83R10496 PMO-D

By: Smithee H.B. No. 2785

A BILL TO BE ENTITLED

AN ACT

relating to an insurance policyholders' bill of rights in connection with policies issued by the Texas Windstorm Insurance Association.

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

SECTION 1. Subchapter E, Chapter 2210, Insurance Code, is amended by adding Section 2210.2051 to read as follows:

Sec. 2210.2051. REQUIRED POLICY PROVISIONS: POLICYHOLDER BILL OF RIGHTS. (a) The association must include in each windstorm and hail insurance policy issued by the association a policyholders' bill of rights. The bill of rights must be printed on the declarations page of the policy and must include a statement disclosing as of the date of issuance of the policy:

(1) the sources of funds, including cash reserves, the catastrophe reserve trust fund balance, and public securities proceeds, immediately available to pay claims during the policy period;

(2) the estimated total exposure of the association during the policy period;

(3) the amount of reinsurance purchased or that the association intends to purchase to cover losses occurring during the policy period;

(4) a projection by the Texas Public Finance Authority regarding the marketability of public securities issued or that may be issued under this chapter to fund payment of claims during the policy period;

(5) any outstanding risk that may financially impact the association's ability to pay claims;

(6) an estimate of probable maximum loss exposure for the association in the event of a 100-year storm occurring during the policy period; and

(7) an explanation of the claims payment process if financial resources available to the association are insufficient to pay claims during the policy period.

(b) The association must disclose on the declarations page of each windstorm and hail insurance policy issued by the association that in the event financial resources available to the association are insufficient to pay claims under policies issued by the association during the policy period:

(1) the state is not legally obligated to pay the claims; and

(2) the payment of the claims is not guaranteed by the state.

SECTION 2. This Act applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2014. A policy delivered, issued for delivery, or renewed before January 1, 2014, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2013.