By: Ellis S.B. No. 1797

A BILL TO BE ENTITLED

AN ACT

relating to the operation of the Texas Windstorm Insurance Association.

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

SECTION 1. Section 2210.104, Insurance Code, is amended to read as follows:

Sec. 2210.104. OFFICERS; 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 officer of the association and any bonuses equal to or greater than $1,000 in value paid or given by the association to any officer, employee, vendor or contractor of the association.

SECTION 2. Section 2210.105, Insurance Code, is amended by amending Subsections (a) and (b) and adding Subsections (b-1) and (e) 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.

(e) The association shall broadcast live on the association's Internet website all meetings of the board of directors.

SECTION 3. 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 association:

(1) operates in accordance with this chapter and commissioner rules;

(2) complies with sound insurance principles; and

(3) meets all standards imposed under this chapter.

(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 4. 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. Except as specifically provided by this chapter or another law, the association is subject to Chapters 551 and 552, Government Code.

SECTION 5. Section 2210.202, Insurance Code, is amended by adding Subsection (c) to read as follows:

(c) The commissioner shall adopt rules to simplify and streamline the process through which a person who has an insurable interest in insurable property may apply with the association for insurance coverage.

SECTION 6. Section 2210.203, Insurance Code, is amended by amending Subsection (a-1) and adding Subsection (a-2) to read as follows:

(a-1) [This subsection applies only to a structure constructed, altered, remodeled, or enlarged on or after September 1, 2009, and only for insurable property located in areas designated by the commissioner.] Notwithstanding Subsection (a), if all or any part of the property to be insured [which this subsection applies] is located in Zone A or another similar zone with a high level of flood risk or in Zone V or another similar zone with an additional hazard associated with storm waves, as defined by the National Flood Insurance Program, [and if flood insurance under that federal program is available,] the association may not issue an insurance policy for initial or renewal coverage unless evidence is submitted to the association that the property to be covered under the policy is also covered by a flood insurance policy issued under the National Flood Insurance Program. This subsection does not apply to property for which flood insurance is not available under the National Flood Insurance Program [is submitted to the association].

(a-2) An agent offering or selling a Texas windstorm and hail insurance policy [in any area designated by the commissioner under this subsection] shall offer flood insurance coverage required under Subsection (a-1) to a [the] prospective insured, if that coverage is available.

SECTION 7. Section 2210.203 (c), Insurance Code, is amended to read as follows:

(c) A policy is automatically [may be] renewed annually [on application for renewal] as long as the property continues to be an insurable property, or until canceled as provided by Section 2210.204. The association may require evidence that the property is covered by a flood insurance policy in accordance with the Subsection (a-1) before the renewal is effective.

(c-2) Section 2210.203 (c), Insurance Code, as amended by this Act, applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2012. A policy delivered, issued for delivery, or renewed before January 1, 2012, is governed by the law as it existed immediately before the effective date of the Act, and that law is continued in effect for that purpose.

SECTION 8. The heading to Subchapter E, Chapter 2210, Insurance Code, is amended to read as follows:

SUBCHAPTER E. INSURANCE COVERAGE; CLAIMS SETTLEMENT AND PAYMENT

SECTION 9. Subchapter E, Chapter 2210, Insurance Code, is amended by adding Sections 2210.205, 2210.210, and 2210.211 to read as follows:

Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR FILING CLAIM. (a) A windstorm and hail insurance policy issued by the association must require an insured to file a claim under the policy not later than the second anniversary of the date on which the damage or loss that is the basis of the claim occurs.

(b) The commissioner, on a showing of good cause by a person insured under this chapter, shall extend the two-year period described by Subsection (a)(1) for a period not to exceed 90 days.

Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED. The association may not issue coverage to a structure, regardless of whether the structure is otherwise insurable property under this chapter, if the structure is used as a sexually oriented business, as defined by Section 243.002, Local Government Code.

Sec. 2210.211. PROOF OF OTHER COVERAGE REQUIRED FOR SETTLEMENT OF CERTAIN CLAIMS. (a) This section applies only to a claim filed under an association policy the issuance or renewal of which, under Section 2210.203(a-1), requires evidence of coverage by a flood insurance policy.

(b) The association may not pay or settle a claim described by Subsection (a) unless the person filing the claim provides evidence satisfactory to the association that, on the date of the loss that is the basis of the claim, the property insured under the association policy was also covered by a flood insurance policy in the amount required for issuance or renewal of the association policy under Section 2210.203(a-1).

SECTION 10. Section 2210.355(g), Insurance Code, is amended to read as follows:

(g) A commission paid to an agent for an association policy must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory and may not exceed 10% with refund for any unearned portion.

SECTION 11. This Act applies only to a Texas windstorm and hail insurance policy, and a 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 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 on the date the policy was delivered, issued for delivery, or renewed, and the former law is continued in effect for that purpose.

SECTION 12. 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 13. 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.