82R10241 KCR-D

By: Smithee H.B. No. 3023

A BILL TO BE ENTITLED

AN ACT

relating to the institution of a formal delinquency proceeding against the Texas Windstorm Insurance Association.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. In this Act:

(1) "Association" means the Texas Windstorm Insurance Association established under Chapter 2210, Insurance Code.

(2) "Commissioner" means the commissioner of insurance.

(3) "Formal delinquency proceeding" and "receivership" have the meanings assigned by Section 443.004, Insurance Code.

(4) "First tier coastal county" and "second tier coastal county" have the meanings assigned by Section 2210.003, Insurance Code.

SECTION 2. The commissioner of insurance shall, as soon as practicable after the effective date of this Act and in accordance with Chapter 443, Insurance Code, petition a court for an order to liquidate the business of the Texas Windstorm Insurance Association.

SECTION 3. Notwithstanding any contrary provision of Chapter 2210, Insurance Code, on the date that the commissioner files the petition for an order to liquidate the business of the Texas Windstorm Insurance Association, the board of the association is dissolved. Persons described by Section 443.010, Insurance Code, shall cooperate with the commissioner in the manner required by that section during the pendency of the formal delinquency proceeding against the association.

SECTION 4. In accordance with Section 443.015(i), Insurance Code, the Texas Windstorm Insurance Association shall pay all expenses of the receivership initiated against the association.

SECTION 5. The commissioner shall appoint an advisory committee as authorized by Section 443.154, Insurance Code. Notwithstanding any contrary provision of Chapter 443, Insurance Code, the committee shall be composed of:

(1) five members, appointed from a list of names submitted to the commissioner by the governor, all of whom must have experience in the business of insurance, loss adjustment, business management, or finance and no more than two of whom are residents of a first tier coastal county;

(2) two members, appointed from a list of names submitted to the commissioner by the speaker of the house of representatives, both of whom must be members of the house of representatives and only one of whom may be a resident of a first or second tier coastal county; and

(3) two members, appointed from a list of names submitted to the commissioner by the lieutenant governor, both of whom must be members of the senate and only one of whom may be a resident of a first or second tier coastal county.

SECTION 6. (a) The advisory committee appointed by the commissioner under Section 5 of this Act shall, as soon as practicable after the effective date of this Act, develop and recommend to the commissioner a plan of liquidation to govern the liquidation of the association. After consideration of the recommendations of the advisory committee, the commissioner shall adopt a plan of liquidation.

(b) The plan of liquidation adopted under Subsection (a) of this section must include provisions concerning:

(1) the transfer of the association's policy obligations to a solvent assuming insurer authorized to write windstorm and hail insurance in this state; and

(2) the establishment of a program that will replace the association and provide a residual market for windstorm and hail insurance in first tier coastal counties.

(c) The program described by Subsection (b) of this section:

(1) must, if possible, operate in the private windstorm and hail insurance market in this state;

(2) must be actuarially sound and have proper internal controls and safeguards to ensure accurate, efficient, and timely adjustment of claims; and

(3) may, if necessary, include a source of funding to support the program.

SECTION 7. (a) The commissioner shall take all steps necessary to ensure that the liquidation of the association is finalized not later than September 1, 2014, or if possible, by September 1, 2013.

(b) On the date that the liquidation is final, the program to replace the association must be fully operational and capable of issuing, or causing the issuance of, windstorm and hail insurance policies in first tier coastal counties.

SECTION 8. If necessary to accomplish the purposes of this Act or to effect a specific action required by this Act, the commissioner may, before commencing the formal delinquency proceeding against the association or at the time the formal delinquency proceeding is commenced, petition a court for a seizure order under Section 443.051, Insurance Code, to allow the commissioner to take possession and control of the Texas Windstorm Insurance Association in the same manner that the commissioner could take possession and control of an insurer under that section.

SECTION 9. The commissioner may adopt rules necessary to implement this Act.

SECTION 10. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2011.