|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to adoption of a temporary program for the operation and |
|
funding of the Texas Windstorm Insurance Association. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapter I to read as follows: |
|
SUBCHAPTER I. OPERATION AND FUNDING OF ASSOCIATION BETWEEN JUNE 1, |
|
2009, AND SEPTEMBER 1, 2013 |
|
Sec. 2210.401. CONSTRUCTION WITH OTHER LAW. |
|
Notwithstanding any other provision of this chapter or other law, |
|
for the period beginning June 1, 2009, and ending September 1, 2013, |
|
the operation and funding of the association is subject to this |
|
subchapter. |
|
Sec. 2210.402. INSURABLE PROPERTY. (a) For purposes of |
|
this subchapter and subject to this section, "insurable property" |
|
means only immovable property at a fixed location in a catastrophe |
|
area, or corporeal movable property located in that immovable |
|
property, that is determined by the association according to the |
|
criteria specified in the plan of operation to be in an insurable |
|
condition against windstorm and hail, as determined by normal |
|
underwriting standards. A structure located in a catastrophe area |
|
that is not built in compliance with applicable building codes or |
|
continued in compliance with those building codes does not |
|
constitute an insurable risk for purposes of windstorm and hail |
|
insurance under this subchapter. |
|
(b) Residential property is insurable property for purposes |
|
of this subchapter only if the property is classified as the |
|
policyholder's residential homestead property under Section 11.13, |
|
Tax Code, or is used as the primary residence of a tenant of the |
|
policyholder. To be eligible for coverage through the association, |
|
the policyholder must certify, in the manner prescribed by the |
|
commissioner, that the property to be insured is the policyholder's |
|
primary residence or the primary residence of the policyholder's |
|
tenant. Residential property that is not used as a primary |
|
residence is not insurable property for purposes of this subchapter |
|
and is not eligible for coverage through the association. |
|
(c) For purposes of this subchapter, a residential |
|
structure is insurable property if: |
|
(1) the residential structure is not: |
|
(A) a condominium, apartment, duplex, or other |
|
multifamily residence; or |
|
(B) a hotel or resort facility; |
|
(2) the residential structure is located within an |
|
area designated as a unit under the Coastal Barrier Resources Act |
|
(Pub. L. No. 97-348); and |
|
(3) a building permit or plat for the residential |
|
structure was filed with the municipality, the county, or the |
|
United States Army Corps of Engineers before June 11, 2003. |
|
(d) Commercial property is eligible for coverage through |
|
the association only as provided by this subchapter. |
|
(e) Except as otherwise provided by this section, if repair |
|
of damage to a structure involves replacement of items covered in |
|
the building specifications set forth in the applicable building |
|
codes, the repairs must be completed in a manner that complies with |
|
those specifications for the structure to continue to be insurable |
|
property for windstorm and hail insurance. |
|
(f) For purposes of this subchapter, a structure is not |
|
insurable property if the commissioner of the General Land Office |
|
notifies the association of a determination that the structure is |
|
located on the public beach under procedures established under |
|
Section 61.011, Natural Resources Code, and that the structure: |
|
(1) constitutes an imminent hazard to safety, health, |
|
or public welfare; or |
|
(2) substantially interferes with the free and |
|
unrestricted right of the public to enter or leave the public beach |
|
or traverse any part of the public beach. |
|
(g) The commissioner, by rule, may adopt inspection |
|
requirements for this subchapter to supplement or replace the |
|
inspection requirements adopted under Subchapter F. |
|
Sec. 2210.403. FLOOD INSURANCE REQUIRED. (a) |
|
Notwithstanding Section 2210.402, 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. |
|
(b) If flood insurance described by Subsection (a) is |
|
unavailable in any portion of the seacoast territory, an |
|
association policy insuring a residential structure described by |
|
Section 2210.402(b) 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. |
|
Sec. 2210.404. MAXIMUM LIABILITY LIMITS. The maximum |
|
liability limits for coverage through the association under this |
|
subchapter on a single insurable property may not exceed: |
|
(1) $250,000 for a dwelling, and the corporeal movable |
|
property located in or about the dwelling, as provided under the |
|
policy; |
|
(2) $2,192,000 for a building, and the corporeal |
|
movable property located in the building, if the building is: |
|
(A) owned by, and at least 75 percent of which is |
|
occupied by, a governmental entity; or |
|
(B) not owned by, but is wholly and exclusively |
|
occupied by, a governmental entity; and |
|
(3) $1 million for a structure other than a dwelling or |
|
a public building, and the corporeal movable property located in |
|
that structure, as provided under the policy. |
|
Sec. 2210.405. ISSUANCE OF COVERAGE; TERM; RENEWAL. (a) If |
|
the association determines that the property for which an |
|
application for insurance coverage is made is insurable property |
|
under this subchapter, the association, on payment of the premium, |
|
shall direct the issuance of an insurance policy as provided by the |
|
plan of operation and commissioner rules for this subchapter. The |
|
policy is subject to the waiting period described by Section |
|
2210.406. |
|
(b) A policy issued under this section must be for a term of |
|
at least 12 months. |
|
(c) A policy may be renewed annually on application for |
|
renewal as long as the property continues to be insurable property. |
|
(d) Coverage under this subchapter does not include |
|
coverage for loss of use of insurable property. |
|
Sec. 2210.406. WAITING PERIOD. (a) A policy of windstorm |
|
and hail insurance issued under this subchapter is subject to a |
|
60-day waiting period before the policyholder is eligible to |
|
recover for losses under the policy. |
|
(b) The waiting period under Subsection (a) begins on the |
|
date that the policy is first issued under this chapter. |
|
Sec. 2210.407. FILE AND USE RATING. (a) Notwithstanding |
|
Subchapter H, rates for coverage issued by the association on and |
|
after June 1, 2009, are subject to this section. |
|
(b) The association shall file with the department in the |
|
manner prescribed by Section 2251.101 each manual of |
|
classifications, rules, and rates, including condition charges, |
|
and each rating plan, and each modification of those items that the |
|
association proposes to use. |
|
(c) After the filing has been made, the association may use |
|
a filed rate, and a filed rate is subject to disapproval by the |
|
commissioner in the manner prescribed by Subchapter C, Chapter |
|
2251. |
|
(d) If at any time the commissioner determines that a filed |
|
rate in effect under Subsection (c) no longer meets the |
|
requirements of this chapter, the commissioner may disapprove the |
|
filed rate in the manner prescribed by Section 2251.104 for |
|
disapproval of a rate. |
|
(e) In adopting rates under this chapter, the association |
|
shall: |
|
(1) comply with the rate standards adopted under |
|
Section 2251.052, to the extent that those standards are determined |
|
by the commissioner to be applicable to the purposes of the |
|
association; |
|
(2) ensure that the rates are actuarially sound; |
|
(3) use territorial rating within the catastrophe |
|
area, adjusted for relative risks; and |
|
(4) include rating factors as necessary to: |
|
(A) fund the catastrophe reserve trust fund; and |
|
(B) pay the losses and expenses of the |
|
association, regardless of the ultimate source of funding for those |
|
losses and expenses. |
|
(f) The catastrophe element used to develop rates under this |
|
subchapter must be developed using industry data, association data, |
|
and catastrophe models approved by the department for use in |
|
association filings. The commissioner shall adopt rules |
|
establishing: |
|
(1) the procedure for approval by the department of |
|
catastrophe models used by the association in the development of |
|
its rates; and |
|
(2) the methodology of use for those models. |
|
(g) A person who is aggrieved by a rate under this |
|
subchapter may proceed as provided by Chapter 2251. |
|
Sec. 2210.408. FUNDING OF LOSSES. (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 shall be paid as provided by this section. |
|
(b) Losses in excess of those paid under Subsection (a) |
|
shall be paid with the proceeds of $1.5 billion in loans obtained by |
|
the association from the economic stabilization fund established |
|
under Section 49-g, Article III, Texas Constitution. Loans |
|
obtained by the association under this subsection are subject to |
|
the loan terms approved in advance by the Legislative Budget Board. |
|
The board of directors shall assess the members of the association |
|
for the repayment to the Legislative Budget Board of loan proceeds |
|
described by this subsection. |
|
(c) Losses in excess of those paid under Subsections (a) and |
|
(b) shall be paid through reinsurance as provided by this |
|
subsection. Not later than July 1, 2009, the association shall |
|
purchase reinsurance for the coverage of losses in a minimum amount |
|
of $2 billion. The initial cost of reinsurance purchased under this |
|
subsection shall be paid by assessments on the members of the |
|
association. The association may recoup the costs of reinsurance |
|
under this subsection through pro-rata assessments on association |
|
policyholders made on or before December 31, 2009, in the manner |
|
prescribed by Subsection (e). |
|
(d) Losses in excess of those paid under Subsections (a), |
|
(b), and (c) shall be paid with the proceeds of additional loans |
|
obtained by the association from the economic stabilization fund |
|
established under Section 49-g, Article III, Texas Constitution. |
|
Loans obtained by the association under this subsection are subject |
|
to the loan terms approved in advance by the Legislative Budget |
|
Board and shall be repaid from the general revenue fund. |
|
(e) The commissioner shall notify each member of the |
|
association of the amount of the member's assessment to repay loan |
|
proceeds described by Subsection (b) and to purchase reinsurance |
|
described by Subsection (c). The association may recoup the |
|
assessments through premium surcharges on each policy of windstorm |
|
and hail insurance written by the association. 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 premium surcharge by a policyholder constitutes failure |
|
to pay premium for purposes of policy cancellation. |
|
Sec. 2210.409. RULES. The commissioner shall adopt rules |
|
in the manner provided by Subchapter A, Chapter 36, as necessary to |
|
implement this subchapter. |
|
Sec. 2210.410. EXPIRATION. This subchapter expires |
|
September 1, 2013. |
|
SECTION 2. Subchapter I, Chapter 2210, Insurance Code, as |
|
added by this Act, takes effect June 1, 2009. |
|
SECTION 3. This Act takes effect immediately if it receives |
|
a vote of two-thirds of all the members elected to each house, as |
|
provided by Section 39, Article III, Texas Constitution. If this |
|
Act does not receive the vote necessary for immediate effect, this |
|
Act takes effect September 1, 2009. |