By: Middleton, et al.  S.B. No. 1217
         (In the Senate - Filed February 27, 2023; March 9, 2023,
  read first time and referred to Committee on Business & Commerce;
  May 1, 2023, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 10, Nays 1; May 1, 2023,
  sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1217 By:  Middleton
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the Texas Windstorm Insurance Association.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2210.014, Insurance Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  The association is not subject to any insurance premium
  tax or insurance maintenance fee or tax.
         SECTION 2.  Subchapter A, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.016 to read as follows:
         Sec. 2210.016.  LEGISLATIVE LOBBYING. (a) The association
  may not use any money under its control to attempt to influence the
  passage or defeat of a legislative measure.
         (b)  An association employee or member of the board of
  directors who violates Subsection (a) is subject to:
               (1)  immediate termination; and
               (2)  a fine of $10,000 to be deposited in the
  catastrophe reserve trust fund.
         (c)  This section does not prohibit an association employee
  or member of the board of directors from using money under the
  association's control to provide public information or to provide
  information responsive to a request for public information.
         SECTION 3.  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 a second tier coastal county.
         SECTION 4.  Section 2210.102, Insurance Code, is amended by
  amending Subsections (a), (c), (c-1), (d), and (g) and adding
  Subsection (d-1) to read as follows:
         (a)  The board of directors is composed of eleven [nine]
  members appointed by the commissioner in accordance with this
  section.
         (c)  Five [Three] members must, as of the date of the
  appointment, reside in the first tier coastal counties.  Each of
  the following regions must, to the extent possible, be represented
  by a member residing in the region and appointed under this
  subsection:
               (1)  the region consisting of Cameron, Kenedy, Kleberg,
  and Willacy Counties;
               (2)  the region consisting of Aransas, Calhoun, Nueces,
  Refugio, and San Patricio Counties; and
               (3)  the region consisting of Brazoria, Chambers,
  Galveston, Jefferson, and Matagorda Counties and any part of Harris
  County designated as a catastrophe area under Section 2210.005.
         (c-1)  Two [One] of the members appointed under Subsection
  (c) must be [a] property and casualty agents [agent] who are [is]
  licensed under this code and are [is] not [a] captive agents
  [agent].
         (d)  Three members must reside in an area of this state that
  is located outside the first tier coastal counties [more than 100
  miles from the Texas coastline].
         (d-1)  One of the members appointed under Subsection (d) must
  be the public counsel of the office of public insurance counsel or
  the counsel's designee.
         (g)  Members appointed to the board of directors under
  Subsections (c) and (d), other than a [the] member appointed under
  Subsection (c-1), must represent the general public in the regions
  described by those subsections.  A person may not be appointed to
  represent the general public under Subsection (c) or (d) if the
  person or the person's spouse:
               (1)  is employed by or participates in the management
  of a business entity or other organization:
                     (A)  operating in the property and casualty
  insurance industry in this state;
                     (B)  receiving money from the association, other
  than insurance claim payments; or
                     (C)  receiving money from association
  policyholders with respect to the policyholders' claims;
               (2)  owns or controls, directly or indirectly, more
  than a 10 percent interest in a business entity or other
  organization:
                     (A)  operating in the property and casualty
  insurance industry in this state;
                     (B)  receiving money from the association, other
  than insurance claim payments; or
                     (C)  receiving money from association
  policyholders with respect to the policyholders' claims; or
               (3)  uses or receives a substantial amount of tangible
  goods, services, or money from the association, other than:
                     (A)  insurance claim payments; or
                     (B)  compensation or reimbursement authorized by
  law for the board members' membership, attendance, or expenses.
         SECTION 5.  Section 2210.103(a), Insurance Code, is amended
  to read as follows:
         (a)  Members of the board of directors serve three-year
  staggered terms, with the terms of three or four members expiring on
  the third Tuesday of March of each year.
         SECTION 6.  Section 2210.105(d), Insurance Code, is amended
  to read as follows:
         (d)  Except for an emergency meeting, a meeting of the board
  of directors shall be held at a location in a first tier coastal
  county or a second tier coastal county as determined by the board of
  directors.
         SECTION 7.  Subchapter E, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.211 to read as follows:
         Sec. 2210.211.  LIMITATIONS ON CERTAIN ADJUSTMENTS. (a) The
  association may not automatically adjust the amount of coverage to
  be purchased by a policyholder.
         (b)  The association may not require the use of any one
  replacement cost calculator.
         (c)  The association may not adjust premiums, fees, or any
  other costs to policyholders for inflation without a vote by the
  board of directors.
         SECTION 8.  Section 2210.352(a), Insurance Code, is amended
  to read as follows:
         (a)  Not later than September [August] 15 of each year, the
  association shall file with the department a proposed manual rate
  for all types and classes of risks written by the association.
         SECTION 9.  Subchapter J, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.4531 to read as follows:
         Sec. 2210.4531.  DETERMINATION OF PROBABLE MAXIMUM LOSS.
  (a) The association shall file with the department a proposed
  probable maximum loss, subject to Section 2210.453.
         (b)  In determining the probable maximum loss, 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 catastrophe
  models that were executed in the preceding storm season;
               (3)  shall, if the association is unable to contract
  for the execution of a catastrophe model described by Subdivision
  (2), contract with any disinterested third party necessary to
  execute a catastrophe 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 catastrophe models in addition to the models required
  under Subdivisions (2) and (3);
               (5)  shall provide to a disinterested third party
  executing a catastrophe model any information necessary to comply
  with this subsection;
               (6)  may not use a combination of catastrophe models to
  determine the probable maximum loss; and
               (7)  may use only the catastrophe model that produces
  the lowest probable maximum loss.
         (c)  The association shall make any information produced in
  compliance with Subsection (b) publicly available on the
  association's Internet website.
         (d)  The association may only use a probable maximum loss
  that is approved by the commissioner. The commissioner may reject a
  probable maximum loss filed with the department by the association
  and set a probable maximum loss at any amount determined by the
  commissioner.
         (e)  The amount of loss adjustment expense, as adopted by the
  board of directors for a catastrophe year and used for the
  association's rate indication for purposes of filing a rate under
  this chapter, must be considered above the probable maximum loss.
         SECTION 10.  Section 2210.102(f), Insurance Code, is
  repealed.
         SECTION 11.  Section 2210.063, Insurance Code, as added by
  this Act, applies to the Texas Windstorm Insurance Association
  beginning on January 1, 2025.
         SECTION 12.  (a) The commissioner of insurance shall appoint
  two additional members to the board of directors of the Texas
  Windstorm Insurance Association as necessary under Sections
  2210.102(c) and (c-1), Insurance Code, as amended by this Act, not
  later than December 1, 2023.
         (b)  Notwithstanding Section 2210.103, Insurance Code, as
  amended by this Act, the initial term of one of the board members
  appointed under Subsection (a) of this section expires on the third
  Tuesday of March 2026, and the initial term of one of the board
  members appointed under Subsection (a) of this section expires on
  the third Tuesday of March 2027.
         (c)  Notwithstanding Section 2210.102(d-1), Insurance Code,
  as added by this Act, a member of the board of directors serving
  under Section 2210.102(d), Insurance Code, is not required to be
  the public insurance counsel or the public insurance counsel's
  designee until the first vacancy under Section 2210.102(d) that
  occurs on or after the effective date of this Act.
         SECTION 13.  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, 2023.
 
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