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A BILL TO BE ENTITLED
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AN ACT
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relating to the rates and other funding of the Texas Windstorm |
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Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.071, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (a) If, in a |
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catastrophe year, an occurrence or series of occurrences in a |
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catastrophe area results in insured losses and operating expenses |
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of the association in excess of premium and other revenue of the |
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association, the excess losses and operating expenses shall be paid |
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as provided by this subchapter. |
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(b) The association may not pay insured losses and operating |
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expenses resulting from an occurrence or series of occurrences in a |
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catastrophe year with premium and other revenue earned in a |
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subsequent year. |
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SECTION 2. Section 2210.0715, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a) |
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The association shall pay losses resulting from an occurrence or |
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series of occurrences in a catastrophe year in excess of premium and |
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other revenue of the association for that catastrophe year from |
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[available] reserves of the association available before or accrued |
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during that catastrophe year and [available] amounts in the |
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catastrophe reserve trust fund available before or accrued during |
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that catastrophe year. |
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(b) Proceeds of [Class 1] public securities issued or |
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assessments made before or as a result [the date] of any occurrence |
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or series of occurrences in a catastrophe year that results in |
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insured losses may not be included in [available] reserves |
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available for a subsequent catastrophe year for purposes of this |
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section. |
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SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.1052 to read as follows: |
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Sec. 2210.1052. EMERGENCY MEETING. If the final estimate |
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of losses for an occurrence or series of occurrences made by the |
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chief financial officer or chief actuary of the association |
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indicates member insurers may be subject to an assessment under |
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Subchapter B-1, the board of directors shall call an emergency |
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meeting of the members of the association to notify the members |
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about the assessment. |
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SECTION 4. (a) Effective December 1, 2019, Section |
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2210.351(d), Insurance Code, is amended to read as follows: |
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(d) The association may use a rate filed by the association |
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without prior commissioner approval if: |
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(1) the filing is made not later than the 30th day |
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before the date of any use or delivery for use of the rate; |
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(2) the filed rate does not exceed [105 percent of] the |
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rate in effect on the date on which the filing is made; |
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(3) the filed rate does not reflect a rate [change] for |
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an individual rating class that is [10 percent] higher than the rate |
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in effect for that rating class on the date on which the filing is |
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made; and |
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(4) the commissioner has not disapproved the filing in |
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writing, advising of the reasons for the disapproval and the |
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criteria the association is required to meet to obtain approval. |
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(b) Effective September 1, 2021, Section 2210.351(d), |
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Insurance Code, is amended to read as follows: |
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(d) The association may use a rate filed by the association |
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without prior commissioner approval if: |
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(1) the filing is made not later than the 30th day |
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before the date of any use or delivery for use of the rate; |
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(2) the filed rate does not exceed 105 percent of the |
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rate in effect on the date on which the filing is made; |
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(3) the filed rate does not reflect a rate change for |
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an individual rating class that is 10 percent higher than the rate |
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in effect for that rating class on the date on which the filing is |
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made; and |
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(4) the commissioner has not disapproved the filing in |
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writing, advising of the reasons for the disapproval and the |
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criteria the association is required to meet to obtain approval. |
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SECTION 5. (a) Effective December 1, 2019, Section |
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2210.352(a-1), Insurance Code, is amended to read as follows: |
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(a-1) The association may use a rate filed by the |
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association under this section without prior commissioner approval |
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if: |
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(1) the filing is made not later than the 30th day |
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before the date of any use or delivery for use of the rate; |
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(2) the filed rate does not exceed [105 percent of] the |
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rate used by the association in effect on the date on which the |
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filing is made; and |
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(3) the filed rate does not reflect a rate [change] for |
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an individual rating class that is [10 percent] higher than the rate |
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in effect for that rating class on the date on which the filing is |
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made. |
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(b) Effective September 1, 2021, Section 2210.352(a-1), |
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Insurance Code, is amended to read as follows: |
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(a-1) The association may use a rate filed by the |
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association under this section without prior commissioner approval |
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if: |
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(1) the filing is made not later than the 30th day |
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before the date of any use or delivery for use of the rate; |
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(2) the filed rate does not exceed 105 percent of the |
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rate used by the association in effect on the date on which the |
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filing is made; and |
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(3) the filed rate does not reflect a rate change for |
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an individual rating class that is 10 percent higher than the rate |
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in effect for that rating class on the date on which the filing is |
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made. |
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SECTION 6. Section 2210.452, Insurance Code, is amended by |
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amending Subsection (c) and adding Subsection (c-1) to read as |
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follows: |
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(c) In addition to the payment required by Subsection (c-1), |
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at [At] the end of each calendar year or policy year, the |
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association shall use the net gain from operations of the |
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association, including all premium and other revenue of the |
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association in excess of incurred losses, operating expenses, |
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public security obligations, and public security administrative |
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expenses, to make payments to the trust fund, procure reinsurance, |
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or use alternative risk financing mechanisms, or to make payments |
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to the trust fund and procure reinsurance or use alternative risk |
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financing mechanisms. |
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(c-1) The association shall annually pay to the catastrophe |
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reserve trust fund 20 percent of net earned premium of the |
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association. |
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SECTION 7. Chapter 2210, Insurance Code, is amended by |
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adding Subchapter N-1 to read as follows: |
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SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE |
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OVERSIGHT BOARD |
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Sec. 2210.661. DEFINITION. In this subchapter, "board" |
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means the windstorm insurance legislative funding and funding |
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structure oversight board. |
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Sec. 2210.662. COMPOSITION OF BOARD. The board is composed |
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of eight members as follows: |
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(1) four members of the senate appointed by the |
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lieutenant governor; and |
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(2) four members of the house of representatives |
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appointed by the speaker of the house of representatives. |
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Sec. 2210.663. POWERS AND DUTIES OF BOARD. (a) The board |
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shall: |
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(1) gather information regarding: |
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(A) how the association's current funding and |
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funding structure operate; |
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(B) how the catastrophic risk pools of other |
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states operate; and |
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(C) other information that the board considers |
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necessary to prepare the report required by Section 2210.664; and |
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(2) hold public meetings to hear testimony from |
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experts, stakeholders, and other interested parties regarding |
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recommendations and proposals for establishing and implementing |
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sustainable funding and a sustainable funding structure for the |
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association. |
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(b) The board may request reports and other information as |
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necessary to implement this subchapter from: |
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(1) the department; |
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(2) the association; and |
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(3) experts, stakeholders, and other interested |
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parties described by Subsection (a)(2). |
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Sec. 2210.664. REPORT. (a) The board shall prepare a |
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report of the board's findings regarding the current funding and |
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funding structure of the association, problems with the funding and |
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funding structure, and recommendations for legislative action |
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related to the funding, funding structure, and sustainability of |
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the association. The report must include: |
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(1) an analysis of the current funding, funding |
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structure, and sustainability of the association, including the |
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association's reliance on debt and reinsurance; and |
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(2) recommendations for legislative action necessary |
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to: |
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(A) address problems with the current funding and |
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funding structure of the association; and |
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(B) foster the stability and sustainability of |
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the association. |
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(b) Not later than November 15, 2020, the board shall |
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deliver the report prepared under Subsection (a) to: |
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(1) the governor; |
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(2) the lieutenant governor; and |
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(3) the speaker of the house of representatives. |
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Sec. 2210.665. EXPIRATION. This subchapter expires |
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September 1, 2021. |
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SECTION 8. As soon as practicable after the effective date |
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of this Act, the Texas Windstorm Insurance Association, through the |
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board of directors of that association, shall propose to the |
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commissioner of insurance amendments to the association's plan of |
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operation to be effective before the hurricane season of 2020 as |
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necessary under Chapter 2210, Insurance Code, as amended by this |
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Act. |
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SECTION 9. (a) Sections 2210.351(d) and 2210.352(a-1), |
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Insurance Code, as amended by this Act effective December 1, 2019, |
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apply only to a rate filed by the Texas Windstorm Insurance |
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Association with the Texas Department of Insurance on or after |
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December 1, 2019. A rate filed with the Texas Department of |
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Insurance before December 1, 2019, is governed by the law as it |
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existed immediately before that date, and that law is continued in |
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effect for that purpose. |
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(b) Sections 2210.351(d) and 2210.352(a-1), Insurance Code, |
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as amended by this Act effective September 1, 2021, apply only to a |
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rate filed by the Texas Windstorm Insurance Association with the |
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Texas Department of Insurance on or after September 1, 2021. A rate |
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filed with the Texas Department of Insurance before September 1, |
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2021, is governed by the law applicable to the rate immediately |
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before that date, and that law is continued in effect for that |
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purpose. |
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SECTION 10. Except as otherwise provided by this Act, this |
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Act takes effect December 1, 2019. |