By: Hegar  S.B. No. 1007
         (In the Senate - Filed March 2, 2009; March 16, 2009, read
  first time and referred to Committee on Government Organization;
  April 2, 2009, reported adversely, with favorable Committee
  Substitute; April 2, 2009, recommitted to Committee on Government
  Organization; April 6, 2009, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 6, Nays 0;
  April 6, 2009, sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1007 By:  Hegar
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the continuation and operation of the Texas Department
  of Insurance and the operation of certain insurance programs;
  imposing administrative penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. GENERAL PROVISIONS
         SECTION 1.001.  Section 31.002, Insurance Code, is amended
  to read as follows:
         Sec. 31.002.  DUTIES OF DEPARTMENT.  In addition to the other
  duties required of the Texas Department of Insurance, the
  department shall:
               (1)  regulate the business of insurance in this state;
               (2)  administer the workers' compensation system of
  this state as provided by Title 5, Labor Code; [and]
               (3)  ensure that this code and other laws regarding
  insurance and insurance companies are executed;
               (4)  protect and ensure the fair treatment of
  consumers; and
               (5)  ensure fair competition in the insurance industry
  in order to foster a competitive market.
         SECTION 1.002.  Subsection (a), Section 31.004, Insurance
  Code, is amended to read as follows:
         (a)  The Texas Department of Insurance is subject to Chapter
  325, Government Code (Texas Sunset Act).  Unless continued in
  existence as provided by that chapter, the department is abolished
  September 1, 2021 [2009].
         SECTION 1.003.  Section 33.004, Insurance Code, is amended
  to read as follows:
         Sec. 33.004.  TRADE ASSOCIATIONS. (a)  In this section,
  "Texas trade association" means a cooperative and voluntarily
  joined statewide association of business or professional
  competitors in this state designed to assist its members and its
  industry or profession in dealing with mutual business or
  professional problems and in promoting their common interest.
         (b)  A person may not be the commissioner and may not be a
  department employee employed in a "bona fide executive,
  administrative, or professional capacity," as that phrase is used
  for purposes of establishing an exemption to the overtime
  provisions of the federal Fair Labor Standards Act of 1938 (29
  U.S.C. Section 201 et seq.), if:
               (1)  the person is an officer, employee, or paid
  consultant of a Texas trade association in the field of insurance;
  or
               (2)  the person's spouse is an officer, manager, or paid
  consultant of a Texas trade association in the field of insurance.
         (c)  A person may not be the commissioner or act as the
  general counsel to the commissioner or the department if the person
  is required to register as a lobbyist under Chapter 305, Government
  Code, because of the person's activities for compensation on behalf
  of a profession related to the operation of the department [A person
  who is an officer, employee, or paid consultant of a trade
  association in the field of insurance may not be:
               [(1)  the commissioner; or
               [(2)     an employee of the department who is exempt from
  the state's position classification plan or is compensated at or
  above the amount prescribed by the General Appropriations Act for
  step 1, salary group A17, of the position classification salary
  schedule].
         [(b)     A person who is the spouse of an officer, manager, or
  paid consultant of a trade association in the field of insurance may
  not be:
               [(1)  the commissioner; or
               [(2)     an employee of the department who is exempt from
  the state's position classification plan or is compensated at or
  above the amount prescribed by the General Appropriations Act for
  step 1, salary group A17, of the position classification salary
  schedule.
         [(c)     In this section, "trade association" means a
  nonprofit, cooperative, and voluntarily joined association of
  business or professional competitors designed to assist its members
  and its industry or profession in dealing with mutual business or
  professional problems and in promoting their common interest.]
         SECTION 1.004.  Section 521.003, Insurance Code, is amended
  to read as follows:
         Sec. 521.003.  COMPLAINTS [NOTIFICATION OF COMPLAINT
  STATUS]. (a)  The department shall maintain a system to promptly
  and efficiently act on complaints filed with the department. The
  department shall maintain information about parties to the
  complaint, the subject matter of the complaint, a summary of the
  results of the review or investigation of the complaint, and its
  disposition.
         (b)  The department shall make information available
  describing its procedures for complaint investigation and
  resolution.
         (c)  The department shall periodically notify the complaint
  parties of the status of the complaint until final disposition. [If
  a written complaint is filed with the department, the department,
  at least quarterly and until final disposition of the complaint,
  shall notify each party to the complaint of the complaint's status
  unless the notice would jeopardize an undercover investigation.]
         SECTION 1.005.  Subchapter B, Chapter 36, Insurance Code, is
  amended by adding Sections 36.110 and 36.111 to read as follows:
         Sec. 36.110.  USE OF TECHNOLOGY.  The commissioner shall
  implement a policy requiring the department to use appropriate
  technological solutions to improve the department's ability to
  perform its functions. The policy must ensure that the public is
  able to interact with the department on the Internet.
         Sec. 36.111.  NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE
  RESOLUTION POLICY.  (a)  The commissioner shall develop and
  implement a policy to encourage the use of:
               (1)  negotiated rulemaking procedures under Chapter
  2008, Government Code, for the adoption of department rules; and
               (2)  appropriate alternative dispute resolution
  procedures under Chapter 2009, Government Code, to assist in the
  resolution of internal and external disputes under the department's
  jurisdiction.
         (b)  The department's procedures relating to alternative
  dispute resolution must conform, to the extent possible, to any
  model guidelines issued by the State Office of Administrative
  Hearings for the use of alternative dispute resolution by state
  agencies.
         (c)  The commissioner shall designate a trained person to:
               (1)  coordinate the implementation of the policy
  adopted under Subsection (a);
               (2)  serve as a resource for any training needed to
  implement the procedures for negotiated rulemaking or alternative
  dispute resolution; and
               (3)  collect data concerning the effectiveness of those
  procedures, as implemented by the department.
         SECTION 1.006.  Sections 33.005 and 521.004, Insurance Code,
  are repealed.
  ARTICLE 2.  CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS AND
  RELATED TECHNICAL CORRECTIONS
         SECTION 2.001.  Chapter 32, Insurance Code, is amended by
  adding Subchapter E to read as follows:
  SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES
         Sec. 32.151.  RULEMAKING AUTHORITY.  (a)  The commissioner
  shall adopt rules, in compliance with Section 39.003 of this code
  and Chapter 2110, Government Code, regarding the purpose,
  structure, and use of advisory committees by the commissioner, the
  state fire marshal, or department staff, including rules governing
  an advisory committee's:
               (1)  purpose, role, responsibility, and goals;
               (2)  size and quorum requirements;
               (3)  qualifications for membership, including
  experience requirements and geographic representation;
               (4)  appointment procedures;
               (5)  terms of service;
               (6)  training requirements; and
               (7)  duration.
         (b)  An advisory committee must be structured and used to
  advise the commissioner, the state fire marshal, or department
  staff. An advisory committee may not be responsible for rulemaking
  or policymaking.
         Sec. 32.152.  PERIODIC EVALUATION. The commissioner shall
  by rule establish a process by which the department shall
  periodically evaluate an advisory committee to ensure its continued
  necessity. The department may retain or develop committees as
  appropriate to meet changing needs.
         Sec. 32.153.  COMPLIANCE WITH OPEN MEETINGS ACT.  A
  department advisory committee must comply with Chapter 551,
  Government Code.
         SECTION 2.002.  Section 843.441, Insurance Code, is
  transferred to Subchapter L, Chapter 843, Insurance Code,
  renumbered as Section 843.410, Insurance Code, and amended to read
  as follows:
         Sec. 843.410 [843.441].  ASSESSMENTS. (a)  To provide
  funds for the administrative expenses of the commissioner regarding
  rehabilitation, liquidation, supervision, conservatorship, or
  seizure [conservation] of a [an impaired] health maintenance
  organization in this state that is placed in supervision or
  conservatorship under Chapter 441 or in a delinquency proceeding
  under Chapter 443 and is found by the commissioner to have
  insufficient funds to pay the total amount of health care claims and
  the administrative[, including] expenses incurred by the
  commissioner regarding the rehabilitation, liquidation,
  supervision, conservatorship, or seizure, the commissioner [acting
  as receiver or by a special deputy receiver, the committee, at the
  commissioner's direction,] shall assess each health maintenance
  organization in the proportion that the gross premiums of the
  health maintenance organization that were written in this state
  during the preceding calendar year bear to the aggregate gross
  premiums that were written in this state by all health maintenance
  organizations, as found [provided to the committee by the
  commissioner] after review of annual statements and other reports
  the commissioner considers necessary.
         (b) [(c)]  The commissioner may abate or defer an assessment
  in whole or in part if, in the opinion of the commissioner, payment
  of the assessment would endanger the ability of a health
  maintenance organization to fulfill its contractual obligations.
  If an assessment is abated or deferred in whole or in part, the
  amount of the abatement or deferral may be assessed against the
  remaining health maintenance organizations in a manner consistent
  with the calculations made by the commissioner under Subsection (a)
  [basis for assessments provided by the approved plan of operation].
         (c) [(d)]  The total of all assessments on a health
  maintenance organization may not exceed one-fourth of one percent
  of the health maintenance organization's gross premiums in any one
  calendar year.
         (d) [(e)]  Notwithstanding any other provision of this
  subchapter, funds derived from an assessment made under this
  section may not be used for more than 180 consecutive days for the
  expenses of administering the affairs of a [an impaired] health
  maintenance organization the surplus of which is impaired and that
  is [while] in supervision[, rehabilitation,] or conservatorship
  [conservation for more than 150 days]. The commissioner
  [committee] may extend the period during which the commissioner
  [it] makes assessments for the administrative expenses [of an
  impaired health maintenance organization as it considers
  appropriate].
         SECTION 2.003.  Section 1660.004, Insurance Code, is amended
  to read as follows:
         Sec. 1660.004.  GENERAL RULEMAKING.  The commissioner may
  adopt rules as necessary to implement this chapter[, including
  rules requiring the implementation and provision of the technology
  recommended by the advisory committee].
         SECTION 2.004.  Subsection (b), Section 1660.102, Insurance
  Code, is amended to read as follows:
         (b)  The commissioner may consider [the] recommendations [of
  the advisory committee] or any other information provided in
  response to a department-issued request for information relating to
  electronic data exchange, including identification card programs,
  before adopting rules regarding:
               (1)  information to be included on the identification
  cards;
               (2)  technology to be used to implement the
  identification card pilot program; and
               (3)  confidentiality and accuracy of the information
  required to be included on the identification cards.
         SECTION 2.005.  Subsection (a), Section 2154.052,
  Occupations Code, is amended to read as follows:
         (a)  The commissioner:
               (1)  shall administer this chapter through the state
  fire marshal; and
               (2)  may issue rules to administer this chapter [in
  compliance with Section 2154.054].
         SECTION 2.006.  Subsection (a), Section 4001.009, Insurance
  Code, is amended to read as follows:
         (a)  As referenced in Section 4001.003(9), a reference to an
  agent in the following laws includes a subagent without regard to
  whether a subagent is specifically mentioned:
               (1)  Chapters 281, 402, 421-423, 441, 444, 461-463,
  [523,] 541-556, 558, 559, 702, 703, 705, 821, 823-825, 827, 828,
  844, 963, 1108, 1205-1209, 1211, 1213, 1214 [1211-1214], 1352,
  1353, 1357, 1358, 1360-1363, 1369, 1453-1455, 1503, 1550, 1801,
  1803, 2151-2154, 2201-2203, 2205-2213, 3501, 3502, 4007, 4102, and
  4201-4203;
               (2)  Chapter 403, excluding Section 403.002;
               (3)  Subchapter A, Chapter 491;
               (4)  Subchapter C, Chapter 521;
               (5)  Subchapter A, Chapter 557;
               (6)  Subchapter B, Chapter 805;
               (7)  Subchapters D, E, and F, Chapter 982;
               (8)  Subchapter D, Chapter 1103;
               (9)  Subchapters B, C, D, and E, Chapter 1204,
  excluding Sections 1204.153 and 1204.154;
               (10)  Subchapter B, Chapter 1366;
               (11)  Subchapters B, C, and D, Chapter 1367, excluding
  Section 1367.053(c);
               (12)  Subchapters A, C, D, E, F, H, and I, Chapter 1451;
               (13)  Subchapter B, Chapter 1452;
               (14)  Sections 551.004, 841.303, 982.001, 982.002,
  982.004, 982.052, 982.102, 982.103, 982.104, 982.106, 982.107,
  982.108, 982.110, 982.111, 982.112, and 1802.001; and
               (15)  Chapter 107, Occupations Code.
         SECTION 2.007.  Section 4102.005, Insurance Code, is amended
  to read as follows:
         Sec. 4102.005.  CODE OF ETHICS. The commissioner[, with
  guidance from the public insurance adjusters examination advisory
  committee,] by rule shall adopt:
               (1)  a code of ethics for public insurance adjusters
  that fosters the education of public insurance adjusters concerning
  the ethical, legal, and business principles that should govern
  their conduct;
               (2)  recommendations regarding the solicitation of the
  adjustment of losses by public insurance adjusters; and
               (3)  any other principles of conduct or procedures that
  the commissioner considers necessary and reasonable.
         SECTION 2.008.  The following laws are repealed:
               (1)  Chapter 523, Insurance Code;
               (2)  Section 524.004, Insurance Code;
               (3)  Subdivision (2), Section 1660.002, Insurance
  Code;
               (4)  Subsection (c), Section 1660.101, Insurance Code;
               (5)  Sections 4002.004, 4004.002, 4101.006, and
  4102.059, Insurance Code;
               (6)  Subsections (c) and (d), Section 4201.003,
  Insurance Code;
               (7)  Sections 843.435, 843.436, 843.437, 843.438,
  843.439, and 843.440, Insurance Code;
               (8)  Subchapter B, Chapter 1660, Insurance Code;
               (9)  Subchapter G, Chapter 2210, Insurance Code;
               (10)  Subchapter C, Chapter 6001, Insurance Code;
               (11)  Subchapter C, Chapter 6002, Insurance Code;
               (12)  Subchapter C, Chapter 6003, Insurance Code;
               (13)  Chapter 1212, Insurance Code;
               (14)  the heading to Subchapter M, Chapter 843,
  Insurance Code;
               (15)  Section 2154.054, Occupations Code; and
               (16)  Subsection (c), Section 2154.055, Occupations
  Code.
         SECTION 2.009.  (a)  The following boards, committees,
  councils, and task forces are abolished on the effective date of
  this Act:
               (1)  the advisory council on continuing education for
  insurance agents;
               (2)  the fire detection and alarm devices advisory
  council;
               (3)  the fire extinguisher advisory council;
               (4)  the fire protection advisory council;
               (5)  the fireworks advisory council;
               (6)  the health maintenance organization solvency
  surveillance committee;
               (7)  the insurance adjusters examination advisory
  board;
               (8)  the technical advisory committee on claims
  processing;
               (9)  the technical advisory committee on electronic
  data exchange;
               (10)  the health coverage public awareness and
  education program task force;
               (11)  the executive committee of the residential
  property insurance market assistance program; and
               (12)  the windstorm building code advisory committee on
  specifications and maintenance.
         (b)  All powers, duties, obligations, rights, contracts,
  funds, records, and real or personal property of a board,
  committee, council, or task force listed under Subsection (a) of
  this section shall be transferred to the Texas Department of
  Insurance not later than February 28, 2010.
         SECTION 2.010.  The changes in law made by this Act by
  repealing Sections 523.003 and 843.439, Insurance Code, apply only
  to a cause of action that accrues on or after the effective date of
  this Act. A cause of action that accrues before the effective date
  of this Act is governed by the law in effect immediately before that
  date, and that law is continued in effect for that purpose.
  ARTICLE 3. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
         SECTION 3.001.  Subtitle D, Title 8, Insurance Code, is
  amended by adding Chapter 1302 to read as follows:
  CHAPTER 1302.  REGULATION OF INDEPENDENT PREFERRED PROVIDER
  ORGANIZATIONS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 1302.001.  DEFINITIONS. In this chapter:
               (1)  "Person" means an individual, corporation,
  association, or other legal entity.
               (2)  "Preferred provider organization" means an
  insurer, third-party administrator, or other person that contracts
  with physicians or health care providers regarding reimbursements
  to be accepted prospectively by the physicians and health care
  providers in providing health care services to enrollees of benefit
  plans contractually entitled to benefit from the reimbursement
  agreements.
         Sec. 1302.002.  APPLICABILITY. (a)  This chapter does not
  apply to a self-funded health benefit plan exempt from regulation
  by this state as an employee welfare benefit plan under the Employee
  Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
  seq.).
         (b)  Except as specifically provided by this chapter, a
  reference in Chapter 1301 to a duty imposed under Chapter 1301 on a
  preferred provider organization contracting with a preferred
  provider benefit plan applies to a preferred provider organization
  that contracts with a preferred provider benefit plan under a
  certificate of authority issued under Subchapter B but that is not
  an insurer or third-party administrator under this code.
         Sec. 1302.003.  RULES. The commissioner shall adopt rules
  as necessary to implement this chapter.
         Sec. 1302.004.  COMPLAINTS. The department shall track and
  analyze complaints made against preferred provider organizations
  regulated under this chapter.
  [Sections 1302.005-1302.050 reserved for expansion]
  SUBCHAPTER B. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
         Sec. 1302.051.  CERTIFICATE OF AUTHORITY REQUIRED;
  EXCEPTION. (a)  Except as provided by Subsection (b), a person may
  not organize or operate as a preferred provider organization in
  this state, or sell or offer to sell or solicit offers to purchase
  or receive consideration in conjunction with a preferred provider
  benefit plan, without holding a certificate of authority under this
  chapter.
         (b)  An insurer that holds a certificate of authority to
  engage in the business of insurance in this state or is otherwise
  authorized under this code to engage in the business of insurance in
  this state is not required to obtain an additional certificate of
  authority under this subchapter to operate a proprietary preferred
  provider organization.
         Sec. 1302.052.  USE OF CERTAIN TERMS. A person may not use
  the term "preferred provider organization" or "PPO" in the course
  of operation unless the person:
               (1)  complies with this chapter and rules adopted by
  the commissioner under this chapter; and
               (2)  holds a certificate of authority under this
  chapter.
         Sec. 1302.053.  DURATION OF CERTIFICATE OF AUTHORITY. A
  certificate of authority issued under this chapter continues in
  effect:
               (1)  while the certificate holder meets the
  requirements of this chapter and rules adopted under this chapter;
  or
               (2)  until the commissioner suspends or revokes the
  certificate or the commissioner terminates the certificate at the
  request of the certificate holder.
  [Sections 1302.054-1302.100 reserved for expansion]
  SUBCHAPTER C. APPLICATION; ISSUANCE OF CERTIFICATE
         Sec. 1302.101.  APPLICATION. (a)  A person may apply to the
  department for and obtain a certificate of authority to organize
  and operate a preferred provider organization.
         (b)  An application for a certificate of authority must:
               (1)  be on a form prescribed by rules adopted by the
  commissioner; and
               (2)  be verified by the applicant or an officer or other
  authorized representative of the applicant.
         Sec. 1302.102.  CONTENTS OF APPLICATION. (a)  An
  application for a certificate of authority must include:
               (1)  a copy of the applicant's basic organizational
  document, if any, such as the articles of incorporation, articles
  of association, partnership agreement, trust agreement, or other
  applicable documents;
               (2)  all amendments to the applicant's basic
  organizational document; and
               (3)  a copy of the bylaws, rules and regulations, or
  similar documents, if any, regulating the conduct of the
  applicant's internal affairs.
         (b)  An application for a certificate of authority must
  include a list of the names, addresses, and official positions of
  the persons responsible for the conduct of the applicant's affairs,
  including:
               (1)  each member of the board of directors, board of
  trustees, executive committee, or other governing body or
  committee;
               (2)  the principal officer, if the applicant is a
  corporation; and
               (3)  each partner or member, if the applicant is a
  partnership or association.
         (c)  An application for a certificate of authority must
  include a template of any contract made or to be made between the
  applicant and any physician or health care provider.
         (d)  The commissioner may adopt rules under which a preferred
  provider organization is required to update the information
  submitted in an application for a certificate of authority.
         Sec. 1302.103.  APPLICATION FEE. (a)  An applicant for a
  certificate of authority under this chapter shall pay to the
  department a filing fee not to exceed $1,000 for processing an
  original application for a certificate of authority for a preferred
  provider organization.
         (b)  The commissioner shall deposit a fee collected under
  this section to the credit of the Texas Department of Insurance
  operating account.
         Sec. 1302.104.  REQUIREMENTS FOR APPROVAL OF APPLICATION.
  The commissioner shall approve an application for a certificate of
  authority to engage in business in this state as a preferred
  provider organization on payment of the application fee prescribed
  by Section 1302.103 and if the commissioner is satisfied that:
               (1)  granting the application would not violate a
  federal or state law;
               (2)  the applicant has not attempted to obtain the
  certificate of authority through fraud or bad faith;
               (3)  the applicant has complied with this chapter and
  rules adopted by the commissioner under this chapter; and
               (4)  the name under which the applicant will engage in
  business in this state is not so similar to that of another
  preferred provider organization that it is likely to mislead the
  public.
         Sec. 1302.105.  DENIAL OF APPLICATION. (a)  If the
  commissioner is unable to approve an application for a certificate
  of authority under this chapter, the commissioner shall:
               (1)  provide the applicant with written notice
  specifying each deficiency in the application; and
               (2)  offer the applicant the opportunity for a hearing
  to address each reason and circumstance for possible denial of the
  application.
         (b)  The commissioner must provide an opportunity for a
  hearing before the commissioner finally denies an application.
         (c)  At the hearing, the applicant has the burden to produce
  sufficient competent evidence on which the commissioner can make
  the determinations required by Section 1302.104.
  [Sections 1302.106-1302.150 reserved for expansion]
  SUBCHAPTER D. ENFORCEMENT
         Sec. 1302.151.  GROUNDS FOR DENIAL, SUSPENSION, OR
  REVOCATION OF CERTIFICATE OF AUTHORITY.  The denial, suspension, or
  revocation of a certificate of authority under this chapter to act
  as a preferred provider organization is subject to:
               (1)  Subchapter C, Chapter 4005; and
               (2)  Chapter 82.
         SECTION 3.002.  Not later than November 1, 2009, the
  commissioner of insurance shall adopt rules as necessary to
  implement Chapter 1302, Insurance Code, as added by this Act.
         SECTION 3.003.  (a)  Except as provided by Subsections (b)
  and (c) of this section, a preferred provider organization that is
  operating before the effective date of this Act and that has not
  previously submitted an application for a certificate of authority
  under the Insurance Code must apply for a certificate of authority
  under Chapter 1302, Insurance Code, as added by this Act, not later
  than the 60th day after the effective date of this Act.
         (b)  A preferred provider organization operating in this
  state that, as of August 31, 2009, holds a certificate of authority
  as an insurer under Chapter 801, Insurance Code, or a certificate of
  authority as a third-party administrator under Chapter 4151,
  Insurance Code, is not required to obtain a certificate of
  authority under Chapter 1302, Insurance Code, as added by this Act.
         (c)  A preferred provider organization in this state that has
  not applied for or does not hold, as of the effective date of this
  Act, a certificate of authority under Chapter 801 or 4151,
  Insurance Code, and that applies for a certificate of authority
  under Chapter 1302, Insurance Code, as added by this Act, may
  continue to operate, if the applicant otherwise complies with
  applicable law, until the commissioner of insurance acts on the
  application.
  ARTICLE 4.  RATE REGULATION
         SECTION 4.001.  Section 2251.101, Insurance Code, is amended
  to read as follows:
         Sec. 2251.101.  RATE FILINGS AND SUPPORTING INFORMATION.
  (a)  Except as provided by Subchapter D, for risks written in this
  state, each insurer shall file with the commissioner all rates,
  applicable rating manuals, supplementary rating information, and
  additional information as required by the commissioner.  An insurer
  may use a rate filed under this subchapter on and after the date the
  rate is filed.
         (b)  The commissioner by rule shall:
               (1)  determine the information required to be included
  in the filing, including:
                     (A) [(1)]  categories of supporting information
  and supplementary rating information;
                     (B) [(2)]  statistics or other information to
  support the rates to be used by the insurer, including information
  necessary to evidence that the computation of the rate does not
  include disallowed expenses; and
                     (C) [(3)]  information concerning policy fees,
  service fees, and other fees that are charged or collected by the
  insurer under Section 550.001 or 4005.003; and
               (2)  prescribe the process through which the department
  requests supplementary rating information and supporting
  information under this section, including:
                     (A)  the number of times the department may make a
  request for information; and
                     (B)  the types of information the department may
  request when reviewing a rate filing.
         SECTION 4.002.  Section 2251.103, Insurance Code, is amended
  to read as follows:
         Sec. 2251.103.  COMMISSIONER ACTION CONCERNING [DISAPPROVAL
  OF RATE IN] RATE FILING NOT YET IN EFFECT; HEARING AND ANALYSIS.
  (a)  Not later than the earlier of the date the rate takes effect or
  the 30th day after the date a rate is filed with the department
  under Section 2251.101, the [The] commissioner  shall disapprove
  the [a] rate if the commissioner determines that the rate [filing
  made under this chapter] does not comply with the requirements of
  this chapter [meet the standards established under Subchapter B].
         (b)  Except as provided by Subsection (c), if a rate has not
  been disapproved by the commissioner before the expiration of the
  30-day period described by Subsection (a), the rate is not
  considered disapproved under this section.
         (c)  For good cause, the commissioner may, on the expiration
  of the 30-day period described by Subsection (a), extend the period
  for disapproval of a rate for one additional 30-day period.  The
  commissioner and the insurer may not by agreement extend the 30-day
  period described by Subsection (a) or this subsection.
         (d)  If the commissioner disapproves a rate under this
  section [filing], the commissioner shall issue an order specifying
  in what respects the rate [filing] fails to meet the requirements of
  this chapter.
         (e)  An insurer that files a rate that is disapproved under
  this section [(c)  The filer] is entitled to a hearing on written
  request made to the commissioner not later than the 30th day after
  the date the order disapproving the rate [filing] takes effect.
         (f)  The department shall track, compile, and routinely
  analyze the factors that contribute to the disapproval of rates
  under this section.
         SECTION 4.003.  Subchapter C, Chapter 2251, Insurance Code,
  is amended by adding Section 2251.1031 to read as follows:
         Sec. 2251.1031.  REQUESTS FOR ADDITIONAL INFORMATION.
  (a)  If the department determines that the information filed by an
  insurer under this subchapter or Subchapter D is incomplete or
  otherwise deficient, the department may request additional
  information from the insurer.
         (b)  If the department requests additional information from
  the insurer during the 30-day period described by Section
  2251.103(a) or 2251.153(a) or under a second 30-day period
  described by Section 2251.103(c) or 2251.153(c), as applicable, the
  time between the date the department submits the request to the
  insurer and the date the department receives the information
  requested is not included in the computation of the first 30-day
  period or the second 30-day period, as applicable.
         (c)  For purposes of this section, the date of the
  department's submission of a request for additional information is
  the earlier of:
               (1)  the date of the department's electronic mailing or
  documented telephone call relating to the request for additional
  information; or
               (2)  the postmarked date on the department's letter
  relating to the request for additional information.
         (d)  The department shall track, compile, and routinely
  analyze the volume and content of requests for additional
  information made under this section to ensure that all requests for
  additional information are fair and reasonable.
         SECTION 4.004.  The heading to Section 2251.104, Insurance
  Code, is amended to read as follows:
         Sec. 2251.104.  COMMISSIONER DISAPPROVAL OF RATE IN EFFECT;
  HEARING.
         SECTION 4.005.  Section 2251.107, Insurance Code, is amended
  to read as follows:
         Sec. 2251.107.  PUBLIC [INSPECTION OF] INFORMATION.
  (a)  Each filing made, and any supporting information filed, under
  this chapter is open to public inspection as of the date of the
  filing.
         (b)  Each year the department shall make available to the
  public information concerning the department's general process and
  methodology for rate review under this chapter, including factors
  that contribute to the disapproval of a rate.  Information provided
  under this subsection must be general in nature and may not reveal
  proprietary or trade secret information of any insurer.
         SECTION 4.006.  Section 2251.151, Insurance Code, is amended
  by adding Subsections (c-1) and (f) and amending Subsection (e) to
  read as follows:
         (c-1)  If the commissioner requires an insurer to file the
  insurer's rates under this section, the commissioner shall
  periodically assess whether the conditions described by Subsection
  (a) continue to exist. If the commissioner determines that the
  conditions no longer exist, the commissioner shall issue an order
  excusing the insurer from filing the insurer's rates under this
  section.
         (e)  If the commissioner requires an insurer to file the
  insurer's rates under this section, the commissioner shall issue an
  order specifying the commissioner's reasons for requiring the rate
  filing and explaining any steps the insurer must take and any
  conditions the insurer must meet in order to be excused from filing
  the insurer's rates under this section.  An affected insurer is
  entitled to a hearing on written request made to the commissioner
  not later than the 30th day after the date the order is issued.
         (f)  The commissioner by rule shall define:
               (1)  the financial conditions and rating practices that
  may subject an insurer to this section under Subsection (a)(1); and
               (2)  the process by which the commissioner determines
  that a statewide insurance emergency exists under Subsection
  (a)(2).
         SECTION 4.007.  Section 2251.156, Insurance Code, is amended
  to read as follows:
         Sec. 2251.156.  RATE FILING DISAPPROVAL BY COMMISSIONER;
  HEARING. (a)  If the commissioner disapproves a rate filing under
  Section 2251.153(a)(2), the commissioner shall issue an order
  disapproving the filing in accordance with Section 2251.103(d)
  [2251.103(b)].
         (b)  An insurer whose rate filing is disapproved is entitled
  to a hearing in accordance with Section 2251.103(e) [2251.103(c)].
         (c)  The department shall track precedents related to
  disapprovals of rates under this subchapter to ensure uniform
  application of rate standards by the department.
         SECTION 4.008.  Section 2251.154, Insurance Code, is
  repealed.
         SECTION 4.009.  Section 2251.103, Insurance Code, as amended
  by this Act, and Section 2251.1031, Insurance Code, as added by this
  Act, apply only to a rate filing made on or after the effective date
  of this Act. A rate filing made before the effective date of this
  Act is governed by the law in effect at the time the filing was made,
  and that law is continued in effect for that purpose.
         SECTION 4.010.  Subsection (c-1), Section 2251.151,
  Insurance Code, as added by this Act, applies to an insurer that is
  required to file the insurer's rates for approval under Section
  2251.151, Insurance Code, on or after the effective date of this
  Act, regardless of when the order requiring the insurer to file the
  insurer's rates for approval under that section is first issued.
         SECTION 4.011.  Subsection (e), Section 2251.151, Insurance
  Code, as amended by this Act, applies only to an order issued by the
  commissioner of insurance on or after the effective date of this
  Act. An order of the commissioner issued before the effective date
  of this Act is governed by the law in effect on the date the order
  was issued, and that law is continued in effect for that purpose.
  ARTICLE 5. STATE FIRE MARSHAL'S OFFICE
         SECTION 5.001.  Section 417.008, Government Code, is amended
  by adding Subsection (f) to read as follows:
         (f)  The commissioner by rule shall prescribe a reasonable
  fee for an inspection performed by the state fire marshal that may
  be charged to a property owner or occupant who requests the
  inspection, as the commissioner considers appropriate. In
  prescribing the fee, the commissioner shall consider the overall
  cost to the state fire marshal to perform the inspections,
  including the approximate amount of time the staff of the state fire
  marshal needs to perform an inspection, travel costs, and other
  expenses.
         SECTION 5.002.  Section 417.0081, Government Code, is
  amended to read as follows:
         Sec. 417.0081.  INSPECTION OF CERTAIN STATE-OWNED OR
  STATE-LEASED BUILDINGS.  (a)  The state fire marshal, at the
  commissioner's direction, shall periodically inspect public
  buildings under the charge and control of the Texas Facilities
  [General Services] Commission and buildings leased for the use of a
  state agency by the Texas Facilities Commission.
         (b)  For the purpose of determining a schedule for conducting
  inspections under this section, the commissioner by rule shall
  adopt guidelines for assigning potential fire safety risk to
  state-owned and state-leased buildings. Rules adopted under this
  subsection must provide for the inspection of each state-owned and
  state-leased building to which this section applies, regardless of
  how low the potential fire safety risk of the building may be.
         (c)  On or before January 1 of each year, the state fire
  marshal shall report to the governor, lieutenant governor, speaker
  of the house of representatives, and appropriate standing
  committees of the legislature regarding the state fire marshal's
  findings in conducting inspections under this section.
         SECTION 5.003.  Section 417.0082, Government Code, is
  amended to read as follows:
         Sec. 417.0082.  PROTECTION OF CERTAIN STATE-OWNED OR
  STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS.  (a)  The state fire
  marshal, under the direction of the commissioner, shall take any
  action necessary to protect a public building under the charge and
  control of the Texas Facilities [Building and Procurement]
  Commission, and the building's occupants, and the occupants of a
  building leased for the use of a state agency by the Texas
  Facilities Commission, against an existing or threatened fire
  hazard.  The state fire marshal and the Texas Facilities [Building
  and Procurement] Commission shall include the State Office of Risk
  Management in all communication concerning fire hazards.
         (b)  The commissioner, the Texas Facilities [Building and
  Procurement] Commission, and the risk management board shall make
  and each adopt by rule a memorandum of understanding that
  coordinates the agency's duties under this section.
         SECTION 5.004.  Section 417.010, Government Code, is amended
  to read as follows:
         Sec. 417.010.  DISCIPLINARY AND ENFORCEMENT ACTIONS;
  ADMINISTRATIVE PENALTIES  [ALTERNATE REMEDIES]. (a)  This section
  applies to each person and firm licensed, registered, or otherwise
  regulated by the department through the state fire marshal,
  including:
               (1)  a person regulated under Title 20, Insurance Code;
  and
               (2)  a person licensed under Chapter 2154, Occupations
  Code.
         (b)  The commissioner by rule shall delegate to the state
  fire marshal the authority to take disciplinary and enforcement
  actions, including the imposition of administrative penalties in
  accordance with this section on a person regulated under a law
  listed under Subsection (a) who violates that law or a rule or order
  adopted under that law. In the rules adopted under this subsection,
  the commissioner shall:
               (1)  specify which types of disciplinary and
  enforcement actions are delegated to the state fire marshal; and
               (2)  outline the process through which the state fire
  marshal may, subject to Subsection (e), impose administrative
  penalties or take other disciplinary and enforcement actions.
         (c)  The commissioner by rule shall adopt a schedule of
  administrative penalties for violations subject to a penalty under
  this section to ensure that the amount of an administrative penalty
  imposed is appropriate to the violation. The department shall
  provide the administrative penalty schedule to the public on
  request. The amount of an administrative penalty imposed under
  this section must be based on:
               (1)  the seriousness of the violation, including:
                     (A)  the nature, circumstances, extent, and
  gravity of the violation; and
                     (B)  the hazard or potential hazard created to the
  health, safety, or economic welfare of the public;
               (2)  the economic harm to the public interest or public
  confidence caused by the violation;
               (3)  the history of previous violations;
               (4)  the amount necessary to deter a future violation;
               (5)  efforts to correct the violation;
               (6)  whether the violation was intentional; and
               (7)  any other matter that justice may require.
         (d)  In [The state fire marshal, in] the enforcement of a law
  that is enforced by or through the state fire marshal, the state
  fire marshal may, in lieu of cancelling, revoking, or suspending a
  license or certificate of registration, impose on the holder of the
  license or certificate of registration an order directing the
  holder to do one or more of the following:
               (1)  cease and desist from a specified activity;
               (2)  pay an administrative penalty imposed under this
  section [remit to the commissioner within a specified time a
  monetary forfeiture not to exceed $10,000 for each violation of an
  applicable law or rule]; or [and]
               (3)  make restitution to a person harmed by the holder's
  violation of an applicable law or rule.
         (e)  The state fire marshal shall impose an administrative
  penalty under this section in the manner prescribed for imposition
  of an administrative penalty under Subchapter B, Chapter 84,
  Insurance Code. The state fire marshal may impose an
  administrative penalty under this section without referring the
  violation to the department for commissioner action.
         (f)  An affected person may dispute the imposition of the
  penalty or the amount of the penalty imposed in the manner
  prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to
  pay an administrative penalty imposed under this section is subject
  to enforcement by the department.
  ARTICLE 6. TITLE INSURANCE
         SECTION 6.001.  Section 2602.107, Insurance Code, is amended
  by adding Subsection (d) to read as follows:
         (d)  The association shall pay, from the guaranty fee
  account, fees and reasonable and necessary expenses that the
  department incurs in an examination of a title agent or direct
  operation under Subchapter H, Chapter 2651.
         SECTION 6.002.  Subchapter D, Chapter 2651, Insurance Code,
  is amended by adding Section 2651.1511 and amending Sections
  2651.153 and 2651.155 to read as follows:
         Sec. 2651.1511.  ANNUAL AUDIT OF OPERATING ACCOUNTS: TITLE
  INSURANCE AGENTS AND DIRECT OPERATIONS. (a)  Each title insurance
  agent and direct operation shall submit to the department an annual
  audit of operating accounts that is verified by an officer of:
               (1)  the audited title insurance agent; or
               (2)  the audited direct operation.
         (b)  The title insurance agent or direct operation shall pay
  for an audit of operating accounts under this section.
         (c)  Not later than the 90th day after the date of the end of
  the agent's or direct operation's fiscal year, the agent or direct
  operation shall send by certified mail, postage prepaid, to the
  department one copy of the audit report with a transmittal letter.
         (d)  Notwithstanding Subsection (a), the commissioner may
  exempt a title insurance agent or direct operation with an annual
  premium volume of less than $100,000 from the requirements of
  Subsections (a)-(c).
         Sec. 2651.153.  RULES. The commissioner by rule shall
  adopt:
               (1)  the standards for an audit conducted under this
  subchapter; [and]
               (2)  the form of the required audit report; and
               (3)  a process to exempt a title insurance agent or
  direct operation under Section 2651.1511(d).
         Sec. 2651.155.  CONFIDENTIALITY OF AUDIT. (a)  The
  commissioner may classify an audit report that is filed with the
  department by a title insurance company under this subchapter as
  confidential and privileged.
         (b)  Information obtained in an audit of the operating
  accounts of a title insurance agent or direct operation under this
  subchapter is confidential and not subject to disclosure under this
  code or Chapter 552, Government Code.
         SECTION 6.003.  Chapter 2651, Insurance Code, is amended by
  adding Subchapter H to read as follows:
  SUBCHAPTER H.  EXAMINATION OF TITLE INSURANCE AGENTS AND DIRECT
  OPERATIONS
         Sec. 2651.351.  EXAMINATION OF TITLE INSURANCE AGENTS AND
  DIRECT OPERATIONS. (a)  The department shall examine each title
  insurance agent and direct operation licensed in this state as
  provided by this subchapter.
         (b)  The department shall:
               (1)  examine the title insurance agent's or direct
  operation's:
                     (A)  financial condition;
                     (B)  trust, escrow, and operating accounts;
                     (C)  ability to meet its liabilities; and
                     (D)  compliance with the laws of this state and
  rules adopted by the commissioner that affect the business conduct
  of the title insurance agent or direct operation; and
               (2)  verify the data reported for rate promulgation.
         (c)  The department shall conduct the examination at the
  principal office of the title insurance agent or direct operation,
  but may access any other offices or business locations of the title
  insurance agent or direct operation for purposes of conducting the
  examination.  The department may conduct the examination alone or
  with representatives of the insurance supervising departments of
  other states.
         (d)  Subject to Subsection (e), the department shall examine
  a title insurance agent or direct operation as frequently as the
  department considers necessary.  At a minimum, the department shall
  examine a title insurance agent or direct operation not less
  frequently than once every three years.
         (e)  The commissioner shall adopt rules governing the
  frequency of examinations of a title insurance agent or direct
  operation licensed for less than three years.
         Sec. 2651.352.  EXAMINATION PERIOD. Unless the department
  requests that an examination cover a longer period, the examination
  must cover the period beginning on the last day covered by the most
  recent examination and ending on December 31 of the year preceding
  the year in which the examination is being conducted.
         Sec. 2651.353.  POWERS RELATED TO EXAMINATION. The
  department or the examiner appointed by the department:
               (1)  has free access, and may require the title
  insurance agent or direct operation to provide free access, to all
  books and papers of the title insurance agent or direct operation
  that relate to the business and affairs of the title insurance agent
  or direct operation; and
               (2)  has the authority to summon and examine under
  oath, if necessary, an officer, agent, or employee of the title
  insurance agent or direct operation or any other person in relation
  to the affairs and condition of the title insurance agent or direct
  operation.
         Sec. 2651.354.  EFFECT OF SUBCHAPTER ON AUTHORITY TO USE
  INFORMATION. (a)  This subchapter does not limit the department's
  authority to:
               (1)  use a final or preliminary examination report, the
  work papers of an examiner, title insurance agent, or direct
  operation, or other documents, or any other information discovered
  or developed during an examination in connection with a legal or
  regulatory action; or
               (2)  release a final or preliminary examination report,
  the work papers of an examiner, title insurance agent, or direct
  operation, or other documents, or any other information discovered
  or developed during an examination, to a law enforcement agency, an
  attorney regulatory authority, or an agency of this state, another
  state, or the United States if the disclosure is necessary or proper
  for the enforcement of the laws of this state, another state, or the
  United States, as determined by the commissioner.
         (b)  A release by the commissioner under Subsection (a) of a
  final or preliminary examination report, the work papers of an
  examiner, title insurance agent, or direct operation, or other
  documents, or any other information discovered or developed during
  an examination, does not make the report, work papers, documents,
  or information public information under Chapter 552, Government
  Code.
         Sec. 2651.355.  CONFIDENTIALITY OF REPORTS AND RELATED
  INFORMATION. (a)  A final or preliminary examination report and
  any information obtained during an examination are confidential and
  are not subject to disclosure under Chapter 552, Government Code.
         (b)  Subsection (a) applies if the examined title insurance
  agent or direct operation is under supervision or conservatorship.
         (c)  Subsection (a) does not apply to an examination
  conducted in connection with a liquidation or receivership under
  this code or another insurance law of this state.
         Sec. 2651.356.  DISCIPLINARY ACTION FOR FAILURE TO COMPLY
  WITH SUBCHAPTER. A title insurance agent or direct operation is
  subject to disciplinary action under Chapter 82 for failure or
  refusal to comply with:
               (1)  this subchapter or a rule adopted under this
  subchapter; or
               (2)  a request by the department or an appointed
  examiner to be examined or to provide information requested as part
  of an examination.
         SECTION 6.004.  Subsection (c), Section 2703.153, Insurance
  Code, is amended to read as follows:
         (c)  Not less frequently than once every five years, the
  commissioner shall evaluate the information required under this
  section to determine whether the department needs additional or
  different information or no longer needs certain information to
  promulgate rates. If the department requires a title insurance
  company or title insurance agent to include new or different
  information in the statistical report, that information may be
  considered by the commissioner in fixing premium rates if the
  information collected is reasonably credible for the purposes for
  which the information is to be used.
         SECTION 6.005.  Subsections (b), (c), and (d), Section
  2602.103, Insurance Code, are repealed.
  ARTICLE 7. TEXAS WINDSTORM INSURANCE ASSOCIATION
         SECTION 7.001.  Subsections (a) and (d), Section 2210.052,
  Insurance Code, are amended to read as follows:
         (a)  Each member of the association shall participate in the
  assessments [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).
         (d)  Notwithstanding Subsection (a), a member, in accordance
  with the plan of operation, is entitled to receive credit for
  similar insurance voluntarily written in an area designated by the
  commissioner. The member's participation in the assessments
  [writings] of the association shall be reduced in accordance with
  the plan of operation.
         SECTION 7.002.  Subsection (c), Section 2210.060, 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 7.003.  Subchapter C, Chapter 2210, Insurance Code,
  is amended by adding Section 2210.1015 to read as follows:
         Sec. 2210.1015.  PRIMARY DUTY OF BOARD MEMBERS. The primary
  duty of each member of the board of directors is to the association,
  as specified in the plan of operation.
         SECTION 7.004.  Section 2210.102, Insurance Code, is amended
  to read as follows:
         Sec. 2210.102.  COMPOSITION.  (a)  The board of directors
  is composed of 11 [the following nine] members appointed by the
  commissioner as follows:
               (1)  five representatives of different insurers who are
  members of the association[, elected by the members as provided by
  the plan of operation];
               (2)  four [two] public representatives [who are
  nominated by the office of public insurance counsel and] who, as of
  the date of the appointment:
                     (A)  reside in a catastrophe area; and
                     (B)  are policyholders of the association; and
               (3)  two property and casualty agents, each of whom
  must:
                     (A)  have demonstrated experience in the
  association;
                     (B)  maintain the agent's principal office, as of
  the date of the appointment, in a catastrophe area; and
                     (C)  hold a license under Chapter 4051 as a
  general property and casualty agent or a personal lines property
  and casualty agent.
         (b)  Insurers who are members of the association shall
  nominate, from among those members, persons to fill any vacancy in
  the five board of director seats reserved for insurers.  The board
  of directors shall solicit nominations from the members and submit
  the nominations to the commissioner.  The nominee slate submitted
  to the commissioner under this subsection must include at least
  four more names than the number of vacancies.  The commissioner
  shall appoint replacement insurer members from the nominee slate.
         (c)  The persons appointed under Subsections (a)(2) and (3)
  must be from different counties.
         (d)  Notwithstanding Section 2210.103, 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
  this section.
         SECTION 7.005.  Subsection (a), Section 2210.103, Insurance
  Code, is amended to read as follows:
         (a)  Members of the board of directors serve three-year
  staggered terms, with the terms of three members or four members, as
  applicable, expiring on the third Tuesday of March of each year.
         SECTION 7.006.  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). The board of
  directors may elect other officers from the board's membership as
  considered necessary to conduct the duties of the board.
         SECTION 7.007.  Subsection (a), Section 2210.152, 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 property inspections for windstorm
  and hail insurance; and
                     (G)  other provisions as considered necessary by
  the department to implement the purposes of this chapter.
         SECTION 7.008.  Subsection (a), Section 2210.202, 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 covering damages from wind and hail through the
  voluntary market, as evidenced by two declinations, cancellations,
  or a combination of declinations and cancellations from insurers
  authorized to engage in the business of, and writing, property
  insurance covering damages from wind and hail 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 coverage. Notwithstanding Section
  2210.203(c), evidence of two declinations or other comparable
  evidence is required with an application for renewal of an
  association policy unless the association has evidence that
  comparable voluntary market coverage is not available in the area
  of the property to be insured for the same class of risk.
         SECTION 7.009.  Section 2210.251, Insurance Code, is amended
  by amending Subsections (a), (c), (f), and (g) and adding
  Subsections (i), (j), and (k) to read as follows:
         (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.
         (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.
         (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 association [department] may enter into agreements
  and contracts as necessary to implement this section.
         (i)  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.
         (j)  Without limitation of the department's authority to
  otherwise enforce this chapter, the department shall monitor the
  association's compliance with this subchapter. To facilitate the
  department's oversight of the inspection program, the association
  shall report to the department quarterly, in the manner prescribed
  by the commissioner, regarding:
               (1)  the number of inspections performed;
               (2)  the number of structures inspected;
               (3)  the number and a general description of the type of
  inspection deficiencies discovered through the inspection program;
  and
               (4)  any actions taken to resolve problems with
  inspections.
         (k)  The commissioner may adopt rules in the manner
  prescribed by Subchapter A, Chapter 36, as necessary to implement
  this section.
         SECTION 7.010.  Subsections (a) and (c), Section 2210.254,
  Insurance Code, are amended to read as follows:
         (a)  For purposes of this chapter, a "qualified inspector"
  includes:
               (1)  a person determined by the association
  [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 association [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].
         (c)  Before performing building inspections, a qualified
  inspector must enter into a contract with the association [be
  approved and appointed or employed by the department].
         SECTION 7.011.  Subchapter F, Chapter 2210, Insurance Code,
  is amended by adding Section 2210.2541 to read as follows:
         Sec. 2210.2541.  ASSOCIATION INSPECTION PROGRAM.  (a)  The
  association shall develop an inspection program to perform
  inspections for windstorm and hail insurance as required by this
  subchapter.
         (b)  The association shall adopt inspection standards and
  regulations regarding the operation of the inspection program,
  including:
               (1)  inspection training and education requirements,
  as determined necessary by the association, for licensed engineers
  who contract with the association under Section 2210.255;
               (2)  guidelines for inspection fees assessed under
  Section 2210.251(i) and for fees collected by inspectors under this
  subchapter; and
               (3)  procedures for handling complaints made to the
  association regarding inspectors.
         (c)  The association shall include in the inspection program
  an oversight process that includes regular reinspections by the
  association to ensure that association inspectors perform duties
  under this subchapter appropriately.
         (d)  The association shall report possible licensing
  violations by an inspector selected under Sections 2210.254 and
  2210.255 to perform inspections under this subchapter to the Texas
  Board of Professional Engineers.
         (e)  The association shall establish procedures as part of
  the inspection program as necessary to issue certificates of
  compliance under Section 2210.251(f).
         (f)  As part of the report required under Section
  2210.251(j), the association shall report to the department
  regarding the operation of the inspection program.
         SECTION 7.012.  Section 2210.255, Insurance Code, is amended
  to read as follows:
         Sec. 2210.255.  CONTRACT WITH [APPOINTMENT OF] LICENSED
  ENGINEER AS INSPECTOR. (a)  On request of an engineer licensed by
  the Texas Board of Professional Engineers, the association may
  enter into a contract with [commissioner shall appoint] the
  engineer under which the engineer serves as an inspector under this
  subchapter.  The association may enter into a contract under this
  subsection only on receipt of information satisfactory to the board
  [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 association shall consult with the commissioner
  regarding [shall adopt rules establishing] the information to be
  considered in contracting with [appointing] engineers under this
  section.
         SECTION 7.013.  Subchapter F, Chapter 2210, Insurance Code,
  is amended by adding Section 2210.2565 to read as follows:
         Sec. 2210.2565.  PROCEDURES REGARDING CONTRACTING WITH
  INSPECTORS. The board of directors shall develop procedures for
  contracting with and oversight of inspectors selected under
  Sections 2210.254 and 2210.255, including procedures relating to
  the grounds for the suspension, modification, or revocation of a
  contract under this subchapter with an inspector.
         SECTION 7.014.  Subsection (c), Section 2210.452, Insurance
  Code, is amended to read as follows:
         (c)  At the end of each calendar year or policy year, the
  association shall pay the net gain from operations of the
  association to the trust fund. For purposes of this subsection:
               (1)  "Net gain from operations" includes [equity of a
  member, including] all premium and other revenue of the association
  in excess of incurred losses and operating expenses.
               (2)  "Operating expenses" includes the cost of any
  reinsurance[, to the trust fund or a reinsurance program approved
  by the commissioner].
         SECTION 7.015.  Subsection (b), Section 2210.454, Insurance
  Code, is amended to read as follows:
         (b)  Each state fiscal year, the department may fund the
  mitigation and preparedness plan using the investment income of the
  trust fund in an amount not less than $1 million and not more than 10
  percent of the investment income of the prior fiscal year.  [From
  that amount and as part of that plan, the department may use in each
  fiscal year $1 million for the windstorm inspection program
  established under Section 2210.251.]
         SECTION 7.016.  The following laws are repealed:
               (1)  Subsection (d), Section 2210.254, Insurance Code;
  and
               (2)  Sections 2210.256 and 2210.257, Insurance Code.
         SECTION 7.017.  (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 effective January 1, 2010.
         (b)  Not later than December 31, 2009, 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.
         (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 January 1, 2010. 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 7.018.  Section 2210.202, Insurance Code, as amended
  by this Act, applies only to an insurance policy delivered, issued
  for delivery, or renewed on or after January 1, 2010. A policy
  delivered, issued for delivery, or renewed before January 1, 2010,
  is governed by the law as it existed immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
  ARTICLE 8.  ELECTRONIC TRANSACTIONS
         SECTION 8.001.  Subtitle A, Title 2, Insurance Code, is
  amended by adding Chapter 35 to read as follows:
  CHAPTER 35.  ELECTRONIC TRANSACTIONS
         Sec. 35.001.  DEFINITIONS. In this chapter:
               (1)  "Conduct business" includes engaging in or
  transacting any business in which a regulated entity is authorized
  to engage or is authorized to transact under the law of this state.
               (2)  "Regulated entity" means each insurer or other
  organization regulated by the department, including:
                     (A)  a domestic or foreign, stock or mutual, life,
  health, or accident insurance company;
                     (B)  a domestic or foreign, stock or mutual, fire
  or casualty insurance company;
                     (C)  a Mexican casualty company;
                     (D)  a domestic or foreign Lloyd's plan;
                     (E)  a domestic or foreign reciprocal or
  interinsurance exchange;
                     (F)  a domestic or foreign fraternal benefit
  society;
                     (G)  a domestic or foreign title insurance
  company;
                     (H)  an attorney's title insurance company;
                     (I)  a stipulated premium company;
                     (J)  a nonprofit legal service corporation;
                     (K)  a health maintenance organization;
                     (L)  a statewide mutual assessment company;
                     (M)  a local mutual aid association;
                     (N)  a local mutual burial association;
                     (O)  an association exempt under Section 887.102;
                     (P)  a nonprofit hospital, medical, or dental
  service corporation, including a company subject to Chapter 842;
                     (Q)  a county mutual insurance company; and
                     (R)  a farm mutual insurance company.
         Sec. 35.002.  CONSTRUCTION WITH OTHER LAW.
  (a)  Notwithstanding any other provision of this code, a regulated
  entity may conduct business electronically in accordance with this
  chapter and the rules adopted under Section 35.004.
         (b)  To the extent of any conflict between another provision
  of this code and a provision of this chapter, the provision of this
  chapter controls.
         Sec. 35.003.  ELECTRONIC TRANSACTIONS AUTHORIZED.  A
  regulated entity may conduct business electronically to the same
  extent that the entity is authorized to conduct business otherwise
  if before the conduct of business each party to the business agrees
  to conduct the business electronically.
         Sec. 35.004.  RULES. (a)  The commissioner shall adopt
  rules necessary to implement and enforce this chapter.
         (b)  The rules adopted by the commissioner under this section
  must include rules that establish minimum standards with which a
  regulated entity must comply in the entity's electronic conduct of
  business with other regulated entities and consumers.
         SECTION 8.002.  Chapter 35, Insurance Code, as added by this
  Act, applies only to business conducted on or after the effective
  date of this Act. Business conducted before the effective date of
  this Act is governed by the law in effect on the date the business
  was conducted, and that law is continued in effect for that purpose.
  ARTICLE 9.  DATA COLLECTION
         SECTION 9.001.  Chapter 38, Insurance Code, is amended by
  adding Subchapter I to read as follows:
  SUBCHAPTER I.  DATA COLLECTION RELATING TO CERTAIN PERSONAL LINES
  OF INSURANCE
         Sec. 38.401.  APPLICABILITY OF SUBCHAPTER.  This subchapter
  applies only to an insurer who writes personal automobile insurance
  or residential property insurance in this state.
         Sec. 38.402.  FILING OF CERTAIN CLAIMS INFORMATION.  
  (a)  The commissioner shall require each insurer described by
  Section 38.401 to file with the commissioner aggregate personal
  automobile insurance and residential property insurance claims
  information for the period covered by the filing, including the
  number of claims:
               (1)  filed during the reporting period;
               (2)  pending on the last day of the reporting period,
  including pending litigation;
               (3)  closed with payment during the reporting period;
               (4)  closed without payment during the reporting
  period; and
               (5)  carrying over from the reporting period
  immediately preceding the current reporting period.
         (b)  An insurer described by Section 38.401 must file the
  information described by Subsection (a) on an annual basis.  The
  information filed must be broken down by quarter.
         Sec. 38.403.  PUBLIC INFORMATION.  (a)  The department shall
  post the data contained in claims information filings under Section
  38.402 on the department's Internet website. The commissioner by
  rule may establish a procedure for posting data under this
  subsection that includes a description of the data that must be
  posted and the manner in which the data must be posted.
         (b)  Information provided under this section must be
  aggregate data by line of insurance for each insurer and may not
  reveal proprietary or trade secret information of any insurer.
         Sec. 38.404.  RULES.  The commissioner may adopt rules
  necessary to implement this subchapter.
  ARTICLE 10. STUDY ON RATE FILING AND APPROVAL
  REQUIREMENTS FOR CERTAIN INSURERS WRITING IN
  UNDERSERVED AREAS; UNDERSERVED AREA DESIGNATION
         SECTION 10.001.  Section 2004.002, Insurance Code, is
  amended by amending Subsection (b) and adding Subsections (c) and
  (d) to read as follows:
         (b)  In determining which areas to designate as underserved,
  the commissioner shall consider:
               (1)  whether residential property insurance is not
  reasonably available to a substantial number of owners of insurable
  property in the area; [and]
               (2)  whether access to the full range of coverages and
  policy forms for residential property insurance does not reasonably
  exist; and
               (3)  any other relevant factor as determined by the
  commissioner.
         (c)  The commissioner shall determine which areas to
  designate as underserved under this section not less than once
  every six years.
         (d)  The commissioner shall conduct a study concerning the
  accuracy of current designations of underserved areas under this
  section for the purpose of increasing and improving access to
  insurance in those areas not less than once every six years.
         SECTION 10.002.  Subchapter F, Chapter 2251, Insurance Code,
  is amended by adding Section 2251.253 to read as follows:
         Sec. 2251.253.  REPORT. (a)  The commissioner shall conduct
  a study concerning the impact of increasing the percentage of the
  total amount of premiums collected by insurers for residential
  property insurance under Section 2251.252.
         (b)  The commissioner shall report the results of the study
  in the biennial report required under Section 32.022.
         (c)  This section expires September 1, 2011.
  ARTICLE 11.  TRANSITION; EFFECTIVE DATE
         SECTION 11.001.  Except as otherwise provided by this Act,
  this Act applies only to an insurance policy, contract, or evidence
  of coverage that is delivered, issued for delivery, or renewed on or
  after January 1, 2010. A policy, contract, or evidence of coverage
  delivered, issued for delivery, or renewed before January 1, 2010,
  is governed by the law as it existed immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
         SECTION 11.002.  This Act takes effect September 1, 2009.
 
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