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A BILL TO BE ENTITLED
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AN ACT
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relating to regulation of residential property insurance; |
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providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 2, Insurance Code, is amended |
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by adding Chapter 41 to read as follows: |
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CHAPTER 41. INFORMATION CONCERNING RATES FOR CERTAIN RESIDENTIAL |
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PROPERTY INSURANCE; INTERNET WEBSITE |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 41.001. DEFINITIONS. In this chapter: |
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(1) "Insurer" means an insurance company, reciprocal |
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or interinsurance exchange, mutual insurance company, capital |
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stock company, county mutual insurance company, Lloyd's plan, or |
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other legal entity writing residential property insurance in this |
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state. The term includes: |
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(A) the Texas Windstorm Insurance Association |
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under Chapter 2210; or |
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(B) the FAIR Plan Association under Chapter 2211. |
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(2) "Residential property insurance" means insurance |
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coverage against loss to real or tangible personal property at a |
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fixed location that is provided through: |
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(A) a homeowners policy, including a tenants |
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policy; |
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(B) a condominium owners policy; or |
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(C) a residential fire and allied lines policy. |
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Sec. 41.002. RULES. The commissioner may adopt rules as |
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provided by Section 36.001 as necessary to implement this chapter. |
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[Sections 41.003-41.050 reserved for expansion] |
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SUBCHAPTER B. RATES FOR RESIDENTIAL PROPERTY INSURANCE |
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Sec. 41.051. RATES. (a) The department shall include on |
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the main page of the department's Internet website and other |
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appropriate pages, as determined by the department, sample base |
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rates for each insurer for residential property insurance. |
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(b) The commissioner by rule shall determine the frequency |
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with which the sample base rates described by Subsection (a) must be |
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updated. |
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Sec. 41.052. ADDITIONAL INFORMATION. On each page on which |
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the rate information described by Section 41.051 is displayed, in a |
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location near the information, the department shall include a link |
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to additional information explaining the rate information, |
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including: |
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(1) a general explanation of how insurance premiums |
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applicable to an individual insured are determined and that the |
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premium amount charged may vary from the base rate displayed; and |
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(2) contact information, for each insurer whose rates |
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for residential property insurance are displayed on the Internet |
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website. |
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SECTION 2. Subtitle H, Title 11, Insurance Code, is amended |
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by adding Chapter 2251A to read as follows: |
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CHAPTER 2251A. BIENNIAL RATE EXAMINATION FOR RESIDENTIAL |
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PROPERTY INSURANCE |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 2251A.001. DEFINITIONS. The definitions under Chapter |
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2251 apply to this chapter. |
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Sec. 2251A.002. APPLICABILITY OF CHAPTER. This chapter |
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applies only to an insurer that: |
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(1) is subject to Subchapters A-D, Chapter 2251; and |
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(2) writes residential property insurance in this |
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state. |
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Sec. 2251A.003. CONSTRUCTION WITH OTHER LAW. (a) |
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Notwithstanding any provision in Chapter 2251, this chapter and |
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Chapter 2251 govern the setting and evaluation of rates for |
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residential property insurance in this state. |
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(b) To the extent that a provision of this chapter and a |
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provision of Chapter 2251 conflict, the provision in this chapter |
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prevails. |
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Sec. 2251A.004. RULES. The commissioner may adopt rules |
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necessary to implement this chapter. |
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[Sections 2251A.005-2251A.050 reserved for expansion] |
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SUBCHAPTER B. BIENNIAL RATE ASSESSMENT |
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Sec. 2251A.051. RATE STANDARDS. (a) A rate filed by an |
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insurer under Section 2251A.052 or a rate ordered by the |
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commissioner following a rate hearing under Section 2251A.053 may |
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not be excessive, inadequate, unfairly discriminatory, or |
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unreasonable. |
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(b) A rate ordered by the commissioner following a rate |
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hearing under Section 2251A.053 must comply with the rate standards |
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described by Subsection (a) and may not be confiscatory. |
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Sec. 2251A.052. SUPPLEMENTAL RATE FILINGS. (a) Not |
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earlier than August 15 and not later than September 1 of each |
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even-numbered year, an insurer described by Section 2251A.002 shall |
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file with the commissioner all rates, applicable rating manuals, |
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and supplementary rating information used by the insurer to set |
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rates for residential property insurance coverage in this state. |
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(b) If an insurer has made a rate filing under Chapter 2251 |
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on or after August 1 of an even-numbered year, the insurer may: |
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(1) notify the department that the insurer is using |
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the rate filing submitted under Chapter 2251 to comply with the |
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requirements of this chapter for the even-numbered year in which |
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the insurer made the filing; or |
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(2) file an update to the material filed under Chapter |
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2251. |
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Sec. 2251A.053. RATE ASSESSMENT; RATE HEARING. (a) Not |
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later than November 1 of each even-numbered year, the commissioner |
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shall: |
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(1) if the filed rate meets the rate standards |
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described by 2251A.051, approve the filed rate; or |
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(2) if the filed rate fails to meet any rate standard |
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under Section 2251A.051, disapprove the filed rate and issue an |
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order specifying in what respects the filed rate fails to comply |
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with the rate standards. |
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(b) If the commissioner disapproves a rate under Subsection |
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(a), the department shall hold a rate hearing and the commissioner |
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shall issue an order in accordance with Chapter 40. |
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Sec. 2251A.054. JUDICIAL REVIEW. (a) Not later than the |
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10th day after the date an insurer receives the commissioner's |
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order issued under Section 2251A.053(a)(2), the insurer may file a |
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petition for judicial review in a district court of Travis County. |
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The standard of review of the commissioner's order is substantial |
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evidence. |
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(b) During the pendency of an appeal under this section, the |
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insurer may charge either the insurer's existing rates or the rate |
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ordered by the commissioner under Section 2251A.053. |
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Sec. 2251A.055. REFUND. If on final appeal a court upholds |
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the commissioner's order issued under Section 2251A.053, the |
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insurer shall refund the difference in overcharged premium, if any, |
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plus interest to each policyholder. The interest rate is the prime |
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rate for the calendar year in which the refund is issued, plus six |
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percent. |
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Sec. 2251A.056. CERTAIN SETTLEMENTS PROHIBITED. If an |
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insurer files a petition for judicial review under Section |
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2251A.054, the department may not agree to a settlement of the |
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lawsuit in any amount that is less than the amount of the refund, |
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including interest, that the insurer would be obligated to pay |
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under Section 2251A.055. |
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Sec. 2251A.057. SANCTIONS. An insurer that violates |
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Section 2251A.052 is subject to sanctions under Chapter 82. |
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Sec. 2251A.058. REPORT TO LEGISLATURE. (a) Not later than |
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January 15 of each odd-numbered year, the commissioner shall |
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deliver to the governor, the lieutenant governor, the speaker of |
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the house of representatives, and each standing committee of the |
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senate and the house of representatives that has jurisdiction over |
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the regulation of insurance in this state a written report that: |
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(1) summarizes any rate hearings conducted under this |
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chapter; and |
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(2) identifies any trends in rates for residential |
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property insurance in this state. |
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(b) The commissioner shall post the report described by |
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Subsection (a) on the page of the department's Internet website |
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where the rate information described in Section 41.051 is posted. |
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SECTION 3. The Texas Department of Insurance shall |
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implement Chapter 41, Insurance Code, as added by this Act, not |
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later than January 1, 2008. |
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SECTION 4. This Act takes effect September 1, 2007. |