By: Middleton, Hunter, Lozano, Dominguez, H.B. No. 769
      et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the administration of the Texas Windstorm Insurance
  Association.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter B, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.063 to read as follows:
         Sec. 2210.063.  LOCATION OF ASSOCIATION HEADQUARTERS. The
  headquarters of the association must be located in a first tier
  coastal county or second tier coastal county.
         SECTION 2.  Section 2210.351, Insurance Code, is amended by
  amending Subsection (d) and adding Subsection (f) to read as
  follows:
         (d)  The association may use a rate filed by the association
  without prior commissioner approval if:
               (1)  the filing is made not later than the 30th day
  before the date of any use or delivery for use of the rate;
               (2)  the filed rate does not exceed [105 percent of] the
  rate in effect on the date on which the filing is made; and
               (3)  [the filed rate does not reflect a rate change for
  an individual rating class that is 10 percent higher than the rate
  in effect for that rating class on the date on which the filing is
  made; and
               [(4)]  the commissioner has not disapproved the filing
  in writing, advising of the reasons for the disapproval and the
  criteria the association is required to meet to obtain approval.
         (f)  The association may not file a rate under this section
  that exceeds the rate in effect on the date on which the filing is
  made unless two-thirds of the board of directors votes to approve
  the rate.
         SECTION 3.  Subchapter H, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.3512 to read as follows:
         Sec. 2210.3512.  REQUIREMENT FOR VOTE ON RATE FILING. The
  board of directors may not vote on a proposed rate filing if there
  is a vacancy on the board.
         SECTION 4.  Section 2210.352, Insurance Code, is amended by
  amending Subsection (a-1) and adding Subsection (a-3) to read as
  follows:
         (a-1)  The association may use a rate filed by the
  association under this section without prior commissioner approval
  if:
               (1)  the filing is made not later than the 30th day
  before the date of any use or delivery for use of the rate; and
               (2)  the filed rate does not exceed [105 percent of] the
  rate used by the association in effect on the date on which the
  filing is made[; and
               [(3)  the filed rate does not reflect a rate change for
  an individual rating class that is 10 percent higher than the rate
  in effect for that rating class on the date on which the filing is
  made].
         (a-3)  The association may not file a rate under this section
  that exceeds the rate in effect on the date on which the filing is
  made unless two-thirds of the board of directors votes to approve
  the rate.
         SECTION 5.  Section 2210.452(c), Insurance Code, is amended
  to read as follows:
         (c)  At the end of each calendar year or policy year, the
  association shall use the net gain from operations of the
  association, including all premium and other revenue of the
  association in excess of incurred losses, operating expenses,
  public security obligations, and public security administrative
  expenses, to make payments to the trust fund or pay public security
  obligations, giving priority to the obligations with the highest
  interest rates[, procure reinsurance, or use alternative risk
  financing mechanisms, or to make payments to the trust fund and
  procure reinsurance or use alternative risk financing mechanisms].
         SECTION 6.  Section 2210.453, Insurance Code, is amended by
  adding Subsections (b-1), (b-2), and (f) to read as follows:
         (b-1)  In determining the probable maximum loss under
  Subsection (b), the association:
               (1)  may not consider the cost of providing loss
  adjustments;
               (2)  shall, to the extent possible, contract with any
  disinterested third parties necessary to execute any hurricane risk
  simulation models that were executed in the preceding storm season;
               (3)  shall, if the association is unable to contract
  for the execution of a hurricane risk simulation model described by
  Subdivision (2), contract with any disinterested third party
  necessary to execute a hurricane risk simulation model that is
  substantially similar to the model for which the association is
  unable to contract under Subdivision (2);
               (4)  may contract with any disinterested third parties
  to execute hurricane risk simulation models in addition to the
  models required by Subdivisions (2) and (3);
               (5)  shall provide to a third party executing a
  hurricane risk simulation model any information necessary to comply
  with this subsection;
               (6)  may not use a combination of hurricane risk
  simulation models to determine the probable maximum loss; and
               (7)  may use only the hurricane risk simulation model
  that produces the lowest probable maximum loss.
         (b-2)  Any information produced in compliance with
  Subsection (b-1) shall be made publicly available on the Internet
  website of the association.
         (f)  The association may not purchase reinsurance under this
  section from an insurer or broker involved in the execution of the
  hurricane risk simulation model on which the association relies in
  determining the probable maximum loss applicable for the period
  covered by the reinsurance.
         SECTION 7.  Section 2210.611, Insurance Code, is amended to
  read as follows:
         Sec. 2210.611.  EXCESS REVENUE COLLECTIONS AND INVESTMENT
  EARNINGS. Revenue collected in any calendar year from a premium
  surcharge under Sections 2210.612, 2210.613, and 2210.6131 that
  exceeds the amount of the public security obligations and public
  security administrative expenses payable in that calendar year and
  interest earned on the funds may, in the discretion of the
  association, be:
               (1)  used to pay public security obligations payable in
  the subsequent calendar year, offsetting the amount of the premium
  surcharge that would otherwise be required to be levied for the year
  under this subchapter; or
               (2)  used to redeem or purchase outstanding public
  securities[; or
               [(3)  deposited in the catastrophe reserve trust fund].
         SECTION 8.  Section 2210.664(b), Insurance Code, is amended
  to read as follows:
         (b)  Not later than November 15, 2022 [2020], the board shall
  deliver a [the] report prepared under Subsection (a) to:
               (1)  the governor;
               (2)  the lieutenant governor; and
               (3)  the speaker of the house of representatives.
         SECTION 9.  Section 2210.665, Insurance Code, is amended to
  read as follows:
         Sec. 2210.665.  EXPIRATION. This subchapter expires
  September 1, 2023 [2021].
         SECTION 10.  Sections 14(c) and (d), Chapter 790 (H.B.
  1900), Acts of the 86th Legislature, Regular Session, 2019, are
  amended to read as follows:
         (c)  Not later than January 1, 2023 [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 a [the] study conducted under this section. The report
  must include the findings and legislative recommendations of the
  board.
         (d)  This section expires January 1, 2024 [2022].
         SECTION 11.  Section 2210.063, Insurance Code, as added by
  this Act, applies to the Texas Windstorm Insurance Association
  beginning January 1, 2023.
         SECTION 12.  Sections 2210.351 and 2210.352, Insurance Code,
  as amended by this Act, apply only to a rate filed by the Texas
  Windstorm Insurance Association with the Texas Department of
  Insurance on or after the effective date of this Act. A rate filed
  with the Texas Department of Insurance before the effective date of
  this Act is governed by the law as it existed immediately before
  that date, and that law is continued in effect for that purpose.
         SECTION 13.  The Texas Department of Insurance shall amend
  the Texas Windstorm Insurance Association's plan of operation to
  conform to the changes in law made by this Act not later than the
  60th day after the effective date of this Act.
         SECTION 14.  This Act takes effect September 1, 2021.