H.B. No. 1900
 
 
 
 
AN ACT
  relating to certain operations and functions of the Texas Windstorm
  Insurance Association and studies relating to the Texas Windstorm
  Insurance Association and the Fair Access to Insurance Requirements
  Plan; authorizing a penalty; authorizing an assessment.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2210.071, Insurance Code, is amended to
  read as follows:
         Sec. 2210.071.  PAYMENT OF EXCESS LOSSES. (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.
         (b)  The association may not pay insured losses and operating
  expenses resulting from an occurrence or series of occurrences in a
  catastrophe year with premium and other revenue earned in a
  subsequent year.
         SECTION 2.  Section 2210.0715, Insurance Code, is amended to
  read as follows:
         Sec. 2210.0715.  PAYMENT FROM RESERVES AND TRUST FUND.  (a)  
  The association shall pay losses resulting from an occurrence or
  series of occurrences in a catastrophe year in excess of premium and
  other revenue of the association for that catastrophe year from
  [available] reserves of the association available before or accrued
  during that catastrophe year and [available] amounts in the
  catastrophe reserve trust fund available before or accrued during
  that catastrophe year.
         (b)  Proceeds of [Class 1] public securities issued or
  assessments made before or as a result [the date] of any occurrence
  or series of occurrences in a catastrophe year that results in
  insured losses may not be included in [available] reserves
  available for a subsequent catastrophe year for purposes of this
  section.
         SECTION 3.  Subchapter C, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.1052 to read as follows:
         Sec. 2210.1052.  EMERGENCY MEETING.  If the ultimate loss
  estimate for an occurrence or series of occurrences made by the
  chief financial officer or chief actuary of the association
  indicates member insurers may be subject to an assessment under
  Subchapter B-1, the board of directors shall call an emergency
  meeting to notify the member insurers about the assessment.
         SECTION 4.  Sections 2210.207(c) and (d), Insurance Code,
  are amended to read as follows:
         (c)  If, on the effective date of an association policy [at
  the time of loss], the total amount of insurance applicable to a
  dwelling is equal to 80 percent or more of the full replacement cost
  of the dwelling or equal to the maximum amount of insurance
  otherwise available through the association, coverage applicable
  to the dwelling under the policy is extended to include the full
  cost of repair or replacement, without a deduction for
  depreciation.
         (d)  If, on the effective date of an association policy [at
  the time of loss], the total amount of insurance applicable to a
  dwelling is equal to less than 80 percent of the full replacement
  cost of the dwelling and less than the maximum amount of insurance
  available through the association, liability for loss under the
  policy may not exceed the replacement cost of the part of the
  dwelling that is damaged or destroyed, less depreciation.
         SECTION 5.  Section 2210.251(g), Insurance Code, is amended
  to read as follows:
         (g)  A certificate of compliance issued by the department [or
  association] under Section 2210.2515 demonstrates compliance with
  the applicable building code under the plan of operation. The
  certificate is evidence of insurability of the structure by the
  association.
         SECTION 6.  Section 2210.2515, Insurance Code, is amended by
  amending Subsection (c) and adding Subsections (c-1), (i), (j), and
  (k) to read as follows:
         (c)  A person may apply to the department [association] on a
  form prescribed by the department for a certificate of compliance
  for a completed improvement. The department [association] shall
  issue a certificate of compliance for a completed improvement if a
  professional engineer licensed by the Texas Board of Professional
  Engineers:
               (1)  has designed the improvement, has affixed the
  engineer's seal on the design, and submits to the department
  [association] on a form prescribed by the department an affirmation
  that the design complies [of compliance] with the applicable
  building code under the plan of operation and that the improvement
  was constructed in accordance with the design; or
               (2)  completes and submits to the department a sealed
  post-construction evaluation report that:
                     (A)  confirms the improvement's compliance with
  the applicable building code under the plan of operation; and
                     (B)  includes documentation supporting the
  engineer's post-construction evaluation report on a form
  prescribed by the department on which the engineer has affixed the
  engineer's seal.
         (c-1)  The department may deny an application for a
  certificate of compliance under Subsection (c) if the evaluation
  report or the form prescribed by the department under Subsection
  (c)(1) is not fully documented as required under Subsection (c).
         (i)  The department is authorized to submit a formal
  complaint under Chapter 1001, Occupations Code, to the Texas Board
  of Professional Engineers related to the engineering work of a
  professional engineer as reflected in the sealed post-construction
  evaluation report or other materials submitted by an engineer under
  Subsection (c).
         (j)  If the department finds that a person acting as a
  qualified inspector under Section 2210.254 has failed to provide
  complete and accurate information in connection with an inspection
  for a certificate of compliance under this section, the department
  may impose a reasonable penalty on the inspector, including by
  prohibiting the inspector from applying for certificates of
  compliance under this section. The commissioner may adopt rules as
  necessary to implement this subsection.
         (k)  The department may rescind a certificate of compliance
  issued under this section if the department finds that the
  improvement does not comply with the applicable building code under
  the plan of operation. The commissioner may adopt rules as
  necessary to implement this subsection.
         SECTION 7.  Subchapter H, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.3511 to read as follows:
         Sec. 2210.3511.  PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS.
  (a)  The association shall make the association's rate adequacy
  analysis publicly available on its Internet website for at least 14
  days before the date the board of directors votes on the submission
  of a proposed rate filing based on the analysis to the department.
  The rate adequacy analysis must include:
               (1)  all user selected hurricane model input
  assumptions; and
               (2)  output data:
                     (A)  with the same content and in the same format
  that is customarily provided to:
                           (i)  the association by hurricane modelers;
  and
                           (ii)  the department by the association; and
                     (B)  in a searchable electronic format that allows
  for efficient analysis and is sufficiently detailed to allow the
  historical experience in this state to be compared to results
  produced by the model.
         (b)  The association shall accept public comment with
  respect to the association's rate adequacy analysis at a public
  meeting of the board of directors before the board of directors
  votes on the submission of a proposed rate filing to the department.
         SECTION 8.  Section 2210.453, Insurance Code, is amended by
  adding Subsections (d) and (e) to read as follows:
         (d)  The cost of the reinsurance purchased or alternative
  financing mechanisms used under this section in excess of the
  minimum funding level required by Subsection (b) shall be paid by
  assessments as provided by this subsection. The association, with
  the approval of the commissioner, shall notify each member of the
  association of the amount of the member's assessment under this
  subsection. The proportion of the cost to each insurer under this
  subsection shall be determined in the manner used to determine each
  insurer's participation in the association for the year under
  Section 2210.052.
         (e)  A member of the association may not recoup an assessment
  paid under Subsection (d) through a premium surcharge or tax
  credit.
         SECTION 9.  Subchapter L-1, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.5741 to read as follows:
         Sec. 2210.5741.  REPLACEMENT COST COVERAGE CLAIM
  PROCESSING. (a)  After the association accepts coverage for a claim
  in full or in part, a claimant whose association policy includes
  replacement cost coverage for the claim may request the replacement
  cost payment by submitting to the association documentation of the
  cost and completion of the repairs related to the claim not later
  than the 545th day after the date the claimant receives a
  notification under Section 2210.573(d)(1) or (2).
         (b)  Not later than the 30th day after the date the
  association receives documentation under Subsection (a), the
  association shall provide the claimant, in writing, notification
  of:
               (1)  the amount of the replacement cost payment the
  association will make; and
               (2)  the deadline to request appraisal under this
  section.
         (c)  The association shall pay the amount described by
  Subsection (b)(1) not later than the 10th day after the date
  notification is provided under Subsection (b).
         (d)  If a claimant has not demanded appraisal with respect to
  a claim under Section 2210.574 and the claimant disputes the
  replacement cost amount the association will pay with respect to
  the claim, the claimant may demand appraisal of the replacement
  cost amount not later than the 30th day after the date the claimant
  receives the notification under Subsection (b).  A claimant may
  demand appraisal under this section without regard to whether all
  repairs related to the claim are complete.
         (e)  Except with respect to the deadlines applicable to an
  appraisal under this section, the appraisal under this section
  shall be conducted in the same manner as an appraisal demanded under
  Section 2210.574.
         (f)  If a claimant's association policy includes replacement
  cost coverage, the written notification provided to the claimant
  under Section 2210.573(d)(1) or (2) must notify the claimant of the
  deadlines under this section for:
               (1)  completing repairs and submitting documentation
  under Subsection (a); and
               (2)  demanding appraisal under this section.
         SECTION 10.  Section 2210.581, Insurance Code, is amended by
  amending Subsections (a) and (b) and adding Subsection (d) to read
  as follows:
         (a)  Subject to Subsection (b), the commissioner, on a
  showing of good cause, may by rule extend any deadline established
  under this subchapter and set the number of days by which the
  deadline is extended.
         (b)  The [With reference to claims filed during a particular
  catastrophe year, the] extension of deadlines under Subsection (a)
  related to claims arising from an occurrence may not exceed 120 days
  in the aggregate for deadlines applicable only to the association.  
  The limitation on extensions under this subsection does not apply
  to the extension of a deadline imposed on a claimant, or on both a
  claimant and the association.
         (d)  The commissioner shall adopt rules as necessary to
  implement this section. Section 2001.0045, Government Code, does
  not apply to rules adopted under this section.
         SECTION 11.  Chapter 2210, Insurance Code, is amended by
  adding Subchapter N-1 to read as follows:
  SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE
  OVERSIGHT BOARD
         Sec. 2210.661.  DEFINITION. In this subchapter, "board"
  means the windstorm insurance legislative funding and funding
  structure oversight board.
         Sec. 2210.662.  COMPOSITION OF BOARD. The board is composed
  of eight members as follows:
               (1)  four members of the senate appointed by the
  lieutenant governor including the chairperson of the Senate
  Business and Commerce Committee, who shall serve as co-chairperson
  of the board; and
               (2)  four members of the house of representatives
  appointed by the speaker of the house of representatives.
         Sec. 2210.663.  POWERS AND DUTIES OF BOARD. (a)  The board
  shall:
               (1)  gather information regarding:
                     (A)  how the association's current funding and
  funding structure operate;
                     (B)  how the catastrophic risk pools of other
  states operate; and
                     (C)  other information that the board considers
  necessary to prepare the report required by Section 2210.664; and
               (2)  hold public meetings to hear testimony from
  experts, stakeholders, and other interested parties regarding
  recommendations and proposals for establishing and implementing
  sustainable funding and a sustainable funding structure for the
  association.
         (b)  The board may request reports and other information as
  necessary to implement this subchapter from:
               (1)  the department;
               (2)  the association; and
               (3)  experts, stakeholders, and other interested
  parties described by Subsection (a)(2).
         Sec. 2210.664.  REPORT. (a)  The board shall prepare a
  report of the board's findings regarding the current funding and
  funding structure of the association, problems with the funding and
  funding structure, and recommendations for legislative action
  related to the funding, funding structure, and sustainability of
  the association. The report must include:
               (1)  an analysis of the current funding, funding
  structure, and sustainability of the association, including the
  association
  's reliance on debt and reinsurance; and
               (2)  recommendations for legislative action necessary
  to:
                     (A)  address problems with the current funding and
  funding structure of the association; and
                     (B)  foster the stability and sustainability of
  the association.
         (b)  Not later than November 15, 2020, the board shall
  deliver the report prepared under Subsection (a) to:
               (1)  the governor;
               (2)  the lieutenant governor; and
               (3)  the speaker of the house of representatives.
         Sec. 2210.665.  EXPIRATION. This subchapter expires
  September 1, 2021.
         SECTION 12.  Section 2210.2515(f), Insurance Code, is
  repealed.
         SECTION 13.  (a)  Section 2210.251(g), Insurance Code, as
  amended by this Act, does not affect the status of a certificate of
  compliance issued by the Texas Windstorm Insurance Association
  before June 1, 2020, or after June 1, 2020, in response to an
  application made before that date for purposes of establishing
  evidence of insurability.
         (b)  Section 2210.2515, Insurance Code, as amended by this
  Act, applies only to an application for a certificate of compliance
  made on or after June 1, 2020. An application for a certificate of
  compliance made before June 1, 2020, 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.
         (c)  Section 2210.3511, Insurance Code, as added by this Act,
  applies only to a rate adequacy analysis made in relation to a rate
  filing made on or after the effective date of this Act.
         SECTION 14.  (a) The windstorm insurance legislative
  oversight board established under Subchapter N, Chapter 2210,
  Insurance Code, shall conduct a study to evaluate a merger of the
  Texas Windstorm Insurance Association established under Chapter
  2210, Insurance Code, and the Fair Access to Insurance Requirements
  Plan established under Chapter 2211, Insurance Code.
         (b)  The evaluation must consider:
               (1)  the affordability and availability of windstorm
  and hail insurance throughout this state and, in particular, in the
  seacoast territory as defined by Section 2210.003, Insurance Code;
               (2)  the affordability and availability of residential
  property insurance throughout this state and, in particular, in
  underserved areas as defined by Section 2211.001, Insurance Code;
               (3)  the advisability of merging the Texas Windstorm
  Insurance Association and the Fair Access to Insurance Requirements
  Plan to provide windstorm and hail and residential property
  insurance in this state;
               (4)  any efficiencies or inefficiencies from a merger
  of the Texas Windstorm Insurance Association and the Fair Access to
  Insurance Requirements Plan;
               (5)  the funding necessary to ensure that windstorm and
  hail and residential property insurance are available after the
  merger of the Texas Windstorm Insurance Association and the Fair
  Access to Insurance Requirements Plan; and
               (6)  any other items the windstorm insurance
  legislative oversight board determines are relevant to a merger of
  the Texas Windstorm Insurance Association and the Fair Access to
  Insurance Requirements Plan.
         (c)  Not later than January 1, 2021, the windstorm insurance
  legislative oversight board shall submit to the governor, the
  lieutenant governor, the speaker of the house of representatives,
  and the Texas Department of Insurance a written report of the study
  conducted under this section. The report must include the findings
  and legislative recommendations of the board.
         (d)  This section expires January 1, 2022.
         SECTION 15.  Sections 2210.207 and 2210.581, Insurance Code,
  as amended by this Act, and Section 2210.5741, Insurance Code, as
  added by this Act, apply only to an insurance policy delivered,
  issued for delivery, or renewed on or after January 1, 2020. A
  policy delivered, issued for delivery, or renewed before January 1,
  2020, 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 16.  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, 2019.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1900 was passed by the House on April
  18, 2019, by the following vote:  Yeas 147, Nays 0, 2 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 1900 on May 23, 2019, by the following vote:  Yeas 143, Nays 0,
  1 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1900 was passed by the Senate, with
  amendments, on May 20, 2019, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor