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A BILL TO BE ENTITLED
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AN ACT
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relating to the provision of property owners' association insurance |
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by the FAIR Plan Association in certain areas. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2211.001, Insurance Code, is amended by |
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adding Subdivision (6-a) to read as follows: |
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(6-a) "Property owners' association insurance" means |
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property and liability insurance covering: |
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(A) common areas and facilities of a homeowners' |
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association; or |
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(B) common elements of a condominium owners' |
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association. |
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SECTION 2. Section 2211.051, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. (a) The |
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commissioner may establish a Fair Access to Insurance Requirements |
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Plan to deliver residential property insurance to residents of this |
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state in underserved areas if the commissioner determines, after a |
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public hearing, that: |
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(1) in all or any part of the state, residential |
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property insurance is not reasonably available in the voluntary |
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market to a substantial number of insurable risks; or |
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(2) at least 25 percent of the applicants to the |
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residential property market assistance program who are qualified |
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under that program's plan of operation have not been placed with an |
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insurer in the preceding six months. |
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(b) The commissioner may include in the plan established |
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under Subsection (a) the delivery of property owners' association |
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insurance in underserved areas as provided by Section 2211.1515 if |
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the commissioner determines, after notice and a hearing, that in |
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all or any part of the area designated under Section 2211.1515(a), |
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property owners' association insurance is not reasonably available |
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in the voluntary market to a substantial number of insurable risks. |
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SECTION 3. Section 2211.054, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.054. CONTENTS OF PLAN OF OPERATION. The plan of |
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operation must: |
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(1) provide for a nonprofit association to issue |
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residential property insurance and, if applicable, property |
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owners' association insurance under this chapter and distribute the |
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losses and expenses in writing that insurance in this state; |
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(2) provide that all insurers that write residential |
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property insurance shall participate in the association in |
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accordance with Sections 2211.101(b) and (c); |
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(3) provide that a participating insurer is entitled |
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to receive credit in accordance with Section 2211.101(d); |
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(4) provide for the immediate binding of eligible |
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risks; |
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(5) provide for the use of premium installment payment |
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plans, adequate marketing, and service facilities; |
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(6) provide for the establishment of reasonable |
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service standards; |
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(7) provide procedures for efficient, economical, |
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fair, and nondiscriminatory administration of the association; |
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(8) provide procedures for determining the net level |
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of participation required for each insurer in the association; |
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(9) provide for the use of deductibles and other |
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underwriting devices; |
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(10) provide for assessment of all members in amounts |
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sufficient to operate the association; |
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(11) establish maximum limits of liability to be |
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placed through the program; |
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(12) establish commissions to be paid to the insurance |
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agents submitting applications; |
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(13) provide that the association issue policies in |
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the association's own name; |
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(14) provide reasonable underwriting standards for |
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determining insurability of a risk; |
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(15) provide procedures for the association to assume |
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and cede reinsurance; and |
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(16) provide any other procedure or operational matter |
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the governing committee or the commissioner considers necessary. |
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SECTION 4. Subchapter D, Chapter 2211, Insurance Code, is |
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amended by adding Section 2211.1515 to read as follows: |
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Sec. 2211.1515. MANDATORY PROPERTY OWNERS' ASSOCIATION |
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POLICIES IN CERTAIN AREAS. (a) This section applies only to the |
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area designated by the commissioner by rule. In determining the |
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boundaries of the area, the commissioner shall: |
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(1) to the extent practicable, ensure the area is not |
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more than 10 miles beyond the Texas Windstorm Insurance Association |
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catastrophe area designated under Section 2210.005; and |
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(2) follow geographical features. |
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(b) If the commissioner makes the determination described |
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by Section 2211.051(b), the association shall make property owners' |
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association insurance available to each applicant in an underserved |
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area of the area designated under Subsection (a) whose property is |
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insurable in accordance with reasonable underwriting standards but |
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who, after diligent efforts, is unable to obtain property owners' |
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association insurance through the voluntary market, as evidenced by |
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two declinations from insurers authorized to engage in the business |
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of, and writing, property owners' association insurance in this |
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state. |
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(c) If the area designated under Subsection (a) changes |
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after the association issues a policy under Subsection (b), the |
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policy is valid until renewal regardless of whether the insured |
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property is located in the area designated under Subsection (a) |
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after the change. |
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SECTION 5. Section 2211.153, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.153. INSPECTION BUREAU. The association, with |
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the approval of the commissioner, shall designate one or more |
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organizations as the inspection bureau. The inspection bureau |
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shall: |
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(1) make inspections to determine the condition of a |
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property for which residential property insurance or property |
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owners' association insurance is sought; and |
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(2) perform other duties authorized by the association |
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or the commissioner. |
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SECTION 6. Section 2211.154(a), Insurance Code, is amended |
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to read as follows: |
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(a) A person who has an insurable interest in real or |
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tangible personal property at a fixed location in an underserved |
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area and who, after diligent effort, is unable to obtain |
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residential property insurance, or a homeowners' or condominium |
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owners' association located in an underserved area as provided by |
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Section 2211.1515 that, after diligent effort, is unable to obtain |
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property owners' association insurance, as evidenced by two current |
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declinations from insurers authorized to engage in the business of |
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residential property insurance or property owners' association |
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insurance, as applicable, in this state and actually writing |
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residential property insurance or property owners' association |
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insurance in this state, is entitled on application to the |
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association to an inspection and evaluation of the property by |
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representatives of the inspection bureau. |
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SECTION 7. Section 2211.155, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.155. INSPECTION RESULTS; REINSPECTION. (a) If, |
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after an inspection, the inspection bureau determines that |
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[residential] property meets the underwriting standards |
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established in the plan of operation, the applicant must be |
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informed in writing of that determination and the association shall |
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issue a policy or binder. If the [residential] property does not |
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meet the underwriting standards, the applicant must be informed in |
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writing of the reason for the failure of the [residential] property |
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to meet the standards. |
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(b) If, at any time, an applicant whose [residential] |
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property did not meet the underwriting standards makes improvements |
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to the property or the property's condition that the applicant |
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believes are sufficient to make the property meet the standards, an |
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inspection bureau representative shall reinspect the property on |
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request. In any case, the applicant is eligible for one |
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reinspection on or before the 60th day after the date of the initial |
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inspection. |
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(c) If, on reinspection, the [residential] property meets |
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the underwriting standards, the applicant must be informed in |
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writing of that fact and the association shall issue a policy or |
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binder. |
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SECTION 8. Section 2211.201, Insurance Code, is amended to |
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read as follows: |
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Sec. 2211.201. PURPOSE. The legislature finds that |
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issuing public securities to provide a method to raise funds to |
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provide residential property insurance and property owners' |
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association insurance in this state through the association is to |
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benefit the public and to further a public purpose. |
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SECTION 9. Notwithstanding the changes in law made by this |
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Act to Chapter 2211, Insurance Code, the Fair Access to Insurance |
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Requirements Plan is not required to provide property owners' |
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association insurance under that chapter until September 1, 2024. |
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SECTION 10. This Act takes effect September 1, 2023. |