.202(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) A person who has an insurable interest in insurable |
|
property may apply to the association for insurance coverage |
|
provided under the plan of operation and an inspection of the |
|
property, subject to any rules[, including any inspection fee,] |
|
established by the board of directors and approved by the |
|
commissioner. The association shall make insurance available to |
|
each applicant in the catastrophe area whose property is insurable |
|
property but who, after diligent efforts, is unable to obtain |
|
property insurance through the voluntary market, as evidenced by |
|
two declinations from insurers authorized to engage in the business |
|
of, and writing, property insurance in this state. For purposes of |
|
this section, "declination" has the meaning assigned by the plan of |
|
operation and may include a refusal to offer coverage and the |
|
inability to obtain substantially equivalent insurance coverage |
|
and rates. |
|
SECTION 20. Section 2210.203, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) Notwithstanding Subsection (a), if all or any part of |
|
the property for which an application for new or renewal insurance |
|
coverage is made is located in Zone V or another similar zone with |
|
an additional hazard associated with storm waves, as defined by the |
|
National Flood Insurance Program, and if flood insurance under that |
|
federal program is available, the association may not issue a new or |
|
renewal insurance policy unless evidence that the property is |
|
covered by a flood insurance policy is submitted to the |
|
association. If that flood insurance is unavailable in any portion |
|
of the seacoast territory, an association policy insuring a |
|
residential structure described by Section 2210.004(g) is subject |
|
to a premium surcharge for the insurance coverage obtained through |
|
the association in an amount equal to not less than 10 percent of |
|
the premium, as set by the commissioner after notice and a hearing. |
|
A premium surcharge collected under this subsection shall be |
|
deposited in the catastrophe reserve trust fund under Subchapter J. |
|
A premium surcharge under this subsection is a separate charge in |
|
addition to the premiums collected and is not subject to premium tax |
|
or commissions. Failure to pay the surcharge by a policyholder |
|
constitutes failure to pay premium for purposes of policy |
|
cancellation. |
|
SECTION 21. Subchapter E, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.210 to read as follows: |
|
Sec. 2210.210. NOTICE TO APPLICANTS FOR INSURANCE AND |
|
POLICYHOLDERS; CONSUMER INFORMATION. (a) Each application for |
|
insurance and each policy issued by the association must include a |
|
notice as provided by this section. The commissioner by rule may |
|
prescribe specific requirements for the notice. The notice must be |
|
substantially as follows: |
|
IMPORTANT NOTICE TO TEXAS WINDSTORM INSURANCE |
|
ASSOCIATION POLICYHOLDERS |
|
Insurance policies issued by the Texas Windstorm Insurance |
|
Association are not guaranteed by the state or federal government. |
|
In the event of a major catastrophe, the association may not have |
|
sufficient funding resources to pay all losses to all policyholders |
|
suffering damage. In such an event, you may be paid less than the |
|
full amount of damages that you suffer. You may obtain additional |
|
information as to the association's potential exposure and its |
|
available funding resources at www.tdi.state.tx.us. |
|
(b) The department shall establish a link on the |
|
department's Internet website through which applicants for |
|
insurance coverage through the association and association |
|
policyholders may obtain information in a format easily understood |
|
about the association's exposure and available resources. |
|
SECTION 22. Section 2210.251, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.251. INSPECTION REQUIREMENTS. (a) Except as |
|
provided by this section, to be considered insurable property |
|
eligible for windstorm and hail insurance coverage from the |
|
association, a structure that is constructed or repaired or to |
|
which additions are made on or after January 1, 1988, must be |
|
inspected [or approved] by the association [department] for |
|
compliance with the plan of operation. |
|
(b) After January 1, 2004, for geographic areas specified by |
|
the commissioner, the board of directors [commissioner by rule] |
|
shall recognize for the purposes of this chapter [adopt] the 2003 |
|
International Residential Code for one- and two-family dwellings |
|
published by the International Code Council. For those geographic |
|
areas, the board of directors [commissioner by rule] may recognize |
|
[adopt] a subsequent edition of that code and [may adopt] any |
|
supplements published by the International Code Council and |
|
amendments to that code. |
|
(c) After January 1, 2004, a person must submit a notice of a |
|
windstorm inspection to the association [unit responsible for
|
|
certification of windstorm inspections at the department] before |
|
beginning to construct, alter, remodel, enlarge, or repair a |
|
structure. |
|
(d) A structure constructed or repaired or to which |
|
additions were made before January 1, 1988, that is located in an |
|
area that was governed at the time of the construction, repair, or |
|
addition by a building code recognized by the association is |
|
insurable property eligible for windstorm and hail insurance |
|
coverage from the association without compliance with the |
|
inspection [or approval] requirements of this section or the plan |
|
of operation. |
|
(e) A structure constructed or repaired or to which |
|
additions were made before January 1, 1988, that is located in an |
|
area not governed by a building code recognized by the association |
|
is insurable property eligible for windstorm and hail insurance |
|
coverage from the association without compliance with the |
|
inspection [or approval] requirements of this section or the plan |
|
of operation if the structure was previously insured by an insurer |
|
authorized to engage in the business of insurance in this state and |
|
the structure is in essentially the same condition as when |
|
previously insured, except for normal wear and tear, and is without |
|
any structural change other than a change made according to code. |
|
For purposes of this subsection, evidence of previous insurance |
|
coverage includes: |
|
(1) a copy of a previous insurance policy; |
|
(2) copies of canceled checks or agent's records that |
|
show payments for previous policies; and |
|
(3) a copy of the title to the structure or mortgage |
|
company records that show previous policies. |
|
(f) The association [department] shall issue a certificate |
|
of compliance for each structure that qualifies for coverage. The |
|
certificate is evidence of insurability of the structure by the |
|
association. |
|
(g) [The department may enter into agreements and contracts
|
|
as necessary to implement this section.
|
|
[(h)] The association [department] may charge a reasonable |
|
fee to cover the cost of making building requirements and |
|
inspection standards available to the public. |
|
(h) The association may charge a reasonable fee for each |
|
inspection in an amount set by commissioner rule. The association |
|
may use fees collected under this section for operating expenses. |
|
(i) In the event of an occurrence or series of occurrences |
|
within a defined catastrophe area that results in widespread |
|
destruction of property, the association may: |
|
(1) fund inspections, including the funding of |
|
expenses for: |
|
(A) independent contractors hired by the |
|
association to serve as temporary qualified inspectors; and |
|
(B) other persons designated by the association |
|
to assist with inspections or related responsibilities as necessary |
|
to facilitate recovery, rebuilding, and repair in the affected |
|
catastrophe area; or |
|
(2) hire independent contractors and other persons as |
|
described by Subdivision (1) as necessary to facilitate recovery, |
|
rebuilding, and repair in the affected catastrophe area. |
|
(j) Without limitation of the department's authority to |
|
otherwise enforce this chapter, the department shall monitor the |
|
association's compliance with this subchapter and may take any |
|
disciplinary action available under this code to enforce this |
|
subchapter, including an action authorized under Chapters 82, 83, |
|
and 84. |
|
(k) The commissioner may adopt rules in the manner |
|
prescribed by Subchapter A, Chapter 36, as necessary to implement |
|
this section. |
|
SECTION 23. Section 2210.252, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.252. INTERNATIONAL RESIDENTIAL CODE BUILDING |
|
SPECIFICATIONS. (a) After January 1, 2004, for geographic areas |
|
specified by the commissioner, the association [commissioner by
|
|
rule] may supplement the plan of operation building specifications |
|
with the structural provisions of the International Residential |
|
Code for one- and two-family dwellings, as published by the |
|
International Code Council or an analogous entity recognized by the |
|
board of directors [department]. |
|
(b) For a geographic area specified under Subsection (a), |
|
the board of directors [commissioner by rule] may recognize [adopt] |
|
a subsequent edition of the International Residential Code for |
|
one- and two-family dwellings and [may adopt] a supplement |
|
published by the International Code Council or an amendment to that |
|
code. |
|
SECTION 24. Sections 2210.254(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) For purposes of this chapter, a "qualified inspector" |
|
includes: |
|
(1) a person determined by the board of directors |
|
[department] to be qualified because of training or experience to |
|
perform building inspections; |
|
(2) a licensed professional engineer who meets the |
|
requirements specified by the board of directors [commissioner
|
|
rule] for appointment to conduct windstorm inspections; and |
|
(3) an inspector who: |
|
(A) is certified by the International Code |
|
Council, the Building Officials and Code Administrators |
|
International, Inc., the International Conference of Building |
|
Officials, or the Southern Building Code Congress International, |
|
Inc.; |
|
(B) has certifications as a buildings inspector |
|
and coastal construction inspector; and |
|
(C) complies with other requirements specified |
|
by the board of directors [commissioner rule]. |
|
(b) A windstorm inspection may be performed only by a |
|
qualified inspector who is employed by or under contract with the |
|
association. |
|
SECTION 25. Section 2210.255, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.255. APPOINTMENT OF LICENSED ENGINEER AS |
|
INSPECTOR. (a) On request of an engineer licensed by the Texas |
|
Board of Professional Engineers, the association may [commissioner
|
|
shall] appoint the engineer as an inspector under this subchapter |
|
on receipt of information satisfactory to the board of directors |
|
[not later than the 10th day after the date the engineer delivers to
|
|
the commissioner information demonstrating] that the engineer is |
|
qualified to perform windstorm inspections under this subchapter. |
|
(b) The board of directors shall consult with the |
|
commissioner regarding [shall adopt rules establishing] the |
|
information to be considered in appointing engineers under this |
|
section. |
|
SECTION 26. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.258 through 2210.261 to read as |
|
follows: |
|
Sec. 2210.258. MANDATORY COMPLIANCE WITH BUILDING CODES; |
|
ELIGIBILITY. (a) Notwithstanding any other provision of this |
|
chapter, to be eligible for insurance through the association, all |
|
construction, alteration, remodeling, enlargement, and repair of |
|
any structure located in the catastrophe area that is begun on or |
|
after January 1, 2008, must be performed in compliance with the |
|
applicable building code standards, as set forth in the plan of |
|
operation. |
|
(b) The association may not insure a structure described by |
|
Subsection (a) until: |
|
(1) the structure has been inspected for compliance |
|
with the plan of operation in accordance with Section 2210.251(a); |
|
and |
|
(2) a certificate of compliance has been issued for |
|
the structure in accordance with Section 2210.251(f). |
|
Sec. 2210.259. EXCEPTION; SURCHARGE FOR CERTAIN |
|
NONCOMPLIANT STRUCTURES. (a) The association may not insure a |
|
structure that has not been inspected for compliance with the plan |
|
of operation in accordance with Section 2210.251(a) and for which a |
|
certificate of compliance has not been issued on the structure in |
|
accordance with Section 2210.251(f), unless the structure: |
|
(1) is a residential structure or is the property of a |
|
school district or public, or not-for-profit, postsecondary |
|
educational institution, including a junior college; |
|
(2) was constructed, altered, remodeled, enlarged, or |
|
repaired before January 1, 2008, and has not been further altered, |
|
remodeled, enlarged, or repaired on or after January 1, 2008; and |
|
(3) was: |
|
(A) insured in the private market within the |
|
12-month period immediately preceding the date of the application; |
|
or |
|
(B) property covered by a self-insured school |
|
district or postsecondary institution. |
|
(b) A structure eligible for insurance under Subsection (a) |
|
is subject to a premium surcharge for insurance coverage obtained |
|
through the association. The commissioner shall determine the |
|
surcharge, after notice and a hearing, in an amount not less than an |
|
amount equal to 20 percent of the premium. |
|
(c) A premium surcharge collected under this section shall |
|
be deposited in the catastrophe reserve trust fund under Subchapter |
|
J. A premium surcharge under this section is a separate charge in |
|
addition to the premiums collected and is not subject to premium tax |
|
or commissions. Failure to pay the surcharge by a policyholder |
|
constitutes failure to pay premium for purposes of policy |
|
cancellation. |
|
Sec. 2210.260. STRUCTURES NOT SUBJECT TO PREMIUM SURCHARGE. |
|
Notwithstanding Section 2210.259, the association may insure |
|
without a premium surcharge a structure that: |
|
(1) was constructed or repaired or to which additions |
|
were made before January 1, 1988, and not thereafter, and is |
|
eligible for association coverage under Section 2210.251(d) or (e); |
|
or |
|
(2) is the subject of a certificate of compliance |
|
issued by the department and that has not been altered, remodeled, |
|
enlarged, or repaired after the date of issuance of the last |
|
department certificate. |
|
Sec. 2210.261. RULES. The commissioner may adopt rules to |
|
implement Sections 2210.258, 2210.259, and 2210.260. |
|
SECTION 27. Section 2210.351(c), Insurance Code, is amended |
|
to read as follows: |
|
(c) Except as provided by Section 2210.352(a-1), as [As] |
|
soon as reasonably possible after the filing has been made, the |
|
commissioner in writing shall approve, modify, or disapprove the |
|
filing. A filing is considered approved unless modified or |
|
disapproved on or before the 30th day after the date of the filing. |
|
SECTION 28. Section 2210.352, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (a-1) to read as |
|
follows: |
|
(a) Not later than August 15 of each year, the association |
|
shall file with the department [for approval by the commissioner] a |
|
proposed manual rate for all types and classes of risks written by |
|
the association. Chapter 40 does not apply to: |
|
(1) a filing made under this subsection; or |
|
(2) a department action with respect to the filing. |
|
(a-1) The association may use a rate filed by the |
|
association without prior commissioner approval if: |
|
(1) the filing is made not later than the 60th day |
|
before the date of any use or delivery for use of the rate; |
|
(2) the filed rate does not exceed 105 percent of the |
|
rate used by the association during the preceding 12-month period; |
|
(3) the filed rate does not reflect a rate change for |
|
an individual rating class that is five percent higher than any rate |
|
used by the association for that rating class during the preceding |
|
12-month period; and |
|
(4) the commissioner has not provided written notice |
|
to the association that the filing will be disapproved or modified |
|
under the procedure established under Subsections (b)-(g). |
|
SECTION 29. Section 2210.354(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) In conjunction with the review of a filing under Section |
|
2210.352 or 2210.353: |
|
(1) the commissioner may request the association to |
|
provide additional supporting information relating to the filing; |
|
and |
|
(2) in the case of a filing in which the filed rate |
|
exceeds 105 percent of the rate used by the association during the |
|
preceding 12-month period, any interested person may file a written |
|
request with the commissioner for additional supporting |
|
information relating to the filing. |
|
SECTION 30. Section 2210.355, Insurance Code, is amended by |
|
adding Subsections (h) and (i) to read as follows: |
|
(h) The association may establish rating territories and |
|
may vary rates among the territories. The association may use |
|
rating territories that subdivide a county only if the rate for any |
|
subdivision in the county is not greater than 15 percent higher than |
|
the rate used in any other subdivision of that county. |
|
(i) Catastrophe models, including hurricane models, may not |
|
be used to develop rates under this chapter. |
|
SECTION 31. Sections 2210.452(a) and (c), Insurance Code, |
|
are amended to read as follows: |
|
(a) The commissioner shall adopt rules under which the |
|
association makes [members relinquish their net equity on an annual
|
|
basis as provided by those rules by making] payments to the |
|
catastrophe reserve trust fund. The trust fund may be used only to |
|
fund: |
|
(1) the obligations of the trust fund under Section |
|
2210.058 [2210.058(a)]; and |
|
(2) the mitigation and preparedness plan established |
|
under Section 2210.454 to reduce the potential for payments by |
|
association members and the Texas FAIR Plan Association that give |
|
rise to tax credits in the event of loss. |
|
(c) At the end of each calendar year or policy year, the |
|
association shall pay the net gain from operations [equity] of the |
|
association [a member], including all premium and other revenue of |
|
the association in excess of incurred losses and operating |
|
expenses, to the trust fund or a reinsurance program approved by the |
|
commissioner. For the purposes of this subsection, "operating |
|
expenses" includes the cost of any reinsurance. |
|
SECTION 32. Section 2210.453, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.453. REINSURANCE [PROGRAM]. (a) The association |
|
may [shall]: |
|
(1) make payments into the trust fund; and [or] |
|
(2) purchase [establish a] reinsurance as part of the |
|
association's annual operating expenses to the extent [program] |
|
approved by the commissioner [department]. |
|
(b) As provided by this subsection, the [With the approval
|
|
of the department, the] association may purchase [establish a] |
|
reinsurance [program] that operates in addition to or in concert |
|
with the trust fund and with assessments authorized by this |
|
chapter. The association may purchase reinsurance in lieu of using |
|
public securities authorized under Section 2210.058 if, after a |
|
cost-benefit analysis or other appropriate examination, the board |
|
of directors determines that the use of reinsurance would result in |
|
lower costs to the association or is otherwise economically |
|
beneficial to the operations of the association. |
|
SECTION 33. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapter M to read as follows: |
|
SUBCHAPTER M. PUBLIC SECURITIES PROGRAM |
|
Sec. 2210.601. PURPOSE. The legislature finds that |
|
authorizing the issuance of public securities to provide a method |
|
to raise funds to provide windstorm and hail insurance through the |
|
association in certain designated portions of the state is for the |
|
benefit of the public and in furtherance of a public purpose. |
|
Sec. 2210.602. DEFINITIONS. In this subchapter: |
|
(1) "Board" means the board of directors of the Texas |
|
Public Finance Authority. |
|
(2) "Class 1 public securities" means public |
|
securities authorized to be issued before the occurrence of a |
|
catastrophic event by Section 2210.058(d). |
|
(3) "Class 2 public securities" means public |
|
securities authorized to be issued on or after the occurrence of a |
|
catastrophic event by Section 2210.058(f). |
|
(4) "Credit agreement" means: |
|
(A) a loan agreement; |
|
(B) a revolving credit agreement, an agreement |
|
establishing a line of credit, or a letter of credit; |
|
(C) an interest rate swap agreement, an interest |
|
rate lock agreement, a currency swap agreement, or a forward |
|
payment conversion agreement; |
|
(D) an agreement to provide payments based on |
|
levels of or changes in interest rates or currency exchange rates; |
|
(E) an agreement to exchange cash flows or a |
|
series of payments; |
|
(F) an option, put, or call to hedge payment, |
|
currency, interest rate, or other exposure; or |
|
(G) another agreement that enhances the |
|
marketability, security, or creditworthiness of a public security |
|
issued under this subchapter. |
|
(5) "Insurer" means each property and casualty insurer |
|
authorized to engage in the business of property and casualty |
|
insurance in this state and an affiliate of such an insurer, as |
|
described by Section 823.003, including an affiliate that is not |
|
authorized to engage in the business of property and casualty |
|
insurance in this state. The term specifically includes a county |
|
mutual insurance company, a Lloyd's plan, and a reciprocal or |
|
interinsurance exchange. |
|
(6) "Public security" means a debt instrument or other |
|
public security issued by the Texas Public Finance Authority. |
|
(7) "Public security administrative expenses" means |
|
expenses incurred to administer public securities issued under this |
|
subchapter, including fees for paying agents, trustees, and |
|
attorneys, and for other professional services necessary to ensure |
|
compliance with applicable state or federal law. |
|
(8) "Public security obligations" means the principal |
|
of a public security and any premium and interest on a public |
|
security issued under this subchapter, together with any amount |
|
owed under a related credit agreement. |
|
(9) "Public security obligation revenue fund" means |
|
the dedicated trust fund established by the association outside the |
|
state treasury under this subchapter. |
|
(10) "Public security resolution" means the |
|
resolution or order authorizing public securities to be issued |
|
under this subchapter. |
|
Sec. 2210.603. APPLICABILITY OF OTHER LAWS. The board |
|
shall issue the public securities as described by Section 2210.604 |
|
in accordance with and subject to the requirements of Chapter 1232, |
|
Government Code, and other provisions of Title 9, Government Code, |
|
that apply to issuance of a public security by a state agency. In |
|
the event of a conflict, this subchapter controls. |
|
Sec. 2210.604. ISSUANCE OF PUBLIC SECURITIES AUTHORIZED. |
|
(a) At the request of the association and with the approval of the |
|
commissioner, the Texas Public Finance Authority shall issue Class |
|
1 or Class 2 public securities. |
|
(b) The association shall specify in the association's |
|
request to the board the maximum principal amount of the public |
|
securities and the maximum term of the public securities, not to |
|
exceed 30 years. |
|
(c) The principal amount determined by the association |
|
under Subsection (b) may be increased to include an amount |
|
sufficient to: |
|
(1) pay the costs related to issuance of the public |
|
securities; |
|
(2) provide a public security reserve fund; and |
|
(3) capitalize interest for the period determined |
|
necessary by the association, not to exceed two years. |
|
Sec. 2210.605. TERMS OF ISSUANCE. (a) The board shall |
|
determine the method of sale, type and form of public security, |
|
maximum interest rates, and other terms of the public securities |
|
that, in the board's judgment, best achieve the goals of the |
|
association and effect the borrowing at the lowest practicable |
|
cost. The board may enter into a credit agreement in connection |
|
with the public securities. |
|
(b) Public securities must be issued in the name of the |
|
association. |
|
Sec. 2210.606. ADDITIONAL COVENANTS. The board may make |
|
additional covenants with respect to the public securities and the |
|
designated income and receipts of the association pledged to their |
|
payment, and provide for the flow of funds and the establishment, |
|
maintenance, and investment of funds and accounts with respect to |
|
the public securities, and the administration of those funds and |
|
accounts, as provided in the proceedings authorizing the public |
|
securities. |
|
Sec. 2210.607. PUBLIC SECURITY PROCEEDS. The proceeds of |
|
public securities issued by the board under this subchapter may be |
|
deposited with a trustee selected by the association in |
|
consultation with the commissioner or held by the comptroller in a |
|
dedicated trust fund outside the state treasury in the custody of |
|
the comptroller. |
|
Sec. 2210.608. USE OF PUBLIC SECURITY PROCEEDS. (a) Public |
|
security proceeds, including investment income, shall be held in |
|
trust for the exclusive use and benefit of the association. The |
|
association may use the proceeds to: |
|
(1) pay incurred claims and operating expenses of the |
|
association; |
|
(2) purchase reinsurance for the association; |
|
(3) pay the costs of issuing the public securities, |
|
and public security administrative expenses, if any; |
|
(4) provide a public security reserve; and |
|
(5) pay capitalized interest and principal on the |
|
public securities for the period determined necessary by the |
|
association, not to exceed two years. |
|
(b) Any excess public security proceeds remaining after the |
|
purposes for which the public securities were issued are satisfied |
|
may be used to purchase or redeem outstanding public securities. If |
|
there are no outstanding public security obligations or public |
|
security administrative expenses, the excess proceeds shall be |
|
transferred to the catastrophe reserve trust fund. |
|
Sec. 2210.609. REPAYMENT OF ASSOCIATION'S PUBLIC SECURITY |
|
OBLIGATIONS. (a) The association shall pay all public security |
|
obligations from available funds collected by the association from |
|
and deposited into the public security obligation revenue fund. If |
|
the association determines that it is unable to pay the public |
|
security obligations and public security administrative expenses, |
|
if any, with available funds, the association shall pay those |
|
obligations and expenses in accordance with Sections 2210.612 and |
|
2210.613. |
|
(b) The board shall notify the association of the amount of |
|
the public security obligations and the estimated amount of public |
|
security administrative expenses, if any, each year in a period |
|
sufficient, as determined by the association, to permit the |
|
association to determine the availability of funds and assess a |
|
premium surcharge if necessary. |
|
(c) The association shall deposit all revenue collected |
|
under Sections 2210.612 and 2210.613 in the public security |
|
obligation revenue fund. Money deposited in the fund may be |
|
invested as permitted by general law. Money in the fund required to |
|
be used to pay public security obligations and public security |
|
administrative expenses, if any, shall be transferred to the |
|
appropriate funds in the manner and at the time specified in the |
|
proceedings authorizing the public securities to ensure timely |
|
payment of obligations and expenses. |
|
(d) The association shall provide for the payment of the |
|
public security obligations and the public security administrative |
|
expenses by irrevocably pledging revenues received from premiums, |
|
premium surcharges, and amounts on deposit in the public security |
|
obligation revenue fund, together with any public security reserve |
|
fund, as provided in the proceedings authorizing the public |
|
securities and related credit agreements. |
|
(e) An amount owed by the board under a credit agreement |
|
shall be payable from and secured by a pledge of revenues received |
|
by the association or amounts from the obligation trust fund to the |
|
extent provided in the proceedings authorizing the credit |
|
agreement. |
|
Sec. 2210.610. PUBLIC SECURITY PAYMENTS. (a) Revenues |
|
received from the premium surcharges under Section 2210.612 or |
|
2210.613 may be applied only as provided by this subchapter. |
|
(b) The association may pay public security obligations |
|
with other legally available funds. |
|
(c) Public security obligations are payable only from |
|
sources provided for payment in this subchapter. |
|
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT |
|
EARNINGS. Revenue collected in any year from a premium surcharge |
|
under Section 2210.612 or 2210.613 that exceeds the amount of the |
|
public security obligations and public security administrative |
|
expenses payable in that year and interest earned on the public |
|
security obligation fund may, in the discretion of the association, |
|
be: |
|
(1) used to pay public security obligations payable in |
|
the subsequent year, offsetting the amount of the premium surcharge |
|
that would otherwise be required to be levied for the year under |
|
this subchapter; |
|
(2) used to redeem or purchase outstanding public |
|
securities; or |
|
(3) deposited in the catastrophe reserve trust fund. |
|
Sec. 2210.612. CLASS 1 PREMIUM SURCHARGE. (a) Each |
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insurer, the association, and the Texas FAIR Plan Association may |
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collect from their policyholders a surcharge in addition to any |
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premiums to pay public security obligations and public security |
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administrative expenses, if any, on Class 1 public securities. |
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(b) The association shall determine the premium surcharge |
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at least annually. |
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(c) On approval by the commissioner, each insurer, the |
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association, and the Texas FAIR Plan Association shall assess a |
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premium surcharge to its policyholders as provided by this section. |
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The premium surcharge must be set in an amount sufficient to pay all |
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debt service not already covered by available funds and all related |
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expenses on the public securities. |
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(d) The association shall collect the premium surcharge |
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from its policyholders. Each insurer and the Texas FAIR Plan |
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Association shall collect the premium surcharge from their |
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policyholders who have a property or casualty policy that provides |
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coverage for premises, locations, operations, or property located |
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in the catastrophe area and shall remit the premium surcharge to the |
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association as required by commissioner rule. |
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(e) A premium surcharge under this section shall apply to |
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all policies that provide coverage on any premises, locations, |
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operations, or property located in the catastrophe area for all |
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property and casualty lines of insurance, other than workers' |
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compensation insurance, accident and health insurance, and medical |
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malpractice insurance. The premium surcharge does not apply to |
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premiums charged for any premises, locations, operations, or |
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property located outside the catastrophe area, except for premiums |
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charged by the association for property insured by the association. |
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(f) A premium surcharge under this section is a separate |
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charge in addition to the premiums collected and is not subject to |
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premium tax or commissions. Failure to pay the surcharge by a |
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policyholder constitutes failure to pay premium for purposes of |
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policy cancellation. |
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Sec. 2210.613. CLASS 2 PREMIUM SURCHARGE. (a) Each |
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insurer, the association, and the Texas FAIR Plan Association shall |
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collect from their policyholders a premium surcharge to pay public |
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security obligations and public security administrative expenses, |
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if any, on Class 2 public securities. |
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(b) The association shall determine the premium surcharge |
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at least annually. |
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(c) On approval by the commissioner, each insurer, the |
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association, and the Texas FAIR Plan Association shall assess a |
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premium surcharge to its policyholders as provided by this section. |
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The premium surcharge must be set in an amount sufficient to pay all |
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debt service and all related expenses on the public securities. The |
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premium surcharge assessed under this section may not exceed six |
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percent of premium and cumulatively may not exceed 10 percent of |
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premium over a 12-month period beginning on the date the surcharge |
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is first assessed. |
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(d) Each insurer, the association, and the Texas FAIR Plan |
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Association shall collect the premium surcharge under this section |
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from their policyholders who have a property or casualty policy |
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that provides coverage for premises, locations, operations, or |
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property located in this state, and shall remit the premium |
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surcharge to the association as required by commissioner rule. |
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(e) A premium surcharge under this section shall apply to |
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all policies that provide coverage on any premises, locations, |
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operations, or property located in this state for all property and |
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casualty lines of insurance, other than workers' compensation |
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insurance, accident and health insurance, and medical malpractice |
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insurance. The premium surcharge does not apply to premiums |
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charged for any premises, locations, operations, or property |
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located outside this state. |
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(f) A premium surcharge under this section is a separate |
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charge in addition to the premiums collected and is not subject to |
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premium tax or commissions. Failure to pay the surcharge by a |
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policyholder constitutes failure to pay premium for purposes of |
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policy cancellation. |
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Sec. 2210.614. SOURCE OF PAYMENT; STATE DEBT NOT CREATED. |
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(a) A public security or credit agreement is payable solely from |
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revenue as provided by this subchapter. |
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(b) A public security issued under this subchapter, and any |
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related credit agreement, is not a debt of this state or any state |
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agency or political subdivision of this state, and does not |
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constitute a pledge of the faith and credit of this state or any |
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state agency or political subdivision of this state. |
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(c) Each public security, and any related credit agreement, |
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issued under this chapter must state on the security's face that: |
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(1) neither the state nor a state agency, political |
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corporation, or political subdivision of the state is obligated to |
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pay the principal of or interest on the public security except as |
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provided by this subchapter; and |
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(2) neither the faith and credit nor the taxing power |
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of the state or any state agency, political corporation, or |
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political subdivision of the state is pledged to the payment of the |
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principal of or interest on the public security. |
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Sec. 2210.615. STATE NOT TO IMPAIR PUBLIC SECURITY |
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OBLIGATIONS. If public securities under this subchapter are |
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outstanding, the state may not: |
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(1) take action to limit or restrict the rights of the |
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association to fulfill its responsibility to pay public security |
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obligations; or |
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(2) in any way impair the rights and remedies of the |
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public security owners until the public securities are fully |
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discharged. |
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Sec. 2210.616. ENFORCEMENT BY MANDAMUS. A writ of mandamus |
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and any other legal and equitable remedies are available to a party |
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at interest to require the association or another party to fulfill |
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an agreement and to perform functions and duties under: |
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(1) this subchapter; |
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(2) the Texas Constitution; or |
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(3) a relevant public security resolution. |
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Sec. 2210.617. EXEMPTION FROM TAXATION. A public security |
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issued under this subchapter, any transaction relating to the |
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public security, and profits made from the sale of the public |
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security are exempt from taxation by this state or by a municipality |
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or other political subdivision of this state. |
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Sec. 2210.618. NO PERSONAL LIABILITY. The members of the |
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association, association employees, the board, the employees of the |
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Texas Public Finance Authority, the commissioner, and department |
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employees are not personally liable as a result of exercising the |
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rights and responsibilities granted under this subchapter. |
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Sec. 2210.619. AUTHORIZED INVESTMENTS. Public securities |
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issued under this subchapter are authorized investments under: |
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(1) Subchapter B, Chapter 424; |
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(2) Subchapter C, Chapter 425; and |
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(3) Sections 425.203-425.213. |
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SECTION 34. Section 2211.104, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.104. ADDITIONAL ASSESSMENT IN EVENT OF DEFICIT; |
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PREMIUM SURCHARGE AUTHORIZED. (a) Except as provided by |
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Subsection (f), if [If] the association incurs a deficit, the |
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association, at the commissioner's direction, shall: |
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(1) request the issuance of public securities as |
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authorized by Subchapter E; or |
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(2) assess participating insurers in accordance with |
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this section. |
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(b) Except as provided by Subsection (f), as [As] |
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reimbursement for assessments paid under this section or service |
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fees paid under Section 2211.209, each insurer may charge a premium |
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surcharge on every property insurance policy insuring property in |
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this state that the insurer issues, the effective date of which is |
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within the three-year period beginning on the 90th day after the |
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date of the assessment or the 90th day after the date the service |
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fee under Section 2211.209 is paid, as applicable. |
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(c) Except as provided by Subsection (f), insurers [The
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insurer] shall compute the amount of the surcharge under Subsection |
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(b) as a uniform percentage of the premium on each policy described |
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by Subsection (b). The percentage must be equal to one-third of the |
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ratio of the amount of the participating insurer's assessment or |
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service fee payment to the amount of the insurer's direct earned |
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premiums, as reported to the department in the insurer's financial |
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statement for the calendar year preceding the year in which the |
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assessment or service fee payment is made so that, over the |
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three-year period, the aggregate of all surcharges by the insurer |
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under this section is at least equal to the amount of the assessment |
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or service fee payment. |
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(d) The amount of any assessment paid and surcharged under |
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this section may be carried by the insurer as an admitted asset of |
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the insurer for all purposes, including exhibition in annual |
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statements under Section 862.001, until collected. |
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(e) The commissioner shall adopt rules and procedures as |
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necessary to implement this section. |
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(f) In the event of an occurrence or series of occurrences |
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resulting in deficits for the association and the Texas Windstorm |
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Insurance Association, the commissioner may adopt rules in the |
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manner provided by Subchapter A, Chapter 36, to provide for the |
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coordinated recoupment of those deficits. The rules may not |
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provide for a recoupment of assessments through premium tax |
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credits. |
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SECTION 35. Section 941.003, Insurance Code, is amended by |
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adding Subsection (e) to read as follows: |
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(e) A Lloyd's plan is subject to Chapter 2210, as provided |
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by that chapter. |
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SECTION 36. Section 942.003, Insurance Code, is amended by |
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adding Subsection (f) to read as follows: |
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(f) An exchange is subject to Chapter 2210, as provided by |
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that chapter. |
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SECTION 37. The following laws are repealed: |
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(1) Sections 2210.003(5) and (12), Insurance Code; |
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(2) Section 2210.059, Insurance Code; |
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(3) Section 2210.356, Insurance Code; and |
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(4) Subchapters G and I, Chapter 2210, Insurance Code. |
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SECTION 38. (a) The board of directors of the Texas |
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Windstorm Insurance Association established under Section |
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2210.102, Insurance Code, as that section existed before amendment |
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by this Act, is abolished on the 30th day after the effective date |
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of this Act. |
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(b) The commissioner of insurance shall appoint the members |
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of the board of directors of the Texas Windstorm Insurance |
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Association under Section 2210.102, Insurance Code, as amended by |
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this Act, not later than the 31st day after the effective date of |
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this Act. |
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(c) The term of a person who is serving as a member of the |
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board of directors of the Texas Windstorm Insurance Association |
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immediately before the abolition of that board under Subsection (a) |
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of this section expires on the 30th day after the effective date of |
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this Act. Such a person is eligible for appointment by the |
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commissioner of insurance to the new board of directors of the Texas |
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Windstorm Insurance Association under Section 2210.102, Insurance |
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Code, as amended by this Act. |
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SECTION 39. The commissioner of insurance shall adopt rules |
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as required by Chapter 2210, Insurance Code, as amended by this Act, |
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not later than the 180th day after the effective date of this Act. |
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SECTION 40. Section 2210.202(a), Insurance Code, as amended |
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by this Act, applies to an application for insurance coverage |
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submitted to the Texas Windstorm Insurance Association on or after |
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the effective date of this Act. |
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SECTION 41. Section 2210.251, Insurance Code, as amended by |
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this Act, applies to an inspection conducted by the Texas Windstorm |
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Insurance Association on or after the effective date of this Act. |
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Except as otherwise specifically provided by that section, a person |
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whose insurable property has been inspected by the Texas Department |
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of Insurance and is in compliance with Section 2210.251, Insurance |
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Code, as that section existed immediately before the effective date |
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of this Act, is not required to obtain an inspection from the Texas |
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Windstorm Insurance Association to remain eligible for insurance |
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coverage through that association. |
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SECTION 42. (a) In accordance with Section 311.031(c), |
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Government Code, which gives effect to a substantive amendment |
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enacted by the same legislature that codifies the amended statute, |
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the text of Section 2211.104, Insurance Code, as set out in Section |
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34 of this Act, gives effect to changes made by Chapter 1082, Acts |
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of the 79th Legislature, Regular Session, 2005. |
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(b) To the extent of any conflict, this Act prevails over |
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another Act of the 80th Legislature, Regular Session, 2007, |
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relating to nonsubstantive additions and corrections in enacted |
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codes. |
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SECTION 43. This Act takes effect immediately if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2007. |
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