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A BILL TO BE ENTITLED
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AN ACT
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relating to the Texas Windstorm Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.014, Insurance Code, is amended by |
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adding Subsection (d) to read as follows: |
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(d) The association is not subject to any insurance premium |
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tax or insurance maintenance fee or tax. |
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SECTION 2. Subchapter A, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.016 to read as follows: |
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Sec. 2210.016. LEGISLATIVE LOBBYING. (a) The association |
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may not use any money under its control to attempt to influence the |
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passage or defeat of a legislative measure. |
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(b) An association employee or member of the board of |
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directors who violates Subsection (a) is subject to: |
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(1) immediate termination; and |
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(2) a fine of $10,000 to be deposited in the |
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catastrophe reserve trust fund. |
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(c) This section does not prohibit an association employee |
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or member of the board of directors from using money under the |
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association's control to provide public information or to provide |
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information responsive to a request for public information. |
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SECTION 3. Subchapter B, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.063 to read as follows: |
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Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The |
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headquarters of the association must be located in a first tier |
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coastal county or a second tier coastal county. |
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SECTION 4. Section 2210.102, Insurance Code, is amended by |
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amending Subsections (a), (c), (c-1), (d), and (g) and adding |
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Subsection (d-1) to read as follows: |
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(a) The board of directors is composed of eleven [nine] |
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members appointed by the commissioner in accordance with this |
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section. |
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(c) Five [Three] members must, as of the date of the |
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appointment, reside in the first tier coastal counties. Each of |
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the following regions must, to the extent possible, be represented |
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by a member residing in the region and appointed under this |
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subsection: |
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(1) the region consisting of Cameron, Kenedy, Kleberg, |
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and Willacy Counties; |
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(2) the region consisting of Aransas, Calhoun, Nueces, |
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Refugio, and San Patricio Counties; and |
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(3) the region consisting of Brazoria, Chambers, |
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Galveston, Jefferson, and Matagorda Counties and any part of Harris |
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County designated as a catastrophe area under Section 2210.005. |
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(c-1) Two [One] of the members appointed under Subsection |
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(c) must be [a] property and casualty agents [agent] who are [is] |
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licensed under this code and are [is] not [a] captive agents |
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[agent]. |
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(d) Three members must reside in an area of this state that |
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is located outside the first tier coastal counties [more than 100 |
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miles from the Texas coastline]. |
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(d-1) One of the members appointed under Subsection (d) must |
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be the public counsel of the office of public insurance counsel or |
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the counsel's designee. |
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(g) Members appointed to the board of directors under |
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Subsections (c) and (d), other than a [the] member appointed under |
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Subsection (c-1), must represent the general public in the regions |
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described by those subsections. A person may not be appointed to |
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represent the general public under Subsection (c) or (d) if the |
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person or the person's spouse: |
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(1) is employed by or participates in the management |
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of a business entity or other organization: |
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(A) operating in the property and casualty |
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insurance industry in this state; |
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(B) receiving money from the association, other |
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than insurance claim payments; or |
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(C) receiving money from association |
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policyholders with respect to the policyholders' claims; |
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(2) owns or controls, directly or indirectly, more |
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than a 10 percent interest in a business entity or other |
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organization: |
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(A) operating in the property and casualty |
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insurance industry in this state; |
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(B) receiving money from the association, other |
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than insurance claim payments; or |
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(C) receiving money from association |
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policyholders with respect to the policyholders' claims; or |
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(3) uses or receives a substantial amount of tangible |
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goods, services, or money from the association, other than: |
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(A) insurance claim payments; or |
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(B) compensation or reimbursement authorized by |
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law for the board members' membership, attendance, or expenses. |
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SECTION 5. Section 2210.103(a), Insurance Code, is amended |
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to read as follows: |
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(a) Members of the board of directors serve three-year |
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staggered terms, with the terms of three or four members expiring on |
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the third Tuesday of March of each year. |
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SECTION 6. Section 2210.105(d), Insurance Code, is amended |
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to read as follows: |
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(d) Except for an emergency meeting, a meeting of the board |
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of directors shall be held at a location in a first tier coastal |
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county or a second tier coastal county as determined by the board of |
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directors. |
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SECTION 7. Subchapter E, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.211 to read as follows: |
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Sec. 2210.211. LIMITATIONS ON CERTAIN ADJUSTMENTS. (a) The |
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association may not automatically adjust the amount of coverage to |
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be purchased by a policyholder. |
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(b) The association may not require the use of any one |
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replacement cost calculator. |
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(c) The association may not adjust premiums, fees, or any |
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other costs to policyholders for inflation without a vote by the |
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board of directors. |
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SECTION 8. Section 2210.352(a), Insurance Code, is amended |
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to read as follows: |
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(a) Not later than September [August] 15 of each year, the |
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association shall file with the department a proposed manual rate |
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for all types and classes of risks written by the association. |
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SECTION 9. Subchapter J, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.4531 to read as follows: |
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Sec. 2210.4531. DETERMINATION OF PROBABLE MAXIMUM LOSS. |
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(a) The association shall file with the department a proposed |
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probable maximum loss, subject to Section 2210.453. |
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(b) In determining the probable maximum loss, the |
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association: |
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(1) may not consider the cost of providing loss |
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adjustments; |
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(2) shall, to the extent possible, contract with any |
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disinterested third parties necessary to execute any catastrophe |
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models that were executed in the preceding storm season; |
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(3) shall, if the association is unable to contract |
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for the execution of a catastrophe model described by Subdivision |
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(2), contract with any disinterested third party necessary to |
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execute a catastrophe model that is substantially similar to the |
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model for which the association is unable to contract under |
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Subdivision (2); |
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(4) may contract with any disinterested third parties |
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to execute catastrophe models in addition to the models required |
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under Subdivisions (2) and (3); |
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(5) shall provide to a disinterested third party |
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executing a catastrophe model any information necessary to comply |
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with this subsection; |
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(6) may not use a combination of catastrophe models to |
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determine the probable maximum loss; and |
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(7) may use only the catastrophe model that produces |
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the lowest probable maximum loss. |
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(c) The association shall make any information produced in |
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compliance with Subsection (b) publicly available on the |
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association's Internet website. |
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(d) The association may only use a probable maximum loss |
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that is approved by the commissioner. The commissioner may reject a |
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probable maximum loss filed with the department by the association |
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and set a probable maximum loss at any amount determined by the |
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commissioner. |
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(e) The amount of loss adjustment expense, as adopted by the |
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board of directors for a catastrophe year and used for the |
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association's rate indication for purposes of filing a rate under |
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this chapter, must be considered above the probable maximum loss. |
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SECTION 10. Section 2210.102(f), Insurance Code, is |
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repealed. |
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SECTION 11. Section 2210.063, Insurance Code, as added by |
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this Act, applies to the Texas Windstorm Insurance Association |
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beginning on January 1, 2025. |
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SECTION 12. (a) The commissioner of insurance shall appoint |
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two additional members to the board of directors of the Texas |
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Windstorm Insurance Association as necessary under Sections |
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2210.102(c) and (c-1), Insurance Code, as amended by this Act, not |
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later than December 1, 2023. |
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(b) Notwithstanding Section 2210.103, Insurance Code, as |
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amended by this Act, the initial term of one of the board members |
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appointed under Subsection (a) of this section expires on the third |
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Tuesday of March 2026, and the initial term of one of the board |
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members appointed under Subsection (a) of this section expires on |
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the third Tuesday of March 2027. |
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(c) Notwithstanding Section 2210.102(d-1), Insurance Code, |
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as added by this Act, a member of the board of directors serving |
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under Section 2210.102(d), Insurance Code, is not required to be |
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the public insurance counsel or the public insurance counsel's |
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designee until the first vacancy under Section 2210.102(d) that |
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occurs on or after the effective date of this Act. |
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SECTION 13. This Act takes effect immediately if it |
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receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, this Act takes effect September 1, 2023. |
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* * * * * |