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A BILL TO BE ENTITLED
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AN ACT
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relating to the issuance of certain public securities by the Texas |
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Windstorm Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.072, Insurance Code, is amended by |
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amending Subsections (a), (b), and (c) and adding Subsection (b-1) |
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to read as follows: |
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(a) Losses not paid under Section 2210.071 shall be paid as |
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provided by this section from the proceeds from Class 1 public |
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securities authorized to be issued in accordance with Subchapter M |
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before, on, or after the date of any occurrence or series of |
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occurrences that results in insured losses. Public securities |
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issued under this section must be repaid within a period not to |
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exceed 10 years, and may be repaid sooner if the board of directors |
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elects to do so and the commissioner approves. |
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(b) Public securities described by Subsection (a) that are |
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issued before an occurrence or series of occurrences that results |
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in incurred losses may be issued if the board of directors |
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determines, before the date of any occurrence, that the amount |
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available from premium and other revenue, in combination with the |
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amounts available from the catastrophe reserve trust fund, may be |
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insufficient to pay insured losses. |
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(b-1) Public securities described by Subsection (a) shall |
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be issued as necessary in a principal amount not to exceed $1 |
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billion per year, in the aggregate, for securities issued before an |
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occurrence or series of occurrences that results in incurred losses |
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and securities issued on or after the date of that occurrence or |
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series of occurrences. |
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(c) If the losses are paid with public securities described |
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by this section, the public securities shall be repaid in the manner |
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prescribed by Subchapter M from premium surcharges and association |
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premium revenue, as applicable. |
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SECTION 2. Section 2210.602(2), Insurance Code, is amended |
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to read as follows: |
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(2) "Class 1 public securities" means public securities |
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authorized to be issued before, on, or after an occurrence or series |
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of occurrences by Section 2210.072, including a commercial paper |
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program authorized before the occurrence of a catastrophic event so |
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long as no tranche of commercial paper is issued under the program |
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until after the catastrophic event. |
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SECTION 3. Section 2210.612(a), Insurance Code, is amended |
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to read as follows: |
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(a) The association shall pay Class 1 public securities |
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issued under Section 2210.072 from: |
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(1) the premium surcharge described by Section |
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2210.6121, for principal on pre-event securities; and |
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(2) the association's [its] premium and other revenue, |
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for interest on pre-event securities and principal and interest on |
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post-event securities. |
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SECTION 4. Subchapter M, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.6121 to read as follows: |
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Sec. 2210.6121. CLASS 1 PREMIUM SURCHARGE. (a) |
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Notwithstanding any other provision of this chapter to the |
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contrary, to pay principal on pre-event Class 1 public securities, |
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each insurer and the association shall collect from their |
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policyholders a surcharge in addition to any premiums to pay public |
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security obligations and public security administrative expenses, |
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if any, on pre-event Class 1 public securities. The association |
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shall determine the premium surcharge under this subsection at |
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least annually. |
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(b) On approval by the commissioner, each insurer and the |
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association shall assess a premium surcharge under Subsection (a) |
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to their policyholders who have a property or casualty insurance |
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policy or Texas windstorm and hail insurance policy that provides |
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coverage for premises, locations, operations, or property located |
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in the catastrophe area. |
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(c) A premium surcharge under Subsection (a) applies to all |
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policies that provide coverage on any premises, locations, |
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operations, or property located in the catastrophe area for all |
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property and casualty lines of insurance, other than federal flood |
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insurance, workers' compensation insurance, accident and health |
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insurance, and medical malpractice insurance. |
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(d) A premium surcharge under this section is a separate |
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nonrefundable charge in addition to the premiums collected and is |
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not subject to premium tax or commissions. Failure by a |
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policyholder to pay the surcharge constitutes failure to pay |
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premium for purposes of policy cancellation. |
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SECTION 5. This Act takes effect September 1, 2011. |