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A BILL TO BE ENTITLED
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AN ACT
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relating to the operation of the Texas Windstorm Insurance |
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Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. 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, if a hearing is |
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requested by any person within the 10-day notice period, the |
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commissioner may designate an area of this state as a catastrophe |
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area if the commissioner determines that windstorm and hail |
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insurance is not reasonably available to a substantial number of |
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the owners of insurable property located in that territory because |
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the territory is subject to unusually frequent and severe damage |
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resulting from windstorms or hailstorms. |
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(b) After at least 10 days' notice and a hearing, if a |
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hearing is requested by any person within the 10-day notice period, |
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the commissioner may designate an area of this state as an |
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inadequate fire insurance area if the commissioner determines that |
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fire and explosion insurance is not reasonably available to a |
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substantial number of owners of insurable property located in that |
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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, if a hearing is requested by |
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any person within the 10-day notice period, that the applicable |
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insurance coverage is no longer reasonably unavailable to a |
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substantial number of owners of insurable property within the |
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designated territory. |
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(d) If the association determines that windstorm and hail |
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insurance or fire and explosion insurance is no longer reasonably |
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unavailable to a substantial number of owners of insurable property |
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in a territory designated as a catastrophe area or inadequate fire |
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insurance area, as applicable, the association may request in |
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writing that the commissioner revoke the designation. After at |
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least 10 days' notice and a hearing, if a hearing is requested by |
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any person within the 10-day notice period, but not later than the |
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30th day after the date of the hearing or the expiration of the |
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notice period if a hearing is not requested, the commissioner |
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shall: |
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(1) approve the request and revoke the designation; |
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or |
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(2) reject the request. |
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SECTION 2. Section 2210.008, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.008. DEPARTMENT ORDERS. (a) After notice and an |
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opportunity for a hearing as provided by Subsection (b), the |
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commissioner may issue any orders that the commissioner considers |
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necessary to implement this chapter [, including orders] regarding |
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maximum rates, competitive rates, and policy forms. |
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(b) Before the commissioner adopts an order under |
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Subsection (a), the department shall post notice of the [hearing on
|
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the] order at the secretary of state's office in Austin and shall |
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hold a hearing to consider the proposed order if a hearing is |
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requested by any person not later than the 10th day after the date |
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on which the notice is posted. Any person may appear at such a [the] |
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hearing and testify for or against the adoption of the order. |
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SECTION 3. Sections 2210.052(a) and (d), Insurance Code, |
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are amended to read as follows: |
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(a) Each member of the association shall participate in the |
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assessments [writings, expenses, profits, and losses] of the |
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association in the proportion that the net direct premiums of that |
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member during the preceding calendar year bears to the aggregate |
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net direct premiums by all members of the association, as |
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determined using the information provided under Subsection (b). |
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(d) Notwithstanding Subsection (a), a member, in accordance |
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with the plan of operation, is entitled to receive credit for |
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similar insurance voluntarily written in an area designated by the |
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commissioner. The member's participation in the assessments |
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[writings] of the association shall be reduced in accordance with |
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the plan of operation. |
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SECTION 4. Section 2210.056(c), Insurance Code, is amended |
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to read as follows: |
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(c) On dissolution of the association, all assets of the |
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association revert to this state and shall be deposited in the |
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general revenue fund. |
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SECTION 5. Section 2210.058, Insurance Code, is amended to |
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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 |
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of occurrences, as defined in the plan of operation, in a |
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catastrophe area results in insured losses and operating expenses |
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of the association in excess of premium and other revenue of the |
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association, the excess losses shall be paid as provided by this |
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section. |
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(b) An amount not to exceed [follows:
|
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[(1)] $100 million for each occurrence shall be |
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assessed against the members of the association and the Texas FAIR |
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Plan Association. The loss allocable to the Texas FAIR Plan |
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Association shall be based on the proportion that the net direct |
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premiums written by the Texas FAIR Plan Association during the |
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preceding calendar year bears to the total net direct premiums |
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written in this state by all members of the association for the same |
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period, as determined under Section 2210.052. The remainder of the |
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assessments shall be allocated to each member insurer in the manner |
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used to determine each insurer's participation in the association |
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for the year under Section 2210.052. Assessments made under this |
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subsection are not reimbursable under Subsection (g). |
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(c) For each occurrence, any [as provided by Subsection (b);
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[(2)] losses in excess of $100 million shall be paid as |
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provided by this subsection from the catastrophe reserve trust fund |
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established under Subchapter J. Not more than 50 percent of the |
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amount in the catastrophe reserve trust fund as of the date of the |
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occurrence, reduced by anticipated payments from prior |
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occurrences, may be used to pay losses under this subsection unless |
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the commissioner determines that a greater percentage should be |
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applied after at least 10 days' notice and a hearing, if a hearing |
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is requested by any person within the 10-day notice period. |
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(d) Any [and any reinsurance program established by the
|
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association;
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[(3) for] losses in excess of the amounts determined |
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under Subsections (b) and (c) [those paid under Subdivisions (1)
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and (2), an additional $200 million] shall be paid in accordance |
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with a plan developed by the association and approved by the |
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commissioner after at least 10 days' notice and a hearing if a |
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hearing is requested by any person within the 10-day notice period, |
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from any or a combination of the following sources: |
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(1) additional assessments to the members of the |
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association and the Texas FAIR Plan Association, not to exceed $300 |
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million per calendar year, which shall be based on the proportion of |
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the member's or the Texas FAIR Plan Association's net direct |
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premiums for the lines of insurance used to compute member |
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participation in the association's assessments under Section |
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2210.052 as reported in the association's annual statement filed |
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with the department for the calendar year immediately preceding the |
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year in which the assessment is made, to the total reported net |
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direct premiums for those insurance lines in this state; |
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(2) any reinsurance proceeds recoverable by the |
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association; and |
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(3) any proceeds from public securities received by |
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the association under Subchapter M. |
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(e) Any [assessed against the members of the association, as
|
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provided by Subsection (b); and
|
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[(4)] losses of the association that are not [in
|
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excess of those] paid by assessments and the catastrophe reserve |
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trust fund as provided by Subsections (b) and (c) or are not paid by |
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the plan approved by the commissioner under Subsection (d) |
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[Subdivisions (1), (2), and (3)] shall be paid from the proceeds |
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from public securities received by the association under Subchapter |
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M [assessed against members of the association, as provided by
|
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Subsection (b)]. |
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(f) Assessments under Subsection (d)(1) are reimbursable in |
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accordance with Subsection (g) [(b)
The proportion of the losses
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allocable to each insurer under Subsections (a)(1), (3), and (4)
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shall be determined in the manner used to determine each insurer's
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participation in the association for the year under Section
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2210.052]. |
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(g) [(c)] An insurer, including the Texas FAIR Plan |
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Association, that has been assessed and has paid the assessments |
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under Subsection (d)(1) may charge a premium surcharge for |
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reimbursement of the assessment. The premium surcharge must be a |
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charge separate from and in addition to premiums collected. The |
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premium surcharge applies to each insurance policy for the lines |
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used to compute the assessment issued by the insurer or the Texas |
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FAIR Plan Association in this state, the effective date of which is |
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within the five-year period beginning on the 90th day after the date |
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of the assessment. The amount of the surcharge shall be computed on |
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the basis of a uniform percentage of the premium on those policies, |
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not to exceed 20 percent per year, of the amount of the assessment, |
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such that over the five-year period the aggregate of all surcharges |
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by the insurer or the Texas FAIR Plan Association equals but does |
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not exceed the amount of the assessment. The amount of an |
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assessment paid and recoverable under this subsection [may credit
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an amount paid in accordance with Subsection (a)(4) in a calendar
|
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year against the insurer's premium tax under Chapter 221.
The tax
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credit authorized under this subsection shall be allowed at a rate
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not to exceed 20 percent per year for five or more successive years
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beginning the calendar year that the assessments under this section
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are paid.
The balance of payments made by the insurer and not
|
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claimed as a premium tax credit] may be reflected in the books and |
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records of the insurer or the Texas FAIR Plan Association as an |
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admitted asset of the insurer for all purposes, including |
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exhibition in an annual statement under Section 862.001. |
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(h) If losses are paid by the procedures under Subsection |
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(d)(1), the association shall develop and implement a plan for |
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collection of a premium surcharge from policyholders of the |
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association. The premium surcharge must be a charge separate from |
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and in addition to premiums collected. The association shall |
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establish the premium surcharge in an amount at least 100 percent |
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and not more than 150 percent of the average per-policy surcharge |
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percentage established under Subsection (g) on any policy issued or |
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renewed by the association. The period for collection of the |
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premium surcharge under this subsection may not exceed five years. |
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Each surcharge collected under this subsection shall be deposited |
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in the catastrophe reserve trust fund. |
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(i) In addition to the funding described by Subsections |
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(b)-(h), the association may also borrow from, or enter into other |
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financing arrangements with, any market sources at prevailing |
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interest rates. |
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(j) The commissioner may adopt rules as necessary to |
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implement this section. |
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SECTION 6. Section 2210.059, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.059. NOTIFICATION REGARDING CERTAIN LOSSES [TAX
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CREDITS]. (a) The association shall immediately notify the |
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department if an occurrence or series of occurrences in a |
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catastrophe area results in insured losses that result in |
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assessments, payments from the trust fund established under Section |
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2210.452, or claims under a reinsurance contract approved under |
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Section 2210.453 [a tax credit under Section 2210.058(c) in a
|
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calendar year]. |
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(b) On receipt of notice under Subsection (a), the |
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department shall immediately notify the governor and the |
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appropriate committees of each house of the legislature of the |
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amount of insured losses eligible for payments using assessment |
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funds, catastrophe reserve trust funds, or reinsurance proceeds |
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[tax credits under Section 2210.058(c)]. |
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SECTION 7. Section 2210.060(c), Insurance Code, is amended |
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to read as follows: |
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(c) Subsection (a) does not authorize the association to |
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indemnify a member of the association for participating in the |
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assessments made by [writings, expenses, profits, and losses of] |
|
the association in the manner provided by this chapter. |
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SECTION 8. Section 2210.102, Insurance Code, is amended by |
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amending Subsection (a) and adding Subsection (c) to read as |
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follows: |
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(a) The board of directors is composed of the following 11 |
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[nine] members appointed by the commissioner: |
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(1) five members who represent the interests of |
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[representatives of different] insurers who are members of the |
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association[, elected by the members as provided by the plan of
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operation]; |
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(2) four members who represent the interests of the |
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[two] public, [representatives] who are nominated by the office of |
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public insurance counsel, and who, as of the date of the |
|
appointment: |
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(A) reside in a catastrophe area; and |
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(B) are policyholders of the association; and |
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(3) two members who are property and casualty agents, |
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each of whom must: |
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(A) have demonstrated experience in the |
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association; |
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(B) maintain the agent's principal office, as of |
|
the date of the appointment, in a catastrophe area; and |
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(C) hold a license under Chapter 4051 as a |
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general property and casualty agent or a personal lines property |
|
and casualty agent. |
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(c) To be eligible to serve on the board of directors as a |
|
representative of insurers, a person must be a full-time employee |
|
of an authorized insurer that is a member of the association. |
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SECTION 9. Section 2210.103, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (c) to read as |
|
follows: |
|
(a) Members of the board of directors serve three-year |
|
staggered terms, with the terms of three or four members expiring on |
|
the third Tuesday of March of each year. |
|
(c) A member of the board of directors serves at the |
|
pleasure of the commissioner. The commissioner shall appoint a |
|
replacement for a member who leaves or is removed from the board of |
|
directors in the manner provided by Section 2210.102. |
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SECTION 10. Subchapter C, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.1051 to read as follows: |
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Sec. 2210.1051. MEETINGS OF BOARD OF DIRECTORS. (a) |
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Notwithstanding Chapter 551, Government Code, or any other law, |
|
members of the board of directors may meet by telephone conference |
|
call, videoconference, or other similar telecommunication method. |
|
The board may use telephone conference call, videoconference, 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, |
|
videoconference, 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. |
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SECTION 11. Section 2210.152, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The plan of operation may contain provisions allowing |
|
the association to change its methods and procedures for doing |
|
business in ways that allow the association to implement new |
|
technologies designed to make the association up to date and |
|
efficient in its operations. |
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SECTION 12. Section 2210.153(a), Insurance Code, is amended |
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to read as follows: |
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(a) The association may present a recommendation for a |
|
change in the plan of operation to the department [at:
|
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[(1)
periodic hearings conducted by the department for
|
|
that purpose; or
|
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[(2)
hearings relating to property and casualty
|
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insurance rates]. |
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SECTION 13. Section 2210.202(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) A general property and casualty agent or a personal |
|
lines property and casualty agent must submit an application for |
|
the insurance coverage on behalf of the applicant on forms |
|
prescribed by the association. [The application must contain a
|
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statement as to whether the applicant has submitted or will submit
|
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the premium in full from personal funds or, if not, to whom a
|
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balance is or will be due.] |
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SECTION 14. Section 2210.207(e), Insurance Code, is amended |
|
to read as follows: |
|
(e) Notwithstanding this chapter or any other law, the |
|
commissioner[, after notice and hearing,] may adopt rules to: |
|
(1) authorize the association to provide actual cash |
|
value coverage instead of replacement cost coverage on the roof |
|
covering of a building insured by the association; and |
|
(2) establish: |
|
(A) the conditions under which the association |
|
may provide that actual cash value coverage; |
|
(B) the appropriate premium reductions when |
|
coverage for the roof covering is provided on an actual cash value |
|
basis; and |
|
(C) the disclosure that must be provided to the |
|
policyholder, prominently displayed on the face of the windstorm |
|
and hail insurance policy. |
|
SECTION 15. Sections 2210.256(a), (b), (d), and (f), |
|
Insurance Code, are amended to read as follows: |
|
(a) After notice and an opportunity for a hearing, the |
|
department may revoke an appointment made under Section 2210.254 if |
|
the appointee is found to be in violation of this subchapter or a |
|
rule of the commissioner adopted under this subchapter. |
|
(b) The commissioner, instead of revocation, may impose |
|
sanctions and penalties under Chapter 82, including one or more of |
|
the following sanctions if the commissioner determines from the |
|
facts that the sanction would be fair, reasonable, or equitable: |
|
(1) suspension of the appointment for a specific |
|
period, not to exceed one year; |
|
(2) issuance of an order directing the appointee to |
|
cease and desist from the specified activity or failure to act |
|
determined to be in violation of this subchapter or rules of the |
|
commissioner adopted under this subchapter; or |
|
(3) if the commissioner finds that the appointee |
|
knowingly, wilfully, fraudulently, or with gross negligence failed |
|
to file the required inspection reports, or signed or caused to be |
|
prepared an inspection report that contains a false or fraudulent |
|
statement, issuance of an order directing the appointee to pay |
|
within a specified time, not to exceed 60 days, a fine not to exceed |
|
$5,000 for the violation. |
|
(d) If it is found [after a hearing] that an appointee has |
|
failed to comply with an order issued under Subsection (b), the |
|
department shall, unless the order is stayed, revoke the |
|
appointment of the person. |
|
(f) If an appointee is an engineer licensed by the Texas |
|
Board of Professional Engineers who is found by the department to |
|
have knowingly, wilfully, fraudulently, or with gross negligence |
|
failed to file the required inspection reports, or signed or caused |
|
to be prepared an inspection report that contains a false or |
|
fraudulent statement, the commissioner may take action against the |
|
appointee in the manner provided by Subsections (a) and (b) but may |
|
not assess a fine against the appointee. The commissioner shall |
|
notify the Texas Board of Professional Engineers of an order issued |
|
by the commissioner against an appointee who is an engineer |
|
licensed by that board, including an order suspending or revoking |
|
the appointment of the person. |
|
SECTION 16. Section 2210.307(h), Insurance Code, is amended |
|
to read as follows: |
|
(h) The advisory committee shall submit to the commissioner |
|
the committee's recommendation on each proposal. The commissioner |
|
shall notify the advisory committee of the acceptance or rejection |
|
of each recommendation not later than the 30th day after the date of |
|
receipt by the commissioner. Acceptance of a recommendation by the |
|
commissioner means that the commissioner will consider adoption of |
|
that recommendation at a rulemaking proceeding [hearing]. Before |
|
adopting a recommendation, the commissioner must determine that the |
|
proposal, if adopted, will not weaken the integrity or diminish the |
|
effectiveness of a procedure. |
|
SECTION 17. Section 2210.351(d), Insurance Code, is amended |
|
to read as follows: |
|
(d) If at any time the commissioner determines that a filing |
|
approved under Subsection (c) no longer meets the requirements of |
|
this chapter, the commissioner may, after [a hearing held on] at |
|
least 10 days' notice and a hearing, if a hearing is requested by |
|
any person within the 10-day notice period [20 days' notice to the
|
|
association that specifies the matters to be considered at the
|
|
hearing], issue an order withdrawing approval of the filing. The |
|
order must specify in what respects the commissioner determines |
|
that the filing no longer meets the requirements of this chapter. |
|
An order issued under this subsection may not take effect before the |
|
30th day after the date of issuance of the order. |
|
SECTION 18. Sections 2210.352(a) and (c), Insurance Code, |
|
are amended 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.] |
|
(c) On request, the [The] commissioner shall schedule an |
|
open meeting not later than the 45th day after the date the |
|
department receives a filing at which interested persons may |
|
present written or oral comments relating to the filing. |
|
SECTION 19. Section 2210.355(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) In adopting rates under this chapter, the following must |
|
be considered: |
|
(1) the past and prospective loss experience within |
|
and outside this state of hazards for which insurance is made |
|
available through the plan of operation, if any; |
|
(2) recognized catastrophe models; |
|
(3) expenses of operation, including acquisition |
|
costs; |
|
(4) [(3)] a reasonable margin for profit and |
|
contingencies; and |
|
(5) [(4)] all other relevant factors, within and |
|
outside this state. |
|
SECTION 20. Section 2210.356(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The catastrophe element used to develop rates under this |
|
subchapter applicable to risks written by the association must be |
|
uniform throughout the seacoast territory. The catastrophe element |
|
of the rates must be developed using: |
|
(1) 90 percent of both the monoline extended coverage |
|
loss experience and related premium income for all insurers, other |
|
than the association, for covered property located in the seacoast |
|
territory, using not less than the most recent 30 years of |
|
experience available; [and] |
|
(2) 100 percent of both the loss experience and |
|
related premium income for the association for covered property, |
|
using not less than the most recent 30 years of experience |
|
available; and |
|
(3) recognized catastrophe models and any other |
|
relevant factors as identified under Section 2210.355(b). |
|
SECTION 21. Section 2210.359(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The commissioner may[, after notice and hearing,] |
|
suspend this section on a finding that a catastrophe loss or series |
|
of occurrences resulting in losses in the catastrophe area justify |
|
a need to ensure: |
|
(1) rate adequacy in the catastrophe area; and |
|
(2) availability of insurance outside the catastrophe |
|
area. |
|
SECTION 22. Section 2210.361(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) After notice and hearing, if a hearing is requested by |
|
any person not later than the 10th day after the date on which the |
|
notice is posted, the commissioner may accept, modify, or reject a |
|
recommendation made by the association under this section. Chapter |
|
40 does not apply to an action taken under this section. |
|
SECTION 23. Sections 2210.452(a), (c), and (d), Insurance |
|
Code, are amended to read as follows: |
|
(a) The commissioner shall adopt rules under which the |
|
association relinquishes its [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 [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. |
|
(d) The commissioner by rule shall establish the procedure |
|
relating to the disbursement of money from the trust fund [to
|
|
policyholders in the event of an occurrence or series of
|
|
occurrences within a catastrophe area that results in a
|
|
disbursement under Section 2210.058(a)]. The rules may provide |
|
that money from the trust fund may be used to purchase reinsurance |
|
to protect the trust fund or to reimburse the association for the |
|
payment of policyholder claims. Any reinsurance purchases under |
|
this subsection must be included in the reinsurance approved under |
|
Section 2210.453. |
|
SECTION 24. 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 department. |
|
(b) With the approval of the department, the association may |
|
use [establish a] reinsurance [program] that operates in addition |
|
to or in concert with the trust fund and with assessments authorized |
|
by this chapter. |
|
SECTION 25. Section 2210.504(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) Not later than the 60th day after the date of receipt of |
|
a filing under Section 2210.503, [and after notice and hearing,] |
|
the commissioner by order shall approve, disapprove, or modify the |
|
proposed adjustment to the maximum liability limits. |
|
SECTION 26. 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 issuing |
|
public securities to provide a method to raise funds to provide |
|
windstorm, hail, and fire insurance through the association in |
|
certain designated areas of the state is to benefit the public and |
|
to further a public purpose. |
|
Sec. 2210.602. DEFINITIONS. In this subchapter: |
|
(1) "Board" means the board of directors of the Texas |
|
Public Finance Authority. |
|
(2) "Insurer" means each property and casualty insurer |
|
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. The term does not include a county mutual |
|
insurance company described by Section 912.310. |
|
(3) "Public security" means a debt instrument or other |
|
public security issued by the Texas Public Finance Authority. |
|
(4) "Public security resolution" means the resolution |
|
or order authorizing public securities to be issued under this |
|
subchapter. |
|
Sec. 2210.603. APPLICABILITY OF OTHER LAWS. (a) To the |
|
extent consistent with this subchapter, Chapter 1232, Government |
|
Code, applies to public securities issued under this subchapter. |
|
In the event of a conflict, this subchapter controls. |
|
(b) The following laws also apply to public securities |
|
issued under this subchapter to the extent consistent with this |
|
subchapter: |
|
(1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371, |
|
Government Code; and |
|
(2) Subchapter A, Chapter 1206, Government Code. |
|
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 public |
|
securities to: |
|
(1) fund the association, including funding necessary |
|
to: |
|
(A) establish and maintain reserves to pay |
|
claims; |
|
(B) pay incurred claims; |
|
(C) pay operating expenses; and |
|
(D) purchase reinsurance; |
|
(2) pay costs related to issuance of the public |
|
securities; and |
|
(3) pay other costs related to the public securities |
|
as may be determined by the board. |
|
(b) The Texas Public Finance Authority may issue, on behalf |
|
of the association, public securities in an amount sufficient to |
|
fund the insured losses and operating expenses of the association |
|
as determined by the association and approved by the commissioner |
|
after at least 10 days' notice and a hearing if a hearing is |
|
requested by any person within the 10-day notice period. |
|
Sec. 2210.605. TERMS OF ISSUANCE. (a) Public securities |
|
issued under this subchapter may be issued at a public or private |
|
sale. |
|
(b) Public securities must: |
|
(1) be issued in the name of the association; and |
|
(2) mature not more than 10 years after the date |
|
issued. |
|
Sec. 2210.606. CONTENTS OF PUBLIC SECURITY RESOLUTION; |
|
ADMINISTRATION OF ACCOUNTS. (a) In a public security resolution, |
|
the board may: |
|
(1) provide for the flow of funds and the |
|
establishment, maintenance, and investment of funds and special |
|
accounts with regard to the public securities, including an |
|
interest and sinking fund account, a reserve account, and other |
|
accounts; and |
|
(2) make additional covenants with respect to the |
|
public securities and the designated income and receipts of the |
|
association pledged to the payment of the public securities. |
|
(b) The association shall administer the accounts in |
|
accordance with this subchapter. |
|
Sec. 2210.607. SOURCE OF PAYMENT. (a) Public securities |
|
issued under this subchapter are payable only from: |
|
(1) the service fees established under Section |
|
2210.609, as applicable; or |
|
(2) other amounts that the association is authorized |
|
to levy, charge, and collect. |
|
(b) The public securities are obligations solely of the |
|
association and do not create a pledge, gift, or loan of the faith, |
|
credit, or taxing authority of this state. |
|
(c) Each public security must: |
|
(1) include a statement that the state is not |
|
obligated to pay any amount on the security and that the faith, |
|
credit, or taxing authority of this state are not pledged, given, or |
|
lent to those payments; and |
|
(2) state on the security's face that the security: |
|
(A) is payable solely from the revenue pledged |
|
for that purpose; and |
|
(B) is not and may not constitute a legal or moral |
|
obligation of the state. |
|
Sec. 2210.608. PAYMENT OF INTEREST. (a) Except as provided |
|
by Subsection (b), all interest on a public security issued as |
|
described by Section 2210.058(d) or (e) shall be paid by the |
|
association from the existing premiums of the association. |
|
(b) If the association is unable to pay the interest on a |
|
public security described by Subsection (a) with existing premiums, |
|
the interest on the public securities shall be paid from the service |
|
fees collected in accordance with Section 2210.609. |
|
Sec. 2210.609. SERVICE FEES; PREMIUM SURCHARGE. (a) A fee |
|
to service public securities issued by the association prior or |
|
subsequent to a catastrophic event may be collected by each |
|
insurer, the association, and the FAIR Plan Association from |
|
policyholders who reside or have operations in, or whose insured |
|
property is located in, the catastrophe area. |
|
(b) A fee to service public securities issued by the |
|
association may be collected by each insurer, the association, and |
|
the FAIR Plan Association from policyholders who reside or have |
|
operations in, or whose insured property is located in, this state. |
|
(c) The association shall determine the amount of a service |
|
fee imposed under Subsection (a) or (b) at least annually. |
|
(d) On approval by the commissioner after at least 10 days' |
|
notice and a hearing, if a hearing is requested by any person within |
|
the 10-day notice period, each insurer, the association, and the |
|
FAIR Plan Association shall charge the service fee to its |
|
policyholders. The service fee must be set in an amount sufficient |
|
to pay all debt service and all related expenses on the public |
|
securities. The service fee shall be collected in the form of a |
|
premium surcharge and shall be remitted to the association as |
|
required by the commissioner by rule. |
|
(e) The premium surcharge shall apply to all insurance |
|
policies for all property and casualty lines other than workers' |
|
compensation, accident and health, and medical malpractice. The |
|
service fees collected in the form of a policy surcharge under this |
|
section are separate charges in addition to premiums collected and |
|
are not subject to premium taxes or commissions. |
|
(f) For purposes of policy cancellation, failure by a |
|
policyholder to pay a premium surcharge imposed under this section |
|
is equivalent to failure to pay premium. |
|
Sec. 2210.610. EXEMPTION FROM TAXATION. Public securities |
|
issued under this subchapter, any interest from those public |
|
securities, and all assets pledged to secure the payment of the |
|
public securities are free from taxation by the state or a political |
|
subdivision of this state. |
|
Sec. 2210.611. AUTHORIZED INVESTMENTS. Public securities |
|
issued under this subchapter are authorized investments under |
|
Subchapter B, Chapter 424, and Subchapters C and D, Chapter 425. |
|
Sec. 2210.612. STATE PLEDGE REGARDING PUBLIC SECURITY OWNER |
|
RIGHTS AND REMEDIES. (a) The state pledges to and agrees with the |
|
owners of public securities issued in accordance with this |
|
subchapter that the state will not limit or alter the rights vested |
|
in the association to fulfill the terms of agreements made with the |
|
owners or in any way impair the rights and remedies of those owners |
|
until the following obligations are fully discharged: |
|
(1) the public securities; |
|
(2) any bond premium; |
|
(3) interest; and |
|
(4) all costs and expenses related to an action or |
|
proceeding by or on behalf of the owners. |
|
(b) The association may include the state's pledge and |
|
agreement under Subsection (a) in an agreement with the owners of |
|
the public securities. |
|
Sec. 2210.613. PAYMENT ENFORCEABLE BY MANDAMUS. A writ of |
|
mandamus and any other legal or equitable remedy are available to a |
|
party in interest to require the association or another party to |
|
fulfill an agreement or perform a function or duty under: |
|
(1) this subchapter; |
|
(2) the Texas Constitution; or |
|
(3) a public security resolution. |
|
SECTION 27. Section 941.003, Insurance Code, is amended by |
|
adding Subsection (e) to read as follows: |
|
(e) A Lloyd's plan is subject to Chapter 2210, as provided |
|
by that chapter. |
|
SECTION 28. Section 942.003, Insurance Code, is amended by |
|
adding Subsection (f) to read as follows: |
|
(f) An exchange is subject to Chapter 2210, as provided by |
|
that chapter. |
|
SECTION 29. The following laws are repealed: |
|
(1) Section 2210.207(f), Insurance Code; |
|
(2) Sections 2210.353(d), (e), and (f), Insurance |
|
Code; and |
|
(3) Section 2210.506, Insurance Code. |
|
SECTION 30. (a) The board of directors of the Texas |
|
Windstorm Insurance Association established under Section |
|
2210.102, Insurance Code, as that section existed before amendment |
|
by this Act, is abolished on the 30th day after the effective date |
|
of this Act. |
|
(b) The commissioner of insurance shall appoint the members |
|
of the board of directors of the Texas Windstorm Insurance |
|
Association under Section 2210.102, Insurance Code, as amended by |
|
this Act, for terms beginning on the 31st day after the effective |
|
date of this Act. |
|
(c) The term of a person who is serving as a member of the |
|
board of directors of the Texas Windstorm Insurance Association |
|
immediately before the abolition of that board under Subsection (a) |
|
of this section expires on the 30th day after the effective date of |
|
this Act. Such a person is eligible for appointment by the |
|
commissioner of insurance to the new board of directors of the Texas |
|
Windstorm Insurance Association under Section 2210.102, Insurance |
|
Code, as amended by this Act. |
|
SECTION 31. 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. |