| 1 | 1 | | 81R9715 PB-D |
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| 2 | 2 | | By: Martinez H.B. No. 2886 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to insurer assessments to fund the catastrophe reserve |
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| 8 | 8 | | trust fund. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Subchapter B, Chapter 2210, Insurance Code, is |
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| 11 | 11 | | amended by adding Section 2210.0581 to read as follows: |
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| 12 | 12 | | Sec. 2210.0581. TRUST FUND SOLVENCY ASSESSMENT; TAX CREDIT. |
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| 13 | 13 | | (a) In this section, "trust fund" means the catastrophe reserve |
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| 14 | 14 | | trust fund established under Subchapter J. |
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| 15 | 15 | | (b) To ensure available reserves and the capacity to pay |
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| 16 | 16 | | excess losses, the members of the association shall be assessed, |
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| 17 | 17 | | for deposit in the trust fund, an amount equal to 0.025 percent of |
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| 18 | 18 | | all members' net direct premium written in this state. |
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| 19 | 19 | | (c) The assessment under Subsection (b) shall be collected |
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| 20 | 20 | | annually until a determination is made under Subsection (d) that |
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| 21 | 21 | | the reserves in the trust fund are adequate to: |
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| 22 | 22 | | (1) pay any obligations of the trust fund under |
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| 23 | 23 | | Section 2210.058 existing as of the date of the assessment; |
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| 24 | 24 | | (2) establish a surplus in an amount reasonably |
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| 25 | 25 | | computed to pay future obligations incurred by the fund; and |
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| 26 | 26 | | (3) fund the mitigation and preparedness plan |
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| 27 | 27 | | established under Section 2210.454. |
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| 28 | 28 | | (d) The commissioner and the board of directors shall meet |
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| 29 | 29 | | annually in December to determine whether the reserves in the trust |
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| 30 | 30 | | fund are adequate under Subsection (c). The commissioner shall |
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| 31 | 31 | | notify each member of the association, not later than January 1 of |
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| 32 | 32 | | the subsequent year: |
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| 33 | 33 | | (1) of the amount of the member's assessment under this |
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| 34 | 34 | | section for that year, if the determination is made that the |
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| 35 | 35 | | reserves are not adequate; and |
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| 36 | 36 | | (2) that the assessment under this section will not be |
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| 37 | 37 | | collected, if the determination is made that the reserves are |
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| 38 | 38 | | adequate. |
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| 39 | 39 | | (e) A member of the association may not recoup an assessment |
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| 40 | 40 | | paid under this section through a premium surcharge. |
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| 41 | 41 | | (f) An insurer may credit an amount paid in accordance with |
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| 42 | 42 | | Subsection (b) in a calendar year against the insurer's premium tax |
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| 43 | 43 | | under Chapter 221. The tax credit authorized under this subsection |
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| 44 | 44 | | shall be allowed at a rate not to exceed 20 percent per year for five |
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| 45 | 45 | | or more successive years beginning the calendar year that the |
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| 46 | 46 | | assessments under this section are paid. The balance of payments |
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| 47 | 47 | | made by the insurer and not claimed as a premium tax credit may be |
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| 48 | 48 | | reflected in the books and records of the insurer as an admitted |
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| 49 | 49 | | asset of the insurer for all purposes, including exhibition in an |
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| 50 | 50 | | annual statement under Section 862.001. |
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| 51 | 51 | | SECTION 2. Section 2210.059, Insurance Code, is amended to |
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| 52 | 52 | | read as follows: |
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| 53 | 53 | | Sec. 2210.059. NOTIFICATION REGARDING TAX CREDITS. (a) |
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| 54 | 54 | | The association shall immediately notify the department if an |
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| 55 | 55 | | occurrence or series of occurrences in a catastrophe area results |
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| 56 | 56 | | in insured losses that result in a tax credit under Section |
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| 57 | 57 | | 2210.058(c) in a calendar year. |
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| 58 | 58 | | [(b)] On receipt of notice under this subsection |
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| 59 | 59 | | [Subsection (a)], the department shall immediately notify the |
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| 60 | 60 | | governor and the appropriate committees of each house of the |
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| 61 | 61 | | legislature of the amount of insured losses eligible for tax |
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| 62 | 62 | | credits under Section 2210.058(c). |
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| 63 | 63 | | (b) The department shall annually notify the governor and |
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| 64 | 64 | | the appropriate committees of each house of the legislature of the |
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| 65 | 65 | | amount eligible for tax credits under Section 2210.0581. |
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| 66 | 66 | | SECTION 3. This Act takes effect immediately if it receives |
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| 67 | 67 | | a vote of two-thirds of all the members elected to each house, as |
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| 68 | 68 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 69 | 69 | | Act does not receive the vote necessary for immediate effect, this |
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| 70 | 70 | | Act takes effect September 1, 2009. |
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