|
|
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A BILL TO BE ENTITLED
|
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AN ACT
|
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relating to the operation and name of the Texas Windstorm Insurance |
|
Association and to the resolution of certain disputes concerning |
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claims made to that association; providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 83.002, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) This chapter also applies to: |
|
(1) a person appointed as a qualified inspector under |
|
Section 2210.254 or 2210.255; and |
|
(2) a person acting as a qualified inspector under |
|
Section 2210.254 or 2210.255 without being appointed as a qualified |
|
inspector under either of those sections. |
|
SECTION 2. Section 541.152, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Except as provided by Subsection (c), on [On] a finding |
|
by the trier of fact that the defendant knowingly committed the act |
|
complained of, the trier of fact may award an amount not to exceed |
|
three times the amount of actual damages. |
|
(c) Subsection (b) does not apply to an action under this |
|
subchapter brought against the Texas Windstorm Insurance |
|
Association or an agent or representative of that association. |
|
SECTION 3. The heading to Chapter 2210, Insurance Code, is |
|
amended to read as follows: |
|
CHAPTER 2210. TEXAS COASTAL [WINDSTORM] INSURANCE PLAN |
|
[ASSOCIATION] |
|
SECTION 4. Section 2210.002(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) This chapter may be cited as the Texas Coastal |
|
[Windstorm] Insurance Plan [Association] Act. A reference to the |
|
Texas Windstorm Insurance Association Act means this chapter. |
|
SECTION 5. Section 2210.003(1), Insurance Code, is amended |
|
to read as follows: |
|
(1) "Association" means the Texas Coastal [Windstorm] |
|
Insurance Plan Association. |
|
SECTION 6. Section 2210.003, Insurance Code, is amended by |
|
adding Subdivision (3-b) to read as follows: |
|
(3-b) "Catastrophe year" means a calendar year in |
|
which an occurrence or a series of occurrences results in insured |
|
losses, regardless of when the insured losses are ultimately paid. |
|
SECTION 7. Subchapter A, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.0081, 2210.010, 2210.012, and |
|
2210.013 to read as follows: |
|
Sec. 2210.0081. CERTAIN ACTIONS BROUGHT AGAINST |
|
ASSOCIATION BY COMMISSIONER. In an action brought by the |
|
commissioner against the association under Chapter 441: |
|
(1) the association's inability to satisfy obligations |
|
under Subchapter M related to the issuance of public securities |
|
under this chapter constitutes a condition that makes the |
|
association's continuation in business hazardous to the public or |
|
to the association's policyholders for the purposes of Section |
|
441.052; |
|
(2) the time for the association to comply with the |
|
requirements of supervision or for the conservator to complete the |
|
conservator's duties, as applicable, is limited to three years from |
|
the date the commissioner commences the action against the |
|
association; and |
|
(3) unless the commissioner takes further action |
|
against the association under Chapter 441, as a condition of |
|
release from supervision, the association must demonstrate to the |
|
satisfaction of the commissioner that the association is able to |
|
satisfy obligations under Subchapter M related to the issuance of |
|
public securities under this chapter. |
|
Sec. 2210.010. APPLICABILITY OF CERTAIN OTHER LAW. (a) A |
|
person may not bring a private action against the association, |
|
including a claim against an agent or representative of the |
|
association, under Chapter 541 or 542. Notwithstanding any other |
|
provision of this code or this chapter, a class action under |
|
Subchapter F, Chapter 541, or under Rule 42 of the Texas Rules of |
|
Civil Procedure may only be brought against the association by the |
|
attorney general. |
|
(b) Chapter 542 does not apply to the processing and |
|
settlement of claims by the association or an agent or |
|
representative of the association. |
|
Sec. 2210.012. STANDARDS OF CONDUCT: BOARD OF DIRECTORS AND |
|
EMPLOYEES; REPORT OF CERTAIN FRAUDULENT CONDUCT. (a) A member of |
|
the board of directors or an employee of the association may not: |
|
(1) accept or solicit any gift, favor, or service that |
|
might reasonably tend to influence the member or employee in the |
|
discharge of duties related to the operation or business of the |
|
association or that the member or employee knows or should know is |
|
being offered with the intent to influence the member's or |
|
employee's conduct related to the operation or business of the |
|
association; |
|
(2) accept other employment or engage in a business or |
|
professional activity that the member or employee might reasonably |
|
expect would require or induce the member or employee to disclose |
|
confidential information acquired by reason of the member's or |
|
employee's position with the association; |
|
(3) accept other employment or compensation that could |
|
reasonably be expected to impair the member's or employee's |
|
independence of judgment in the performance of the member's or |
|
employee's duties related to the operation or business of the |
|
association; |
|
(4) make personal investments that could reasonably be |
|
expected to create a substantial conflict between the member's or |
|
employee's private interest and the interest of the association; or |
|
(5) intentionally or knowingly solicit, accept, or |
|
agree to accept any benefit for having exercised the member's or |
|
employee's powers related to the operation or business of the |
|
association or having performed, in favor of another, the member's |
|
or employee's duties related to the operation or business of the |
|
association. |
|
(b) An association employee who violates Subsection (a) or a |
|
code of conduct established under Section 2210.107(a)(4) is subject |
|
to an employment-related sanction, including termination of the |
|
employee's employment with the association. |
|
(c) A member of the board of directors or an association |
|
employee who violates Subsection (a) is subject to any applicable |
|
civil or criminal penalty if the violation also constitutes a |
|
violation of another statute or rule. |
|
(d) A board member, employee of the association, or member |
|
of the windstorm insurance legislative oversight board established |
|
under Subchapter N who reasonably suspects that a fraudulent |
|
insurance act has been or is about to be committed by any board |
|
member, employee of the association, or member of the windstorm |
|
insurance legislative oversight board established under Subchapter |
|
N shall, not later than the 30th day after discovering the conduct, |
|
report the conduct and identity of the person engaging in the |
|
conduct to the Travis County district attorney or the department. |
|
Sec. 2210.013. CERTAIN EMPLOYMENT AND CONTRACTS |
|
PROHIBITED. A member of the board of directors or an employee of |
|
the association may not appoint or employ, or contract with, the |
|
following individuals for the provision of goods or services in |
|
connection with the operation or business of the association, if |
|
the individual to be appointed or employed, or with whom a contract |
|
is to be entered into, is to be directly or indirectly compensated |
|
from funds of the association: |
|
(1) an individual related to the member or employee |
|
within a degree of relationship described by Section 573.002, |
|
Government Code; or |
|
(2) an individual related to any member of the board of |
|
directors or employee of the association within a degree of |
|
relationship described by Section 573.002, Government Code. |
|
SECTION 8. Section 2210.053, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The association may not be considered a debtor |
|
authorized to file a petition or seek relief in bankruptcy under |
|
Title 11, United States Code. |
|
SECTION 9. Subchapter B, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.058 to read as follows: |
|
Sec. 2210.058. CLAIMS PRACTICES AUDIT. (a) If the |
|
commissioner determines that 500 or more claims have been filed |
|
under association policies the bases of which are damage to insured |
|
property caused by the same storm, the department shall conduct a |
|
random audit of the claim files of those claims to: |
|
(1) determine whether the association is adequately |
|
and properly documenting claims decisions in each claim file; and |
|
(2) ensure that each claim is being handled |
|
appropriately, including being handled in accordance with the terms |
|
of the policy under which the claim is filed. |
|
(b) The department shall conduct an audit required under |
|
this section as soon as possible after the filing of the 500th claim |
|
described by Subsection (a) to ensure the quality of the process |
|
with which the association, including an agent or representative of |
|
the association, is handling claims described by Subsection (a). |
|
(c) If, following an audit conducted under this section, the |
|
commissioner determines that the association or an agent or |
|
representative of the association is not adequately and properly |
|
documenting claims decisions or that claims described by Subsection |
|
(a) are not otherwise being handled appropriately, the commissioner |
|
shall: |
|
(1) notify the board of directors of that |
|
determination; and |
|
(2) identify the manner in which the association or an |
|
agent or representative of the association should correct any |
|
deficiencies identified by the commissioner. |
|
SECTION 10. Section 2210.071(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) If, in a catastrophe year, an occurrence or series of |
|
occurrences in a catastrophe area results in insured losses and |
|
operating expenses of the association in excess of premium and |
|
other revenue of the association, the excess losses and operating |
|
expenses shall be paid as provided by this subchapter. |
|
SECTION 11. Section 2210.072, Insurance Code, is amended by |
|
amending Subsections (a), (b), and (c) and adding Subsections |
|
(b-1), (e), and (f) to read as follows: |
|
(a) Losses not paid under Section 2210.071(b) [2210.071] |
|
shall be paid as provided by this section from the proceeds from |
|
Class 1 public securities authorized to be issued in accordance |
|
with Subchapter M before, on, or after the date of any occurrence or |
|
series of occurrences that results in insured losses. Public |
|
securities issued under this section must be repaid within a period |
|
not to exceed 14 [10] years, and may be repaid sooner if the board of |
|
directors elects to do so and the commissioner approves. |
|
(b) Public securities described by Subsection (a) that are |
|
issued before an occurrence or series of occurrences that results |
|
in incurred losses: |
|
(1) may be issued if the board of directors |
|
determines, before the date of any occurrence, that the amount |
|
available from premium and other revenue, in combination with the |
|
amounts available from the catastrophe reserve trust fund, may be |
|
insufficient to pay insured losses; and |
|
(2) may not, in the aggregate, exceed $1 billion at any |
|
one time, regardless of the calendar year or years in which the |
|
outstanding public securities were issued. |
|
(b-1) Public securities described by Subsection (a): |
|
(1) shall be issued as necessary in a principal amount |
|
not to exceed $1 billion per catastrophe year, in the aggregate, for |
|
securities issued before the occurrence or series of occurrences |
|
that results in incurred losses in that year and securities issued |
|
on or after the date of that occurrence or series of occurrences; |
|
and |
|
(2) may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in the calendar year in which the occurrence or |
|
series of occurrences takes place, during the following calendar |
|
year. |
|
(c) If [the losses are paid with] public securities are |
|
issued as described by this section, the public securities shall be |
|
repaid in the manner prescribed by Subchapter M from association |
|
premium revenue. |
|
(e) The proceeds of any outstanding public securities |
|
described by Subsection (a) that are issued before an occurrence or |
|
series of occurrences shall be exhausted before the proceeds of any |
|
securities issued under that subsection after an occurrence or |
|
series of occurrences may be used. Public securities described by |
|
Subsection (a) to be issued after an occurrence or series of |
|
occurrences may be issued before the proceeds of any outstanding |
|
public securities issued under that subsection before an occurrence |
|
or series of occurrences have been exhausted. |
|
(f) To the extent the proceeds of outstanding public |
|
securities described by Subsection (a) that are issued before an |
|
occurrence or series of occurrences are used to pay for losses under |
|
this section, for the purposes of this chapter, those public |
|
securities shall be considered as being issued after the date of the |
|
occurrence or series of occurrences and issued in the catastrophe |
|
year in which the occurrence or series of occurrences resulted in |
|
the payment of losses under this section. |
|
SECTION 12. Section 2210.073, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Public securities described by Subsection (a): |
|
(1) may be issued as necessary in a principal amount |
|
not to exceed $1 billion per catastrophe year; and |
|
(2) may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in the calendar year in which the occurrence or |
|
series of occurrences takes place, during the following calendar |
|
year. |
|
(c) If the losses are paid with public securities described |
|
by this section, the public securities shall be repaid in the manner |
|
prescribed by Subchapter M. |
|
SECTION 13. Section 2210.074, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Public securities described by Subsection (a): |
|
(1) may be issued as necessary in a principal amount |
|
not to exceed $500 million per catastrophe year; and |
|
(2) may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in the calendar year in which the occurrence or |
|
series of occurrences takes place, during the following calendar |
|
year. |
|
(c) If the losses are paid with public securities described |
|
by this section, the public securities shall be repaid in the manner |
|
prescribed by Subchapter M through member assessments as provided |
|
by this section. The association shall notify each member of the |
|
association of the amount of the member's assessment under this |
|
section. The proportion of the losses allocable to each insurer |
|
under this section shall be determined in the manner used to |
|
determine each insurer's participation in the association for the |
|
year under Section 2210.052. A member of the association may not |
|
recoup an assessment paid under this subsection through a premium |
|
surcharge or tax credit. |
|
SECTION 14. Section 2210.102, Insurance Code, is amended by |
|
adding Subsection (i) to read as follows: |
|
(i) Notwithstanding Subsection (f), for a vacancy occurring |
|
in a position under Subsection (b), the commissioner may appoint, |
|
for the lesser of 120 days or until the vacancy is filled, a person |
|
who has demonstrated knowledge in insurance principles. This |
|
subsection does not apply to a vacancy due to the expiration of a |
|
term occurring under Section 2210.103. This subsection expires |
|
December 31, 2012, and any appointment in effect on that date is |
|
continued until the expiration of the term of the appointment. |
|
SECTION 15. Section 2210.104, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.104. OFFICERS AND MANAGERIAL EMPLOYEES; SALARIES |
|
AND BONUSES. (a) 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. |
|
(b) The association shall post on the association's |
|
Internet website the salary of each association employee who serves |
|
in a managerial capacity and any bonuses paid to those association |
|
employees. |
|
SECTION 16. Section 2210.105, Insurance Code, is amended by |
|
amending Subsections (a) and (b) and adding Subsections (b-1), (e), |
|
and (f) to read as follows: |
|
(a) Except for an emergency meeting, the association shall: |
|
(1) notify the department not later than the 11th day |
|
before the date of a meeting of the board of directors or of the |
|
members of the association; and |
|
(2) not later than the seventh day before the date of a |
|
meeting of the board of directors, post notice of the meeting on the |
|
association's Internet website and the department's Internet |
|
website. |
|
(b) Except for a closed meeting authorized by Subchapter D, |
|
Chapter 551, Government Code, a meeting of the board of directors or |
|
of the members of the association is open to[:
|
|
[(1)
the commissioner or the commissioner's designated
|
|
representative; and
|
|
[(2)] the public. |
|
(b-1) A meeting of the board of directors or the members of |
|
the association, including a closed meeting authorized by |
|
Subchapter D, Chapter 551, Government Code, is open to the |
|
commissioner or the commissioner's designated representative. The |
|
commissioner or the commissioner's designated representative shall |
|
maintain the confidentiality of, and may not disclose the content |
|
of, any confidential information discussed in a closed meeting |
|
authorized by Subchapter D, Chapter 551, Government Code. |
|
(e) The association shall: |
|
(1) broadcast live on the association's Internet |
|
website all meetings of the board of directors, other than closed |
|
meetings; and |
|
(2) maintain on the association's Internet website an |
|
archive of meetings of the board of directors. |
|
(f) A recording of a meeting must be maintained in the |
|
archive required under Subsection (e) through and including the |
|
second anniversary of the meeting. |
|
SECTION 17. Section 2210.107, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.107. PRIMARY BOARD OBJECTIVES; REPORT. (a) The |
|
primary objectives of the board of directors are to ensure that the |
|
board and the association: |
|
(1) operate [operates] in accordance with this |
|
chapter, the plan of operation, and commissioner rules; |
|
(2) comply [complies] with sound insurance |
|
principles; [and] |
|
(3) meet [meets] all standards imposed under this |
|
chapter; |
|
(4) establish a code of conduct and performance |
|
standards for association employees and persons with which the |
|
association contracts; and |
|
(5) establish, and adhere to terms of, an annual |
|
evaluation of association management necessary to achieve the |
|
statutory purpose, board objectives, and any performance or |
|
enterprise risk management objectives established by the board. |
|
(b) Not later than June 1 of each year, the association |
|
shall submit to the commissioner, the legislative oversight board |
|
established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
evaluating the extent to which the board met the objectives |
|
described by Subsection (a) in the 12-month period immediately |
|
preceding the date of the report. |
|
SECTION 18. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.108 to read as follows: |
|
Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. (a) Except |
|
as specifically provided by this chapter or another law, the |
|
association is subject to Chapters 551 and 552, Government Code. |
|
(b) A settlement agreement to which the association is a |
|
party: |
|
(1) is public information and is not exempted from |
|
required disclosure under Chapter 552, Government Code; and |
|
(2) if applicable, must contain the name of any |
|
attorney or adjuster involved with the claim that is the basis of |
|
the settlement. |
|
(c) Subsection (b) may not be construed to limit or |
|
otherwise restrict the categories of information that are public |
|
information under Section 552.022, Government Code. |
|
(d) The association, before disclosing a settlement |
|
agreement to which the association is a party, shall redact from the |
|
settlement agreement any information that is not otherwise required |
|
to be disclosed under this section and that is confidential under |
|
Chapter 552, Government Code, or any other law. |
|
SECTION 19. Section 2210.152, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The plan of operation shall require the association, |
|
including an agent or representative of the association, to use the |
|
claim settlement guidelines published by the commissioner under |
|
Section 2210.577(f) in evaluating the extent to which a loss to |
|
insured property is incurred as a result of wind, waves, tidal |
|
surges, rising waters not caused by waves or surges, or wind-driven |
|
rain associated with a storm. |
|
SECTION 20. Section 2210.202, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.202. APPLICATION FOR COVERAGE. (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 |
|
established by the board of directors and approved by the |
|
commissioner. The association shall make insurance available to |
|
each applicant in the catastrophe area whose property is insurable |
|
property but who, after diligent efforts, is unable to obtain |
|
property insurance through the voluntary market, as evidenced by |
|
one declination from an insurer authorized to engage in the |
|
business of, and writing, property insurance providing windstorm |
|
and hail coverage in the first tier coastal counties. For purposes |
|
of this section, "declination" has the meaning assigned by the plan |
|
of operation and shall include a refusal to offer coverage for the |
|
perils of windstorm and hail and the inability to obtain |
|
substantially equivalent insurance coverage for the perils of |
|
windstorm and hail. Notwithstanding Section 2210.203(c), once |
|
every three calendar years, evidence of one declination otherwise |
|
described by this subsection is also required with an application |
|
for renewal of an association policy. |
|
(b) A property and casualty agent must submit an application |
|
for initial [the] insurance coverage on behalf of the applicant on |
|
forms prescribed by the association. The association shall develop |
|
a simplified renewal process that allows for the acceptance of an |
|
application for renewal coverage, and payment of premiums, from a |
|
property and casualty agent or a person insured under this chapter. |
|
An [The] application for initial or renewal coverage must contain: |
|
(1) a statement as to whether the applicant has |
|
submitted or will submit the premium in full from personal funds or, |
|
if not, to whom a balance is or will be due; and |
|
(2) [.
Each application for initial or renewal
|
|
coverage must also contain] a statement that the agent acting on |
|
behalf of the applicant possesses proof of the declination |
|
described by Subsection (a) and proof of flood insurance coverage |
|
or unavailability of that coverage as described by Section |
|
2210.203(a-1). |
|
SECTION 21. Section 2210.203, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (d) to read as |
|
follows: |
|
(a) If the association determines that the property for |
|
which an application for initial insurance coverage is made is |
|
insurable property, the association, on payment of the premium, |
|
shall direct the issuance of an insurance policy as provided by the |
|
plan of operation. |
|
(d) The commissioner, after consultation with the board of |
|
directors, shall adopt rules governing the rate of agent |
|
commissions on policies renewed under Subsection (c). Rules |
|
adopted under this subsection must require that commission rates be |
|
reasonable and not excessive, based on the time required of, and the |
|
nature of work to be performed by, an agent. |
|
SECTION 22. Sections 2210.204(d) and (e), Insurance Code, |
|
are amended to read as follows: |
|
(d) If an insured requests cancellation of the insurance |
|
coverage, the association shall refund the unearned premium, less |
|
any minimum retained premium set forth in the plan of operation, |
|
payable to the insured and the holder of an unpaid balance. The |
|
property and casualty agent who received a commission as the result |
|
of the issuance of an association policy providing the canceled |
|
coverage [submitted the application] shall refund the agent's |
|
commission on any unearned premium in the same manner. |
|
(e) For cancellation of insurance coverage under this |
|
section, the minimum retained premium in the plan of operation must |
|
be for a period of not less than 90 [180] days, except for events |
|
specified in the plan of operation that reflect a significant |
|
change in the exposure or the policyholder concerning the insured |
|
property, including: |
|
(1) the purchase of similar coverage in the voluntary |
|
market; |
|
(2) sale of the property to an unrelated party; |
|
(3) death of the policyholder; or |
|
(4) total loss of the property. |
|
SECTION 23. Subchapter E, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.205 and 2210.210 to read as |
|
follows: |
|
Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR |
|
FILING CLAIM; NOTICE CONCERNING RESOLUTION OF CERTAIN DISPUTES. |
|
(a) A windstorm and hail insurance policy issued by the association |
|
must: |
|
(1) require an insured to file a claim under the policy |
|
not later than the first anniversary of the date on which the damage |
|
to property that is the basis of the claim occurs; and |
|
(2) contain, in boldface type, a conspicuous notice |
|
concerning the resolution of disputes under the policy, including: |
|
(A) the processes and deadlines for appraisal |
|
under Section 2210.575 and mediation under Section 2210.576; and |
|
(B) the necessity of complying with the |
|
requirements of Subchapter L-1 to seek administrative or judicial |
|
relief. |
|
(b) The commissioner, on a showing of good cause by a person |
|
insured under this chapter, may extend the one-year period |
|
described by Subsection (a)(1) for a period not to exceed 180 days. |
|
Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED. |
|
The association may not issue coverage for a wind turbine, |
|
regardless of whether the turbine is otherwise insurable property |
|
under this chapter. |
|
SECTION 24. Section 2210.254, Insurance Code, is amended by |
|
adding Subsection (e) to read as follows: |
|
(e) The department may establish an annual renewal period |
|
for persons appointed as qualified inspectors. |
|
SECTION 25. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.2551 to read as follows: |
|
Sec. 2210.2551. EXCLUSIVE ENFORCEMENT AUTHORITY; RULES. |
|
(a) The department has exclusive authority over all matters |
|
relating to the appointment and oversight of qualified inspectors |
|
for purposes of this chapter. |
|
(b) The commissioner by rule shall establish criteria to |
|
ensure that a person seeking appointment as a qualified inspector |
|
under this subchapter, including an engineer seeking appointment |
|
under Section 2210.255, possesses the knowledge, understanding, |
|
and professional competence to perform windstorm inspections under |
|
this chapter and to comply with other requirements of this chapter. |
|
(c) Subsection (b) applies only to a determination |
|
concerning the appointment of a qualified inspector under this |
|
chapter. The exclusive jurisdiction of the department under this |
|
section does not apply to the practice of engineering as defined by |
|
Section 1001.003, Occupations Code, or to a license issued, |
|
qualification required, determination made, order issued, judgment |
|
rendered, or other action of a board operating under Chapter 1001, |
|
Occupations Code. In the event of conflict, the authority of that |
|
board prevails with regard to the practice of engineering. |
|
SECTION 26. The heading to Section 2210.256, Insurance |
|
Code, is amended to read as follows: |
|
Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING |
|
APPOINTED INSPECTORS AND CERTAIN OTHER PERSONS. |
|
SECTION 27. Section 2210.256, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) In addition to any other action authorized under this |
|
section, the commissioner ex parte may enter an emergency cease and |
|
desist order under Chapter 83 against a qualified inspector, or a |
|
person acting as a qualified inspector, if: |
|
(1) the commissioner believes that: |
|
(A) the qualified inspector has: |
|
(i) through submitting or failing to submit |
|
to the department sealed plans, designs, calculations, or other |
|
substantiating information, failed to demonstrate that a structure |
|
or a portion of a structure subject to inspection meets the |
|
requirements of this chapter and department rules; or |
|
(ii) refused to comply with requirements |
|
imposed under this chapter or department rules; or |
|
(B) the person acting as a qualified inspector is |
|
acting without appointment as a qualified inspector under Section |
|
2210.254 or 2210.255; and |
|
(2) the commissioner determines that the conduct |
|
described by Subdivision (1) is fraudulent or hazardous or creates |
|
an immediate danger to the public. |
|
SECTION 28. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.260 to read as follows: |
|
Sec. 2210.260. ALTERNATIVE ELIGIBILITY FOR COVERAGE. (a) |
|
On and after January 1, 2012, a person who has an insurable interest |
|
in a residential structure may obtain insurance coverage through |
|
the association for that structure without obtaining a certificate |
|
of compliance under Section 2210.251(g) in accordance with this |
|
section and rules adopted by the commissioner. |
|
(b) The department may issue an alternative certification |
|
for a residential structure if the person who has an insurable |
|
interest in the structure demonstrates that at least one qualifying |
|
structural building component of the structure has been: |
|
(1) inspected by a department inspector or by a |
|
qualified inspector; and |
|
(2) determined to be in compliance with applicable |
|
building code standards, as set forth in the plan of operation. |
|
(c) The commissioner shall adopt reasonable and necessary |
|
rules to implement this section. The rules adopted under this |
|
section must establish which structural building components are |
|
considered qualifying structural building components for the |
|
purposes of Subsection (b), taking into consideration those items |
|
that are most probable to generate losses for the association's |
|
policyholders and the cost to upgrade those items. |
|
(d) Except as provided in Section 2210.251(f), a person who |
|
has an insurable interest in a residential structure that is |
|
insured by the association as of January 1, 2012, but for which the |
|
person has not obtained a certificate of compliance under Section |
|
2210.251(g), must obtain an alternative certification under this |
|
section before the association, on or after January 1, 2013, may |
|
renew coverage for the structure. |
|
(e) Each residential structure for which a person obtains an |
|
alternative certification under this section must comply with: |
|
(1) the requirements of this chapter, including |
|
Section 2210.258; and |
|
(2) the association's underwriting requirements, |
|
including maintaining the structure in an insurable condition and |
|
paying premiums in the manner required by the association. |
|
(f) The association shall develop and implement an |
|
actuarially sound rate, credit, or surcharge that reflects the |
|
risks presented by structures with reference to which alternative |
|
certifications have been obtained under this section. A rate, |
|
credit, or surcharge under this subsection may vary based on the |
|
number of qualifying structural building components included in a |
|
structure with reference to which an alternative certification is |
|
obtained under this section. |
|
SECTION 29. The heading to Subchapter H, Chapter 2210, |
|
Insurance Code, is amended to read as follows: |
|
SUBCHAPTER H. RATES; DISCOUNTS |
|
SECTION 30. Subchapter H, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.363 to read as follows: |
|
Sec. 2210.363. PREMIUM DISCOUNTS. (a) The association may |
|
offer a person insured under this chapter an actuarially justified |
|
premium discount on a policy issued by the association if the person |
|
elects to purchase a binding arbitration endorsement under Section |
|
2210.554. |
|
(b) The commissioner shall adopt rules necessary to |
|
implement and enforce this section. |
|
SECTION 31. Section 2210.453, Insurance Code, is amended by |
|
adding Subsections (c), (d), and (e) to read as follows: |
|
(c) If the association does not purchase reinsurance as |
|
authorized by this section, the board, not later than June 1 of each |
|
year, shall submit to the commissioner, the legislative oversight |
|
board established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
containing an actuarial plan for paying losses in the event of a |
|
catastrophe with estimated damages of $2.5 billion or more. The |
|
report required by this subsection must: |
|
(1) document and denominate the association's |
|
resources available to pay claims, including cash or other highly |
|
liquid assets, assessments that the association is projected to |
|
impose, pre-event and post-event bonding capacity, and |
|
private-sector recognized risk-transfer mechanisms, including |
|
catastrophe bonds and reinsurance; |
|
(2) include an independent, third-party appraisal of |
|
the likelihood of an assessment, the maximum potential size of the |
|
assessment, and an estimate of the probability that the assessment |
|
would not be adequate to meet the association's needs; and |
|
(3) include an analysis of financing alternatives to |
|
assessments that includes the costs of borrowing and the |
|
consequences that additional purchase of reinsurance, catastrophe |
|
bonds, or other private-sector recognized risk-transfer |
|
instruments would have in reducing the size or potential of |
|
assessments. |
|
(d) A person who prepares a report required by Subsection |
|
(c) may not contract to provide any other service to the |
|
association, except for the preparation of similar reports, before |
|
the third anniversary of the date the last report prepared by the |
|
person under that subsection is submitted. |
|
(e) The report required under Subsection (c) is for |
|
informational purposes and does not bind the association to a |
|
particular course of action. |
|
SECTION 32. Subchapter J, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.455 to read as follows: |
|
Sec. 2210.455. CATASTROPHE PLAN. (a) Not later than June 1 |
|
of each year, the board shall submit to the commissioner, the |
|
legislative oversight board established under Subchapter N, the |
|
governor, the lieutenant governor, and the speaker of the house of |
|
representatives a catastrophe plan covering the period beginning on |
|
the date the plan is submitted and ending on the following May 31. |
|
(b) The catastrophe plan must: |
|
(1) describe the manner in which the association will, |
|
during the period covered by the plan, evaluate losses and process |
|
claims after the following windstorms affecting an area of maximum |
|
exposure to the association: |
|
(A) a windstorm with a four percent chance of |
|
occurring during the period covered by the plan; |
|
(B) a windstorm with a two percent chance of |
|
occurring during the period covered by the plan; and |
|
(C) a windstorm with a one percent chance of |
|
occurring during the period covered by the plan; and |
|
(2) include, if the association does not purchase |
|
reinsurance under Section 2210.453 for the period covered by the |
|
plan, an actuarial plan for paying losses in the event of a |
|
catastrophe with estimated damages of $2.5 billion or more. |
|
(c) The catastrophe plan must include a description of how |
|
losses under association policies will be paid, and how claims |
|
under association policies will be administered and adjusted, |
|
during the period covered by the plan. |
|
(d) The catastrophe plan is for informational purposes and |
|
does not bind the association to a particular course of action. |
|
SECTION 33. Sections 2210.551(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) This section: |
|
(1) does not apply to a person who is required to |
|
resolve a dispute under Subchapter L-1; and |
|
(2) applies only to: |
|
(A) [(1)] a person not described by Subdivision |
|
(1) who is insured under this chapter or an authorized |
|
representative of the person; or |
|
(B) [(2)] an affected insurer. |
|
(b) A person or entity described by Subsection (a)(2) [(a)] |
|
who is aggrieved by an act, ruling, or decision of the association |
|
may appeal to the commissioner not later than the 30th day after the |
|
date of that act, ruling, or decision. |
|
SECTION 34. The heading to Section 2210.552, Insurance |
|
Code, is amended to read as follows: |
|
Sec. 2210.552. [CLAIM] DISPUTES OTHER THAN CLAIM DISPUTES; |
|
VENUE. |
|
SECTION 35. Section 2210.552, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsections (e), (f), (g), and |
|
(h) to read as follows: |
|
(a) Except as provided by Subsection (e) and Sections |
|
2210.007 and 2210.106, and subject to Subchapter L-1, a person |
|
insured under this chapter who is aggrieved by an act, ruling, or |
|
decision of the association [relating to the payment of, the amount
|
|
of, or the denial of a claim] may: |
|
(1) bring an action against the association, including |
|
an action described by Section 2210.5761 that is brought under |
|
Subsection (f)[, including an action under Chapter 541]; or |
|
(2) if applicable, appeal the act, ruling, or decision |
|
under Section 2210.551. |
|
(e) Except as provided by Subsection (f), Subchapter L-1 |
|
provides the exclusive remedies for a claimant to resolve a dispute |
|
with the association concerning the payment of, the amount of, or |
|
the denial of a claim. A claimant may not bring an action against |
|
the association concerning the payment of, the amount of, or the |
|
denial of a claim before exhausting all remedies under Subchapter |
|
L-1. If a claimant brings an action against the association |
|
concerning the payment of, the amount of, or the denial of a claim |
|
before exhausting all remedies under that subchapter, the court |
|
shall abate the action until all remedies under that subchapter |
|
have been exhausted. For purposes of this subsection, "claim" and |
|
"claimant" have the meanings assigned by Section 2210.571. |
|
(f) If a claimant, as defined by Section 2210.571, disputes |
|
an act, ruling, or decision of the association concerning a |
|
causation dispute or a coverage dispute, as defined by Section |
|
2210.571, the claimant may bring an action against the association |
|
in a district court in the county in which the loss occurred. An |
|
action brought under this subsection is subject to Sections |
|
2210.576 and 2210.5761. |
|
(g) A person who brings an action against the association |
|
under this section: |
|
(1) may recover only the amount of the covered loss for |
|
an action brought under Subsection (f), or the amount of actual |
|
damages for any other action, plus court costs and reasonable and |
|
necessary attorney's fees; and |
|
(2) may not recover consequential, punitive, or |
|
exemplary damages, including damages under Section 541.152(b) of |
|
this code or Section 17.50, Business & Commerce Code. |
|
(h) For purposes of Subsection (g)(2), "consequential |
|
damages" does not include a loss covered under an association |
|
policy or an endorsement to an association policy. |
|
SECTION 36. Subchapter L, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.553 and 2210.554 to read as |
|
follows: |
|
Sec. 2210.553. LIMITATIONS PERIOD. (a) Notwithstanding |
|
any other law, including Section 541.162, a person insured under |
|
this chapter who brings an action against the association in the |
|
manner described by Section 2210.552(a)(1) must bring the action |
|
not later than the second anniversary of the date of the act, |
|
ruling, or decision of the association by which the insured is |
|
aggrieved. |
|
(b) This section is a statute of repose and controls over |
|
any other applicable limitations period. |
|
Sec. 2210.554. VOLUNTARY ARBITRATION OF CERTAIN COVERAGE |
|
AND CLAIM DISPUTES. (a) A person insured under this chapter may |
|
elect to purchase a binding arbitration endorsement in a form |
|
prescribed by the commissioner. A person who elects to purchase an |
|
endorsement under this section must arbitrate a dispute involving |
|
an act, ruling, or decision of the association relating to the |
|
payment of, the amount of, or the denial of the claim. |
|
(b) An arbitration under this section shall be conducted in |
|
the manner and under rules and deadlines prescribed by the |
|
commissioner by rule. |
|
SECTION 37. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapter L-1 to read as follows: |
|
SUBCHAPTER L-1. CLAIMS: SETTLEMENT AND DISPUTE RESOLUTION |
|
Sec. 2210.571. DEFINITIONS. In this subchapter: |
|
(1) "Association policy" means a windstorm and hail |
|
insurance policy issued by the association. |
|
(2) "Causation dispute" means a dispute involving the |
|
extent to which damage to property insured under an association |
|
policy was caused by an event or peril covered under the policy. |
|
(3) "Claim" means a request for payment under an |
|
association policy. The term also includes any other claim against |
|
the association, or an agent or representative of the association, |
|
relating to an insured loss, under any theory or cause of action of |
|
any kind, regardless of the theory under which the claim is |
|
asserted, the cause of action brought, or the type of damages |
|
sought. |
|
(4) "Claimant" means a person who makes a claim. |
|
(5) "Coverage dispute" means a dispute that involves |
|
whether, or the extent to which, an association policy covers |
|
damages to property alleged to be insured under the policy. The |
|
term does not include a causation dispute. |
|
(6) "Damage dispute" means a dispute that involves the |
|
actual cash value, amount of loss, or cost of repairing or replacing |
|
property insured under an association policy. The term does not |
|
include a causation dispute or coverage dispute. |
|
Sec. 2210.572. EXCLUSIVE REMEDIES AND LIMITATION ON AWARD. |
|
(a) Subject to Sections 2210.552(e) and (f), and notwithstanding |
|
any other provision of this chapter or other law, this subchapter |
|
provides the exclusive remedies for a claim against the |
|
association, including an agent or representative of the |
|
association. |
|
(b) Except as provided by Section 2210.552(f), the |
|
association or an agent or representative of the association may |
|
not be held liable for any amount on a claim other than: |
|
(1) amounts payable under any applicable terms of the |
|
association policy; and |
|
(2) any costs and fees awarded under Section 2210.578. |
|
(c) The association or an agent or representative of the |
|
association may not be held liable for damages under Chapter 17, |
|
Business & Commerce Code, or under any provision of any law |
|
providing for trebling of damages or a penalty. |
|
Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a) |
|
Subject to Section 2210.205(b), an insured must file a claim under |
|
an association policy not later than the first anniversary of the |
|
date on which the damage to property that is the basis of the claim |
|
occurs. |
|
(b) Except as provided by Subsection (d), not later than the |
|
90th day after the date the association receives a claim, the |
|
association shall: |
|
(1) notify the claimant in writing of the amount of |
|
money, if any, the association will pay the claimant for the claim; |
|
and |
|
(2) provide the claimant with: |
|
(A) a detailed description of the assumptions or |
|
estimates used by the association in determining the amount of the |
|
claim to be paid, including the estimated labor and materials |
|
required and the estimated prices for the labor and materials; or |
|
(B) if the association determines that, in whole |
|
or in part, the property damaged is not insured under the |
|
association policy, or that the property insured under the |
|
association policy was damaged by an event or peril not covered by |
|
the association policy, a detailed description of the factual and |
|
legal basis on which the association determined that a coverage or |
|
causation dispute exists concerning all or part of the claim. |
|
(c) If the association does not notify the claimant within |
|
the period required by Subsection (b), the claim is presumed to be |
|
covered by the association policy. |
|
(d) The association may extend the 90-day period described |
|
by Subsection (b) for a period not to exceed 90 days, if, before the |
|
end of the 90-day period described by Subsection (b), the |
|
association determines that special circumstances require an |
|
extension of the 90-day period described by Subsection (b) and |
|
notifies the claimant in writing of that determination and those |
|
circumstances. |
|
(e) If a claimant fails to submit information necessary for |
|
the association to determine whether to pay a claim or any portion |
|
of a claim or to deny payment of a claim or any portion of a claim, |
|
the association shall, not later than the 15th day after the date |
|
the association receives notice of the claim, request in writing |
|
any necessary information from the claimant. For good cause, the |
|
association may make a request for additional information under |
|
this subsection not later than the 30th day after the date the |
|
association receives notice of a claim. If the association makes a |
|
written request for information, the applicable period described by |
|
Subsection (b) or (d) is tolled from the date the association |
|
requests the information until the date the association receives |
|
from the claimant information responsive to the request. |
|
(f) In addition to the notice and information otherwise |
|
required under this section, the association shall notify a |
|
claimant of the time limits under Section 2210.574 to request |
|
review of the association's determination under Subsection (e). |
|
Sec. 2210.574. REQUEST FOR REVIEW OF ASSOCIATION |
|
DETERMINATION. (a) A claimant aggrieved by a determination of the |
|
association under Section 2210.573 may, not later than the 30th day |
|
after the date the claimant receives the association's |
|
determination, request in writing a review of the determination. A |
|
claimant may submit written comments, documents, records, and other |
|
information to the association with or following the request for |
|
review. |
|
(b) The association shall, on request and free of charge, |
|
provide a claimant requesting review of an association |
|
determination under Subsection (a) reasonable access to all |
|
information relevant to the determination of the association that |
|
is being reviewed. The claimant may copy the information at the |
|
claimant's own cost or may request the association to provide a copy |
|
of all or part of the information to the claimant. The association |
|
may charge a claimant the actual cost incurred by the association in |
|
providing a copy of information under this section, excluding any |
|
amount for labor involved in making any information or copy of |
|
information available to a claimant. |
|
(c) Not later than the 60th day after the date the |
|
association receives a request for review under Subsection (a), the |
|
association shall notify the claimant in writing of the outcome of |
|
the association's review. The association and the claimant may |
|
agree to extend the 60-day period described by this subsection. |
|
(d) The association's notice to the claimant of the outcome |
|
of the association's review must be in writing, contain the reasons |
|
for the outcome, and notify the claimant of the time limits to |
|
request, as applicable, appraisal under Section 2210.575 or |
|
mediation under Section 2210.576. |
|
Sec. 2210.575. APPRAISAL IN DAMAGE DISPUTES. (a) If, after |
|
review of an association determination under Section 2210.574, a |
|
damage dispute exists with reference to a claim filed under an |
|
association policy, but a coverage or causation dispute does not |
|
exist with reference to that claim, the claimant must request |
|
appraisal of the actual cash value, amount of loss, or cost of |
|
repairing or replacing the property insured under the policy. |
|
(b) A claimant must make a written request for appraisal not |
|
later than the 30th day after the date the claimant receives actual |
|
or constructive notice of the outcome of the association's review |
|
of a determination under Section 2210.574 that is the basis of the |
|
damage dispute. If a claimant, on a showing of good cause and not |
|
later than the 60th day after the expiration of the 30-day period |
|
described by this subsection, requests in writing that the 30-day |
|
period to request appraisal be extended, the commissioner may grant |
|
an additional 30-day period in which the claimant may request |
|
appraisal. |
|
(c) If a claimant requests appraisal under Subsection (b), |
|
the claimant and the association shall resolve the damage dispute |
|
through appraisal, in accordance with the terms of the association |
|
policy. The results of the appraisal: |
|
(1) are binding on the claimant and the association |
|
and are subject to appeal and judicial review only in the manner |
|
provided by Section 2210.578; and |
|
(2) become final and appealable on the 15th day after |
|
the date the appealing party receives actual or constructive notice |
|
of the results. |
|
(d) A request for appraisal, and participation in the |
|
appraisal process, under this section is a condition precedent to |
|
contesting a determination made by the association concerning the |
|
actual cash value, amount of loss, or cost of repairing or replacing |
|
property insured under an association policy. A claimant who does |
|
not request appraisal within the applicable period described by |
|
Subsection (b) waives the claimant's right to contest a |
|
determination of the association concerning the actual cash value, |
|
amount of loss, or cost of repairing or replacing property insured |
|
under an association policy. |
|
(e) If a claimant requests appraisal under this section, the |
|
claimant is responsible for paying any costs incurred or charged by |
|
an appraiser retained by and on behalf of the claimant, the |
|
association is responsible for paying any costs incurred or charged |
|
by an appraiser retained by and on behalf of the association, and |
|
the claimant and the association are responsible in equal shares |
|
for any costs incurred or charged by any other appraiser chosen by |
|
the claimant's and the association's appraisers to participate in |
|
the resolution of the dispute. |
|
(f) The commissioner by rule shall establish policies and |
|
procedures for an appraisal requested and conducted under this |
|
section. |
|
Sec. 2210.576. MEDIATION. (a) If a claimant disputes the |
|
association's determination concerning a causation dispute or |
|
coverage dispute and provides notice of intent to bring an action |
|
that meets the requirements of Section 541.154, the association may |
|
require the claimant, as a prerequisite to filing the action |
|
against the association, to submit the dispute to alternate dispute |
|
resolution by mediation, as provided by Chapter 154, Civil Practice |
|
and Remedies Code. If a claimant brings an action against the |
|
association before mediation under this section is completed, the |
|
court shall abate the action until the mediation is completed. A |
|
claimant described by this subsection that also disputes the |
|
association's determination concerning a damage dispute related to |
|
the causation dispute or coverage dispute that is the subject of |
|
mediation may include in the mediation the damage dispute. |
|
(b) The association shall request mediation of a dispute |
|
described by Subsection (a) not later than the 60th day after the |
|
date the association receives from the claimant notice of intent to |
|
bring an action. |
|
(c) Mediation under this section must be completed not later |
|
than the 60th day after the date a request for mediation is made |
|
under Subsection (b). The 60-day period described by this |
|
subsection may be extended by the commissioner by rule or by the |
|
association and a claimant by mutual consent. |
|
(d) If mediation is not completed before the expiration of |
|
the 60-day period described by Subsection (c) or, if applicable, |
|
any extension under that subsection, the claimant may bring an |
|
action against the association as described by Section 2210.5761. |
|
(e) The claimant and the association shall select a mediator |
|
to conduct mediation under this section. If the claimant and the |
|
association cannot agree on a mediator, the commissioner shall |
|
appoint a mediator. The commissioner shall adopt rules concerning |
|
the division of mediation costs between the claimant and the |
|
association. |
|
(f) The commissioner shall establish rules to implement |
|
this section, including provisions for expediting mediation, |
|
facilitating the ability of a claimant to appear with or without |
|
counsel, and providing that formal rules of evidence shall not |
|
apply to the proceedings. |
|
Sec. 2210.5761. ACTION BY CLAIMANT. (a) Subject to |
|
providing notice of intent to bring an action that meets the |
|
requirements of Section 541.154, a claimant aggrieved by the |
|
outcome of mediation under Section 2210.576 may bring an action |
|
against the association. |
|
(b) If six or more claimants file actions against the |
|
association under this section as a result of a weather-related |
|
event, an action brought against the association under this section |
|
must be presided over by a judge appointed by the judicial panel on |
|
multidistrict litigation designated under Section 74.161, |
|
Government Code. A judge appointed under this section must be an |
|
active judge in Travis County, for suits filed in Travis County, or |
|
an active judge in the county in which suit is filed, for a suit |
|
filed in a county other than Travis County. For purposes of this |
|
subsection, "active judge" has the meaning assigned by Section |
|
74.041, Government Code. |
|
(c) An action brought against the association is governed by |
|
this subchapter and Sections 2210.552 and 2210.553. |
|
Sec. 2210.577. TECHNICAL PANEL. (a) The commissioner |
|
shall appoint a technical panel of experts to advise the |
|
association concerning the extent to which damage to property |
|
insured under an association policy was incurred as a result of |
|
wind, waves, tidal surges, rising waters not caused by waves or |
|
surges, and wind-driven rain associated with a storm. The panel |
|
shall consist of a number of experts to be decided by the |
|
commissioner. The commissioner shall appoint one member of the |
|
panel to serve as the presiding officer of the panel. |
|
(b) Members of the panel must have professional expertise |
|
in, and be knowledgeable concerning, the geography and meteorology |
|
of the Texas seacoast territory, as well as the scientific basis for |
|
determining the extent to which damage to property is caused by |
|
wind, waves, tidal surges, rising waters not caused by waves or |
|
surges, and wind-driven rain associated with a storm. |
|
(c) The panel shall meet at the request of the commissioner |
|
or the call of the presiding officer of the panel. |
|
(c-1) The commissioner shall adopt rules regarding notice |
|
of panel meetings and the transparency of deliberations of the |
|
technical panel. |
|
(d) The panel shall investigate, collect, and evaluate the |
|
information necessary to provide recommendations under Subsection |
|
(e). |
|
(e) At the request of the commissioner, the technical panel |
|
shall recommend to the commissioner methods for determining the |
|
extent to which damage to property insured under an association |
|
policy resulted from wind, waves, tidal surges, rising waters not |
|
caused by waves or surges, and wind-driven rain associated with a |
|
storm for geographic areas or regions designated by the |
|
commissioner. |
|
(f) After consideration of the recommendations made by the |
|
panel under Subsection (e), the commissioner shall publish |
|
guidelines that the association will use to settle claims. |
|
(g) A member of the technical panel is not individually |
|
liable for an act or failure to act in the performance of the |
|
official duties in connection with the individual's work on the |
|
panel. |
|
Sec. 2210.578. JUDICIAL REVIEW. (a) A claimant who has |
|
exhausted all administrative remedies under this subchapter and who |
|
is aggrieved by an appraisal under Section 2210.575 is entitled to |
|
judicial review. A claimant may not seek judicial review before |
|
exhausting all administrative remedies under this subchapter. |
|
(b) A claimant may seek judicial review of an appraisal |
|
under Section 2210.575 in the manner provided for the appeal of |
|
contested cases under Subchapter G, Chapter 2001, Government Code. |
|
The standard for judicial review under this section is the |
|
substantial evidence rule. |
|
(c) In a proceeding for judicial review under this section, |
|
the court may award only the amount described by Section |
|
2210.572(b), plus court costs and reasonable and necessary |
|
attorney's fees. |
|
(d) Notwithstanding Subsection (b), a claimant aggrieved by |
|
an appraisal process under Section 2210.575 may appeal to a |
|
district court in the county in which the loss that is the subject |
|
of the appraisal occurred for a determination concerning: |
|
(1) the amount of the loss; and |
|
(2) the amount of court costs and reasonable and |
|
necessary attorney's fees. |
|
(e) An appeal to a district court under Subsection (d) shall |
|
be trial de novo. The only questions that may be presented and |
|
determined at the trial de novo are: |
|
(1) the amount of the loss; and |
|
(2) the amount of court costs and reasonable and |
|
necessary attorney's fees. |
|
(f) The only evidence that may be admitted in a trial de novo |
|
under Subsection (d) is evidence that was admitted or presented in |
|
the appraisal process under Section 2210.575. The Texas Rules of |
|
Evidence govern whether evidence presented during the appraisal |
|
process under Section 2210.575 is admissible in a trial de novo |
|
under Subsection (d). |
|
(g) A petition for trial de novo under Subsection (d) must |
|
be filed with a district court in the county in which the loss that |
|
is the subject of the appraisal occurred not later than the 30th day |
|
after the date on which the determination being appealed is final |
|
and appealable under this subchapter. |
|
(h) The appeal seeking a trial de novo under Subsection (d) |
|
shall be presided over by a judge appointed by the judicial panel on |
|
multidistrict litigation designated under Section 74.161, |
|
Government Code. A judge appointed under this section must be an |
|
active judge, as defined by Section 74.041, Government Code, who is |
|
a resident of the county in which the loss occurred or of a first |
|
tier coastal county or a second tier coastal county adjacent to the |
|
county in which the loss occurred. |
|
(i) The Texas Supreme Court shall adopt rules governing the |
|
proceedings of a trial de novo under Subsection (d). |
|
Sec. 2210.579. CONSTRUCTION WITH OTHER LAW. To the extent |
|
of any conflict between a provision of this subchapter and any other |
|
law, the provision of this subchapter prevails. |
|
Sec. 2210.580. MEDIATION; CERTAIN DEADLINES TOLLED. A |
|
deadline imposed on a claimant under Section 2210.574, 2210.575, or |
|
2210.576 is tolled for a single period not to exceed 45 consecutive |
|
days during which the claimant is actively seeking resolution of |
|
the causation dispute, coverage dispute, or damage dispute through |
|
a mediation administered by the department, other than the |
|
mediation described by Section 2210.576. |
|
SECTION 38. Section 2210.602(2), Insurance Code, is amended |
|
to read as follows: |
|
(2) "Class 1 public securities" means public |
|
securities authorized to be issued before, on, or after an |
|
occurrence or series of occurrences by Section 2210.072, including |
|
a commercial paper program authorized before the occurrence of a |
|
catastrophic event [so long as no tranche of commercial paper is
|
|
issued under the program until after the catastrophic event]. |
|
SECTION 39. Section 2210.604, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (a-1) to read as |
|
follows: |
|
(a) At the request of the association and with the approval |
|
of the commissioner, the Texas Public Finance Authority shall issue |
|
Class 1, Class 2, or Class 3 public securities. The association |
|
shall submit to the commissioner a cost-benefit analysis of various |
|
financing methods and funding structures when requesting the |
|
issuance of public securities under this subsection. |
|
(a-1) The association and the commissioner must approve |
|
each tranche of commercial paper issued under a commercial paper |
|
program established under this chapter. |
|
SECTION 40. Section 2210.605(c), Insurance Code, is amended |
|
to read as follows: |
|
(c) Public securities issued under Section 2210.6136 [this
|
|
chapter] are eligible obligations under Section 404.027, |
|
Government Code. |
|
SECTION 41. Section 2210.608(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) Public security proceeds, including investment income, |
|
shall be held in trust for the exclusive use and benefit of the |
|
association. The association may use the proceeds to: |
|
(1) pay incurred claims and operating expenses of the |
|
association; |
|
(2) purchase reinsurance for the association; |
|
(3) pay the costs of issuing the public securities, |
|
and public security administrative expenses, if any; |
|
(4) provide a public security reserve; [and] |
|
(5) pay capitalized interest and principal on the |
|
public securities for the period determined necessary by the |
|
association; |
|
(6) pay private financial agreements entered into by |
|
the association as temporary sources of payment of losses and |
|
operating expenses of the association; and |
|
(7) reimburse the association for any cost described |
|
by Subdivisions (1)-(6) paid by the association before issuance of |
|
the public securities. |
|
SECTION 42. Sections 2210.609(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) The board and the association shall enter into an |
|
agreement under which the association shall provide for the payment |
|
of all public security obligations from available funds collected |
|
by the association and deposited into the public security |
|
obligation revenue fund. If the association determines that it is |
|
unable to pay the public security obligations and public security |
|
administrative expenses, if any, with available funds, the |
|
association shall pay those obligations and expenses in accordance |
|
with Sections 2210.612, 2210.613, [and] 2210.6135, and 2210.6136 as |
|
applicable. Class 1, Class 2, or Class 3 public securities may be |
|
issued on a parity or subordinate lien basis with other Class 1, |
|
Class 2, or Class 3 public securities, respectively. |
|
(b) The board shall notify the association of the amount of |
|
the public security obligations and the estimated amount of public |
|
security administrative expenses, if any, each calendar year in a |
|
period sufficient, as determined by the association, to permit the |
|
association to determine the availability of funds and assess a |
|
premium surcharge if necessary. |
|
SECTION 43. Section 2210.610(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) Revenues received from the premium surcharges under |
|
Section 2210.613 and member assessments under Sections 2210.613 and |
|
2210.6135 may be applied only as provided by this subchapter. |
|
SECTION 44. Section 2210.611, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT |
|
EARNINGS. Revenue collected in any calendar year from a premium |
|
surcharge under Section 2210.613 and member assessments under |
|
Sections 2210.613 and 2210.6135 that exceeds the amount of the |
|
public security obligations and public security administrative |
|
expenses payable in that calendar year and interest earned on the |
|
public security obligation fund may, in the discretion of the |
|
association, be: |
|
(1) used to pay public security obligations payable in |
|
the subsequent calendar year, offsetting the amount of the premium |
|
surcharge and member assessments, as applicable, that would |
|
otherwise be required to be levied for the year under this |
|
subchapter; |
|
(2) used to redeem or purchase outstanding public |
|
securities; or |
|
(3) deposited in the catastrophe reserve trust fund. |
|
SECTION 45. Section 2210.612, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.612. PAYMENT OF CLASS 1 PUBLIC SECURITIES. (a) |
|
The association shall pay Class 1 public securities issued under |
|
Section 2210.072 from its net premium and other revenue. |
|
(b) The association may enter financing arrangements as |
|
described by Section 2210.072(d) as necessary to obtain public |
|
securities issued under Section 2210.072 [that section]. Nothing |
|
in this subsection prevents [shall prevent] the authorization and |
|
creation of one or more programs for the issuance of commercial |
|
paper before the date of an occurrence or series of occurrences that |
|
results in insured losses under Section 2210.072(a) [so long as no
|
|
tranche of commercial paper is issued under a commercial paper
|
|
program until after such an occurrence]. |
|
SECTION 46. Sections 2210.613(b), (c), and (d), Insurance |
|
Code, are amended to read as follows: |
|
(b) Seventy percent of the cost of the public securities |
|
shall be paid by a [nonrefundable] premium surcharge collected |
|
under this section in an amount set by the commissioner. On |
|
approval by the commissioner, each insurer, the association, and |
|
the Texas FAIR Plan Association shall assess, as provided by this |
|
section, a premium surcharge to each policyholder of a policy that |
|
is in effect on or after the 180th day after the date the |
|
commissioner issues notice of the approval of the public securities |
|
[its policyholders as provided by this section]. The premium |
|
surcharge must be set in an amount sufficient to pay, for the |
|
duration of the issued public securities, all debt service not |
|
already covered by available funds and all related expenses on the |
|
public securities. |
|
(c) The premium surcharge under Subsection (b) shall be |
|
assessed on all policyholders of policies that cover [who reside or
|
|
have operations in, or whose] insured property that is located in a |
|
catastrophe area, including automobiles principally garaged in a |
|
catastrophe area. The premium surcharge shall be assessed on [for] |
|
each Texas windstorm and hail insurance policy and each property |
|
and casualty insurance policy, including an automobile insurance |
|
policy, issued for automobiles and other property located in the |
|
catastrophe area. A premium surcharge under Subsection (b) applies |
|
to: |
|
(1) all policies written under the following lines of |
|
insurance: |
|
(A) fire and allied lines; |
|
(B) farm and ranch owners; |
|
(C) residential property insurance; |
|
(D) private passenger automobile liability and |
|
physical damage insurance; and |
|
(E) commercial automobile liability and physical |
|
damage insurance; and |
|
(2) the property insurance portion of a commercial |
|
multiple peril insurance [that provide coverage on any premises,
|
|
locations, operations, or property located in the area described by
|
|
this subsection for all property and casualty lines of insurance,
|
|
other than federal flood insurance, workers' compensation
|
|
insurance, accident and health insurance, and medical malpractice
|
|
insurance]. |
|
(d) A premium surcharge under Subsection (b) is a separate |
|
[nonrefundable] charge in addition to the premiums collected and is |
|
not subject to premium tax or commissions. Failure by a |
|
policyholder to pay the surcharge constitutes failure to pay |
|
premium for purposes of policy cancellation. |
|
SECTION 47. Section 2210.6135(a), Insurance Code, is |
|
amended to read as follows: |
|
(a) The association shall pay Class 3 public securities |
|
issued under Section 2210.074 as provided by this section through |
|
member assessments. The association, for the payment of the |
|
losses, shall assess the members of the association in the amounts |
|
necessary for the repayment of public securities issued in a |
|
principal [an] amount not to exceed $500 million per catastrophe |
|
year [for the payment of the losses]. The association shall notify |
|
each member of the association of the amount of the member's |
|
assessment under this section. |
|
SECTION 48. Subchapter M, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.6136 to read as follows: |
|
Sec. 2210.6136. COMBINED SOURCES OF PAYMENT. (a) In lieu |
|
of issuing distinct Class 1, Class 2, or Class 3 public securities, |
|
on request of the association and approval by the commissioner, the |
|
board may issue public securities payable from all of the sources |
|
described in Sections 2210.612, 2210.613, and 2210.6135 with: |
|
(1) the first source of payment being as described in |
|
Section 2210.612 to the extent public securities issued under this |
|
section are marketable, in a principal amount not to exceed $1 |
|
billion; |
|
(2) the second source of payment being as described in |
|
Section 2210.613, in a principal amount not to exceed $1 billion; |
|
and |
|
(3) the third source of payment being as described in |
|
Section 2210.6135. |
|
(b) The aggregate principal amount of public securities |
|
issued in the manner described by this section may not exceed $2.5 |
|
billion in any consecutive 12-month period from the earlier of, as |
|
applicable: |
|
(1) the date on which public securities are issued |
|
under Section 2210.072(a) before an occurrence or series of |
|
occurrences that results in insured losses; or |
|
(2) the date of an occurrence or series of occurrences |
|
in a calendar year that results in insured losses in excess of |
|
premium and other revenue of the association from available |
|
reserves of the association and available amounts in the |
|
catastrophe reserve trust fund. |
|
SECTION 49. Section 2210.614, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.614. REFINANCING PUBLIC SECURITIES. (a) The |
|
association may request the board to refinance any public |
|
securities issued in accordance with Subchapter B-1, whether Class |
|
1, Class 2, or Class 3 public securities, with public securities |
|
payable from the same sources as the original public securities. |
|
(b) Notwithstanding Section 1207.006, Government Code, |
|
public securities refinanced under this section may not have a term |
|
that is greater than 14 years. |
|
SECTION 50. Section 2210.616, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.616. STATE NOT TO IMPAIR PUBLIC SECURITY |
|
OBLIGATIONS. (a) The state pledges for the benefit and protection |
|
of financing parties, the board, and the association that the state |
|
will not take or permit any action that would: |
|
(1) impair the collection of member assessments and |
|
premium surcharges or the deposit of those funds into the member |
|
assessment trust fund or premium surcharge trust fund; |
|
(2) reduce, alter, or impair the member assessments or |
|
premium surcharges to be imposed, collected, and remitted to |
|
financing parties until the principal, interest, and premium, and |
|
any other charges incurred and contracts to be performed in |
|
connection with the related public securities, have been paid and |
|
performed in full; or |
|
(3) [If public securities under this subchapter are
|
|
outstanding, the state may not:
|
|
[(1)
take action to limit or restrict the rights of the
|
|
association to fulfill its responsibility to pay public security
|
|
obligations; or
|
|
[(2)] in any way impair the rights and remedies of the |
|
public security owners until the public securities are fully |
|
discharged. |
|
(b) A party issuing public securities under this subchapter |
|
may include the pledge described by Subsection (a) in any |
|
documentation relating to those securities. |
|
SECTION 51. Subchapter M, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.6165 to read as follows: |
|
Sec. 2210.6165. PROPERTY RIGHTS. If public securities |
|
issued under this subchapter are outstanding, the rights and |
|
interests in revenues from a premium surcharge or member assessment |
|
held by the association, a successor to the association, any member |
|
of the association, or any entity required to impose, collect, or |
|
receive a premium surcharge or a member assessment under this |
|
subchapter, to the extent those rights and interests are property |
|
rights, are extinguished once those revenues are first pledged for |
|
the repayment of the association's public security obligations as |
|
provided by Section 2210.609. |
|
SECTION 52. Section 2210.551(e), Insurance Code, is |
|
repealed. |
|
SECTION 53. (a) A legislative interim study committee |
|
shall conduct a study of alternative ways to provide insurance to |
|
the seacoast territory of this state through a quasi-governmental |
|
entity. |
|
(b) The committee is composed of 12 members appointed as |
|
follows: |
|
(1) four members of the senate appointed by the |
|
lieutenant governor, two of whom represent one or more first tier |
|
coastal counties and two of whom do not represent a first tier |
|
coastal county; |
|
(2) four members of the house of representatives |
|
appointed by the speaker of the house of representatives, two of |
|
whom represent one or more first tier coastal counties and two of |
|
whom do not represent a first tier coastal county; and |
|
(3) four public members with a background in actuarial |
|
science, law, business, or insurance, as follows: |
|
(A) two members who do not reside in a first tier |
|
coastal county, appointed by the governor; |
|
(B) one member who resides in a first tier |
|
coastal county, appointed by the lieutenant governor; and |
|
(C) one member who resides in a first tier |
|
coastal county, appointed by the speaker of the house of |
|
representatives. |
|
(c) The speaker of the house of representatives and the |
|
lieutenant governor shall jointly designate a chair or, |
|
alternatively, designate two co-chairs, from among the committee |
|
membership, one of whom represents or resides in a first tier |
|
coastal county. |
|
(d) The committee shall: |
|
(1) examine alternative ways to provide insurance to |
|
the seacoast territory of this state through a quasi-governmental |
|
entity; |
|
(2) recommend: |
|
(A) the appropriate scope of authority and |
|
responsibility for the entity to provide insurance to the seacoast |
|
territory of this state; |
|
(B) an organizational structure to exercise |
|
authority and responsibility over the provision of insurance to the |
|
seacoast territory of this state; |
|
(C) a timetable for implementation; and |
|
(D) specific amendments to state laws and rules |
|
that are necessary to implement the committee's recommendations |
|
under this subdivision; and |
|
(3) estimate funding requirements to implement the |
|
recommendations. |
|
(e) The committee may adopt rules necessary to conduct |
|
business under and implement this section. |
|
(f) Except as specifically provided by this section, the |
|
committee may operate in the same manner as a joint committee of the |
|
82nd Legislature. |
|
(g) Not later than December 1, 2012, the committee shall |
|
report to the governor and the legislature the recommendations made |
|
under this section. |
|
SECTION 54. (a) The name of the Texas Windstorm Insurance |
|
Association is changed to the Texas Coastal Insurance Plan |
|
Association. |
|
(b) A reference in law to the Texas Windstorm Insurance |
|
Association or the Texas Windstorm Insurance Association Act means |
|
the Texas Coastal Insurance Plan Association or the Texas Coastal |
|
Insurance Plan Act, respectively. |
|
SECTION 55. This Act applies only to a Texas windstorm and |
|
hail insurance policy, and a claim or dispute arising under a Texas |
|
windstorm and hail insurance policy, delivered, issued for |
|
delivery, or renewed by the Texas Windstorm Insurance Association |
|
on or after the 30th day after the effective date of this Act. A |
|
Texas windstorm and hail insurance policy, and a claim or dispute |
|
arising under a Texas windstorm and hail insurance policy, |
|
delivered, issued for delivery, or renewed by the Texas Windstorm |
|
Insurance Association before the 30th day after the effective date |
|
of this Act, are governed by the law in effect immediately before |
|
the effective date of this Act, and the former law is continued in |
|
effect for that purpose. |
|
SECTION 56. The Texas Windstorm Insurance Association shall |
|
amend the association's plan of operation to conform to the changes |
|
in law made by this Act not later than January 1, 2012. |
|
SECTION 57. If any provision of this Act or its application |
|
to any person or circumstance is held invalid, the invalidity does |
|
not affect other provisions or applications of this Act that can be |
|
given effect without the invalid provision or application, and to |
|
this end the provisions of this Act are severable. |
|
SECTION 58. 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 on the 91st day after the last day of |
|
the legislative session. |