H.B. No. 4409
AN ACT
relating to emergency preparation and management.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 418, Government Code, is
amended by adding Section 418.006 to read as follows:
Sec. 418.006. CIVIL LIABILITY. An officer or employee of a
state or local agency, or a volunteer acting at the direction of an
officer or employee of a state or local agency, is considered for
purposes of Section 431.085 to be a member of the state military
forces ordered into active service of the state by proper authority
and is considered to be discharging a duty in that capacity if the
person is performing an activity related to sheltering or housing
individuals in connection with the evacuation of an area stricken
or threatened by disaster.
SECTION 2. Section 418.043, Government Code, is amended to
read as follows:
Sec. 418.043. OTHER POWERS AND DUTIES. The division shall:
(1) determine requirements of the state and its
political subdivisions for food, clothing, and other necessities in
event of a disaster;
(2) procure and position supplies, medicines,
materials, and equipment;
(3) adopt standards and requirements for local and
interjurisdictional emergency management plans;
(4) periodically review local and interjurisdictional
emergency management plans;
(5) coordinate deployment of mobile support units;
(6) establish and operate training programs and
programs of public information or assist political subdivisions and
emergency management agencies to establish and operate the
programs;
(7) make surveys of public and private industries,
resources, and facilities in the state that are necessary to carry
out the purposes of this chapter;
(8) plan and make arrangements for the availability
and use of any private facilities, services, and property and
provide for payment for use under terms and conditions agreed on if
the facilities are used and payment is necessary;
(9) establish a register of persons with types of
training and skills important in disaster mitigation,
preparedness, response, and recovery;
(10) establish a register of mobile and construction
equipment and temporary housing available for use in a disaster;
(11) assist political subdivisions in developing
plans for the humane evacuation, transport, and temporary
sheltering of service animals and household pets in a disaster;
(12) prepare, for issuance by the governor, executive
orders and regulations necessary or appropriate in coping with
disasters;
(13) cooperate with the federal government and any
public or private agency or entity in achieving any purpose of this
chapter and in implementing programs for disaster mitigation,
preparation, response, and recovery; [and]
(14) define "individuals with special needs" in the
context of a disaster; and
(15) do other things necessary, incidental, or
appropriate for the implementation of this chapter.
SECTION 3. Subchapter F, Chapter 418, Government Code, is
amended by adding Section 418.126 to read as follows:
Sec. 418.126. PRE-EVENT DISASTER RESPONSE CONTRACTS. (a)
The General Land Office shall solicit proposals for and enter into
one or more pre-event contracts that may be activated by the office
in the event of a weather-related disaster declaration to obtain
services for debris removal from beaches as needed following the
disaster.
(b) The Texas Department of Transportation shall solicit
proposals for and enter into one or more pre-event contracts that
may be activated by the department in the event of a weather-related
disaster declaration to obtain services for debris removal from the
state highway system as needed following the disaster.
(c) The Texas Department of Housing and Community Affairs
shall solicit proposals for and enter into one or more pre-event
contracts that may be activated by the department in the event of a
weather-related disaster declaration to obtain temporary or
emergency housing as needed following the disaster.
(d) Services obtained under a pre-event contract under this
section may be paid for with money from the disaster contingency
fund under Section 418.073.
SECTION 4. Subtitle G, Title 10, Government Code, is
amended by adding Chapter 2311 to read as follows:
CHAPTER 2311. ENERGY SECURITY TECHNOLOGIES FOR CRITICAL
GOVERNMENTAL FACILITIES
Sec. 2311.001. DEFINITIONS. In this chapter:
(1) "Combined heating and power system" means a system
that:
(A) is located on the site of a facility;
(B) is the primary source of both electricity and
thermal energy for the facility;
(C) can provide all of the electricity needed to
power the facility's critical emergency operations for at least 14
days; and
(D) has an overall efficiency of energy use that
exceeds 60 percent.
(2) "Critical governmental facility" means a building
owned by the state or a political subdivision of the state that is
expected to:
(A) be continuously occupied;
(B) maintain operations for at least 6,000 hours
each year;
(C) have a peak electricity demand exceeding 500
kilowatts; and
(D) serve a critical public health or public
safety function during a natural disaster or other emergency
situation that may result in a widespread power outage, including
a:
(i) command and control center;
(ii) shelter;
(iii) prison or jail;
(iv) police or fire station;
(v) communications or data center;
(vi) water or wastewater facility;
(vii) hazardous waste storage facility;
(viii) biological research facility;
(ix) hospital; or
(x) food preparation or food storage
facility.
Sec. 2311.002. COMBINED HEATING AND POWER SYSTEMS. When
constructing or extensively renovating a critical governmental
facility or replacing major heating, ventilation, and
air-conditioning equipment for a critical governmental facility,
the entity with charge and control of the facility shall evaluate
whether equipping the facility with a combined heating and power
system would result in expected energy savings that would exceed
the expected costs of purchasing, operating, and maintaining the
system over a 20-year period. The entity may equip the facility
with a combined heating and power system if the expected energy
savings exceed the expected costs.
SECTION 5. Section 2210.001, Insurance Code, is amended to
read as follows:
Sec. 2210.001. PURPOSE. The primary purpose of the Texas
Windstorm Insurance Association is the provision of an [An]
adequate market for windstorm and[,] hail[, and fire] insurance in
the seacoast territory of this state. The legislature finds that
the provision of adequate windstorm and hail insurance is necessary
to the economic welfare of this state, and without that insurance,
the orderly growth and development of this state would be severely
impeded. This chapter provides a method by which adequate
windstorm and[,] hail[, and fire] insurance may be obtained in
certain designated portions of the seacoast territory of this
state. The association is intended to serve as a residual insurer
of last resort for windstorm and hail insurance in the seacoast
territory. The association shall:
(1) function in such a manner as to not be a direct
competitor in the private market; and
(2) provide windstorm and hail insurance coverage to
those who are unable to obtain that coverage in the private market.
SECTION 6. Section 2210.002, Insurance Code, is amended to
read as follows:
Sec. 2210.002. SHORT TITLE; SUNSET PROVISION. (a) This
chapter may be cited as the Texas Windstorm Insurance Association
Act.
(b) The association is subject to review under Chapter 325,
Government Code (Texas Sunset Act), but is not abolished under that
chapter. The association shall be reviewed during the period in
which state agencies abolished in 2015 are reviewed. The
association shall pay the costs incurred by the Sunset Advisory
Commission in performing the review of the association under this
subsection. The Sunset Advisory Commission shall determine the
costs of the review performed under this subsection, and the
association shall pay the amount of those costs promptly on receipt
of a statement from the Sunset Advisory Commission regarding those
costs. This subsection expires September 1, 2015.
SECTION 7. Subchapter A, Chapter 2210, Insurance Code, is
amended by adding Section 2210.0025 to read as follows:
Sec. 2210.0025. BIENNIAL REPORT TO LEGISLATURE. On or
before December 31 of each even-numbered year, the board of
directors shall submit to the commissioner, the appropriate
committees of each house of the legislature, and the Sunset
Advisory Commission a written report relating to the operations of
the association during the preceding biennium. The report must
include:
(1) any proposed changes in the laws relating to
regulation of the association and a statement of the reasons for the
changes; and
(2) any information regarding association operations
or procedures that is requested by the department to be addressed in
the report.
SECTION 8. Section 2210.003, Insurance Code, is amended by
adding Subdivision (3-a) and amending Subdivision (6) to read as
follows:
(3-a) "Catastrophe reserve trust fund" means the trust
fund established under Subchapter J.
(6) "Insurance" means Texas [fire and explosion
insurance and Texas] windstorm and hail insurance.
SECTION 9. Subsection (a), Section 2210.004, Insurance
Code, is amended to read as follows:
(a) Except as provided by Subsection (h), for purposes of
this chapter and subject to this section, "insurable property"
means immovable property at a fixed location in a catastrophe area
or corporeal movable property located in that immovable property,
as designated in the plan of operation, that is determined by the
association according to the criteria specified in the plan of
operation to be in an insurable condition against windstorm and
hail [or fire and explosion, as appropriate], as determined by
normal underwriting standards. The term includes property
described by Section 2210.209.
SECTION 10. Section 2210.005, Insurance Code, is amended to
read as follows:
Sec. 2210.005. DESIGNATION AS CATASTROPHE AREA [OR
INADEQUATE FIRE INSURANCE AREA]; REVOCATION OF DESIGNATION.
(a) After at least 10 days' notice and a hearing, the commissioner
may designate an area of the seacoast territory of this state as a
catastrophe area if the commissioner determines, unless such a
determination results in an adverse impact to the exposure of the
association, that windstorm and hail insurance is not reasonably
available to a substantial number of the owners of insurable
property located in that territory because the territory is subject
to unusually frequent and severe damage resulting from windstorms
or hailstorms.
(b) [After at least 10 days' notice and a hearing, the
commissioner may designate an area of this state as an inadequate
fire insurance area if the commissioner determines that fire and
explosion insurance is not reasonably available to a substantial
number of owners of insurable property located in that area.
[(c)] The commissioner shall revoke a designation made
under Subsection (a) [or (b)] if the commissioner determines, after
at least 10 days' notice and a hearing, that the applicable
insurance coverage is no longer reasonably unavailable to a
substantial number of owners of insurable property within the
designated territory.
(c) [(d)] If the association determines that windstorm and
hail insurance [or fire and explosion insurance] is no longer
reasonably unavailable to a substantial number of owners of
insurable property in a territory designated as a catastrophe area
[or inadequate fire insurance area, as applicable], the association
may request in writing that the commissioner revoke the
designation. After at least 10 days' notice and a hearing, but not
later than the 30th day after the date of the hearing, the
commissioner shall:
(1) approve the request and revoke the designation; or
(2) reject the request.
SECTION 11. Section 2210.008, Insurance Code, is amended to
read as follows:
Sec. 2210.008. DEPARTMENT ORDERS; GENERAL RULEMAKING
AUTHORITY. (a) The [After notice and hearing as provided by
Subsection (b), the] commissioner may issue any orders that the
commissioner considers necessary to implement this chapter[,
including orders regarding maximum rates, competitive rates, and
policy forms].
(b) The commissioner may adopt rules in the manner
prescribed by Subchapter A, Chapter 36, as reasonable and necessary
to implement this chapter [Before the commissioner adopts an order,
the department shall post notice of the hearing on the order at the
secretary of state's office in Austin and shall hold a hearing to
consider the proposed order. Any person may appear at the hearing
and testify for or against the adoption of the order].
(c) In rules adopted under this chapter, the commissioner
shall define the meaning of "alter" and "alteration" for purposes
of this chapter, specifically as used in Subchapters E and F.
SECTION 12. Subchapter A, Chapter 2210, Insurance Code, is
amended by adding Section 2210.009 to read as follows:
Sec. 2210.009. LIST OF PRIVATE INSURERS; INCENTIVE PLAN.
(a) The department shall maintain a list of all insurers that
engage in the business of property and casualty insurance in the
voluntary market in the seacoast territory.
(b) The department shall develop incentive programs in the
manner described by Section 2210.053(b) to encourage authorized
insurers to write insurance on a voluntary basis and to minimize the
use of the association as a means to obtain insurance.
SECTION 13. Section 2210.052, Insurance Code, is amended by
amending Subsections (a) and (d) and adding Subsection (e) to read
as follows:
(a) Each member of the association shall participate in
insured losses and operating expenses of the association, in excess
of premium and other revenue [the writings, expenses, profits, and
losses] of the association, in the proportion that the net direct
premiums of that member during the preceding calendar year bears to
the aggregate net direct premiums by all members of the
association, as determined using the information provided under
Subsection (b).
(d) Notwithstanding Subsection (a), a member, in accordance
with the plan of operation, is entitled to receive credit for
similar insurance voluntarily written in areas [an area] designated
by the commissioner. The member's participation in the insured
losses and operating expenses of the association in excess of
premium and other revenue [writings] of the association shall be
reduced in accordance with the plan of operation.
(e) Notwithstanding Subsections (a)-(d), an insurer that
becomes a member of the association and that has not previously been
a member of the association is not subject to participation in any
insured losses and operating expenses of the association in excess
of premium and other revenue of the association until the second
anniversary of the date on which the insurer first becomes a member
of the association.
SECTION 14. Subsection (b), Section 2210.056, Insurance
Code, is amended to read as follows:
(b) The association's assets may not be used for or diverted
to any purpose other than to:
(1) satisfy, in whole or in part, the liability of the
association on claims made on policies written by the association;
(2) make investments authorized under applicable law;
(3) pay reasonable and necessary administrative
expenses incurred in connection with the operation of the
association and the processing of claims against the association;
[or]
(4) satisfy, in whole or in part, the obligations of
the association incurred in connection with Subchapters B-1, J, and
M, including reinsurance, public securities, and financial
instruments; or
(5) make remittance under the laws of this state to be
used by this state to:
(A) pay claims made on policies written by the
association;
(B) purchase reinsurance covering losses under
those policies; or
(C) prepare for or mitigate the effects of
catastrophic natural events.
SECTION 15. Subsection (c), Section 2210.060, Insurance
Code, is amended to read as follows:
(c) Subsection (a) does not authorize the association to
indemnify a member of the association for participating in the
assessments made by [writings, expenses, profits, and losses of]
the association in the manner provided by this chapter.
SECTION 16. Chapter 2210, Insurance Code, is amended by
adding Subchapter B-1 to read as follows:
SUBCHAPTER B-1. PAYMENT OF LOSSES
Sec. 2210.071. PAYMENT OF EXCESS LOSSES; PAYMENT FROM
RESERVES AND TRUST FUND. (a) If an occurrence or series of
occurrences in a catastrophe area results in insured losses and
operating expenses of the association in excess of premium and
other revenue of the association, the excess losses and operating
expenses shall be paid as provided by this subchapter.
(b) The association shall pay losses in excess of premium
and other revenue of the association from available reserves of the
association and available amounts in the catastrophe reserve trust
fund.
Sec. 2210.072. PAYMENT FROM CLASS 1 PUBLIC SECURITIES;
FINANCIAL INSTRUMENTS. (a) Losses not paid under Section 2210.071
shall be paid as provided by this section from the proceeds from
Class 1 public securities authorized to be issued in accordance
with Subchapter M on or after the date of any occurrence or series
of occurrences that results in insured losses. Public securities
issued under this section must be repaid within a period not to
exceed 10 years, and may be repaid sooner if the board of directors
elects to do so and the commissioner approves.
(b) Public securities described by Subsection (a) shall be
issued as necessary in a principal amount not to exceed $1 billion
per year.
(c) If the losses are paid with public securities described
by this section, the public securities shall be repaid in the manner
prescribed by Subchapter M from association premium revenue.
(d) The association may borrow from, or enter into other
financing arrangements with, any market source, under which the
market source makes interest-bearing loans or other financial
instruments to the association to enable the association to pay
losses under this section or to obtain public securities under this
section. For purposes of this subsection, financial instruments
includes commercial paper.
Sec. 2210.073. PAYMENT FROM CLASS 2 PUBLIC SECURITIES. (a)
Losses not paid under Sections 2210.071 and 2210.072 shall be paid
as provided by this section from proceeds from Class 2 public
securities authorized to be issued in accordance with Subchapter M
on or after the date of any occurrence that results in insured
losses under this subsection. Public securities issued under this
section must be repaid within a period not to exceed 10 years, and
may be repaid sooner if the board of directors elects to do so and
the commissioner approves.
(b) Public securities described by Subsection (a) may be
issued as necessary in a principal amount not to exceed $1 billion
per year. If the losses are paid with public securities described
by this section, the public securities shall be repaid in the manner
prescribed by Subchapter M.
Sec. 2210.074. PAYMENT THROUGH CLASS 3 PUBLIC SECURITIES.
(a) Losses not paid under Sections 2210.071, 2210.072, and
2210.073 shall be paid as provided by this section from proceeds
from public securities authorized to be issued in accordance with
Subchapter M on or after the date of any occurrence that results in
insured losses under this subsection or through reinsurance as
described by Section 2210.075. Public securities issued under this
section must be repaid within a period not to exceed 10 years, and
may be repaid sooner if the board of directors elects to do so and
the commissioner approves.
(b) Public securities described by Subsection (a) may be
issued as necessary in a principal amount not to exceed $500 million
per year. If the losses are paid with public securities described by
this section, the public securities shall be repaid in the manner
prescribed by Subchapter M through member assessments as provided
by this section. The association shall notify each member of the
association of the amount of the member's assessment under this
section. The proportion of the losses allocable to each insurer
under this section shall be determined in the manner used to
determine each insurer's participation in the association for the
year under Section 2210.052. A member of the association may not
recoup an assessment paid under this subsection through a premium
surcharge or tax credit.
Sec. 2210.075. REINSURANCE. (a) Before any occurrence or
series of occurrences, an insurer may elect to purchase reinsurance
to cover an assessment for which the insurer would otherwise be
liable under Section 2210.074(b).
(b) An insurer must notify the board of directors, in the
manner prescribed by the association whether the insurer will be
purchasing reinsurance. If the insurer does not elect to purchase
reinsurance under this section, the insurer remains liable for any
assessment imposed under Section 2210.074(b).
SECTION 17. The heading to Subchapter C, Chapter 2210,
Insurance Code, is amended to read as follows:
SUBCHAPTER C. ASSOCIATION BOARD OF DIRECTORS; GENERAL
POWERS AND DUTIES OF BOARD OF DIRECTORS
SECTION 18. Section 2210.102, Insurance Code, is amended to
read as follows:
Sec. 2210.102. COMPOSITION. (a) The board of directors is
composed of [the following] nine members appointed by the
commissioner in accordance with this section.
(b) Four members must be [: (1) five] representatives of
the insurance industry.
(c) Four members must [different insurers who are members of
the association, elected by the members as provided by the plan of
operation;
[(2) two public representatives who are nominated by
the office of public insurance counsel and who], as of the date of
the appointment, [:
[(A)] reside in the first tier coastal counties. At
least one of the members appointed under this subsection must be a
[catastrophe area; and
[(B) are policyholders of the association; and
[(3) two] property and casualty agent who is licensed
under this code and is not a captive agent.
(d) One member must be a representative of an area of this
state that is not located in the seacoast territory with
demonstrated expertise in insurance and actuarial principles.
(e) All members must [agents, each of whom must:
[(A)] have demonstrated experience in insurance,
general business, or actuarial principles sufficient to make the
success of the association probable[;
[(B) maintain the agent's principal office, as of
the date of the appointment, in a catastrophe area; and
[(C) hold a license under Chapter 4051 as a
general property and casualty agent or a personal lines property
and casualty agent].
(f) Insurers who are members of the association shall
nominate, from among those members, persons to fill any vacancy in
the four board of director seats reserved for representatives of
the insurance industry. The board of directors shall solicit
nominations from the members and submit the nominations to the
commissioner. The nominee slate submitted to the commissioner
under this subsection must include at least three more names than
the number of vacancies. The commissioner shall appoint
replacement insurance industry representatives from the nominee
slate.
(g) The commissioner shall appoint one person to serve as a
nonvoting member of the board to advise the board regarding issues
relating to the inspection process. The commissioner may give
preference in an appointment under this subsection to a person who
is a qualified inspector under Section 2210.254. The nonvoting
member appointed under this section must:
(1) be an engineer licensed by, and in good standing
with, the Texas Board of Professional Engineers;
(2) reside in a first tier coastal county; and
(3) be knowledgeable of, and have professional
expertise in, wind-related design and construction practices in
coastal areas that are subject to high winds and hurricanes.
(h) [(b)] The persons appointed under Subsection (c)
[Subsections (a)(2) and (3)] must be from different counties.
SECTION 19. Section 2210.103, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) A member of the board of directors may be removed by the
commissioner with cause stated in writing and posted on the
association's website. The commissioner shall appoint a
replacement in the manner provided by Section 2210.102 for a member
who leaves or is removed from the board of directors.
SECTION 20. Section 2210.104, Insurance Code, is amended to
read as follows:
Sec. 2210.104. OFFICERS. The board of directors shall
elect from the board's membership an executive committee consisting
of a presiding officer, assistant presiding officer, and
secretary-treasurer. [At least one of the officers must be a member
appointed under Section 2210.102(a)(2) or (3).]
SECTION 21. Section 2210.105, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) Except for an emergency meeting, a meeting of the board
of directors shall be held at a location as determined by the board
of directors.
SECTION 22. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.1051 to read as follows:
Sec. 2210.1051. MEETINGS OF BOARD OF DIRECTORS.
(a) Notwithstanding Chapter 551, Government Code, or any other
law, members of the board of directors may meet by telephone
conference call, videoconference, or other similar
telecommunication method. The board may use telephone conference
call, videoconference, or other similar telecommunication method
for purposes of establishing a quorum or voting or for any other
meeting purpose in accordance with this subsection and Subsection
(b). This subsection applies without regard to the subject matter
discussed or considered by the members of the board at the meeting.
(b) A meeting held by telephone conference call,
videoconference, or other similar telecommunication method:
(1) is subject to the notice requirements applicable
to other meetings of the board of directors;
(2) may not be held unless notice of the meeting
specifies the location of the meeting and a recording of the meeting
is posted on the association's website;
(3) must be audible to the public at the location
specified in the notice under Subdivision (2); and
(4) must provide two-way audio communication between
all members of the board attending the meeting during the entire
meeting, and if the two-way audio communication link with members
attending the meeting is disrupted so that a quorum of the board is
no longer participating in the meeting, the meeting may not
continue until the two-way audio communication link is
reestablished.
SECTION 23. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.107 to read as follows:
Sec. 2210.107. PRIMARY BOARD OBJECTIVES. The primary
objectives of the board of directors are to ensure that the
association:
(1) operates in accordance with this chapter and
commissioner rules;
(2) complies with sound insurance principles; and
(3) meets all standards imposed under this chapter.
SECTION 24. Section 2210.151, Insurance Code, is amended to
read as follows:
Sec. 2210.151. ADOPTION OF PLAN OF OPERATION. With the
advice of the board of directors, the commissioner by rule shall
adopt the plan of operation to provide[:
[(1)] Texas windstorm and hail insurance in a
catastrophe area[; and
[(2) Texas fire and explosion insurance in an
inadequate fire insurance area].
SECTION 25. Subsection (a), Section 2210.152, Insurance
Code, is amended to read as follows:
(a) The plan of operation must:
(1) provide for the efficient, economical, fair, and
nondiscriminatory administration of the association; and
(2) include:
(A) a plan for the equitable assessment of the
members of the association to defray losses and expenses;
(B) underwriting standards;
(C) procedures for accepting and ceding
reinsurance;
(D) procedures for obtaining and repaying
amounts under any financial instruments authorized under this
chapter;
(E) procedures for determining the amount of
insurance to be provided to specific risks;
(F) [(E)] time limits and procedures for
processing applications for insurance; and
(G) [(F)] other provisions as considered
necessary by the department to implement the purposes of this
chapter.
SECTION 26. Section 2210.202, Insurance Code, is amended to
read as follows:
Sec. 2210.202. APPLICATION FOR COVERAGE. (a) A person who
has an insurable interest in insurable property may apply to the
association for insurance coverage provided under the plan of
operation and an inspection of the property, subject to any rules[,
including any inspection fee,] established by the board of
directors and approved by the commissioner. The association shall
make insurance available to each applicant in the catastrophe area
whose property is insurable property but who, after diligent
efforts, is unable to obtain property insurance through the
voluntary market, as evidenced by one declination from an insurer
authorized to engage in the business of, and writing, property
insurance providing windstorm and hail coverage in the first tier
coastal counties. For purposes of this section, "declination" has
the meaning assigned by the plan of operation and shall include a
refusal to offer coverage for the perils of windstorm and hail and
the inability to obtain substantially equivalent insurance
coverage for the perils of windstorm and hail. Notwithstanding
Section 2210.203(c), evidence of one declination is also required
with an application for renewal of an association policy.
(b) A [general] property and casualty agent [or a personal
lines property and casualty agent] must submit an application for
the insurance coverage on behalf of the applicant on forms
prescribed by the association. The application must contain a
statement as to whether the applicant has submitted or will submit
the premium in full from personal funds or, if not, to whom a
balance is or will be due. Each application for initial or renewal
coverage must also contain a statement that the agent possesses
proof of the declination described by Subsection (a) and proof of
flood insurance coverage or unavailability of that coverage as
described by Section 2210.203(a-1).
SECTION 27. Section 2210.203, Insurance Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) This subsection applies only to a structure
constructed, altered, remodeled, or enlarged on or after September
1, 2009, and only for insurable property located in areas
designated by the commissioner. Notwithstanding Subsection (a), if
all or any part of the property to which this subsection applies is
located in Zone V or another similar zone with an additional hazard
associated with storm waves, as defined by the National Flood
Insurance Program, and if flood insurance under that federal
program is available, the association may not issue an insurance
policy for initial or renewal coverage unless evidence that the
property is covered by a flood insurance policy is submitted to the
association. An agent offering or selling a Texas windstorm and
hail insurance policy in any area designated by the commissioner
under this subsection shall offer flood insurance coverage to the
prospective insured, if that coverage is available.
SECTION 28. Section 2210.204, Insurance Code, is amended by
amending Subsection (d) and adding Subsection (e) to read as
follows:
(d) If an insured requests cancellation of the insurance
coverage, the association shall refund the unearned premium, less
any minimum retained premium set forth in the plan of operation,
payable to the insured and the holder of an unpaid balance. The
property and casualty agent who submitted the application shall
refund the agent's commission on any unearned premium in the same
manner.
(e) For cancellation of insurance coverage under this
section, the minimum retained premium in the plan of operation must
be for a period of not less than 180 days, except for events
specified in the plan of operation that reflect a significant
change in the exposure or the policyholder concerning the insured
property, including:
(1) the purchase of similar coverage in the voluntary
market;
(2) sale of the property to an unrelated party;
(3) death of the policyholder; or
(4) total loss of the property.
SECTION 29. Subchapter E, Chapter 2210, Insurance Code, is
amended by adding Section 2210.2041 to read as follows:
Sec. 2210.2041. NONREFUNDABLE SURCHARGE. A nonrefundable
surcharge established under this chapter is not refundable under
this code for any reason or purpose.
SECTION 30. Section 2210.251, Insurance Code, is amended to
read as follows:
Sec. 2210.251. INSPECTION REQUIREMENTS. (a) Except as
provided by this section, to be considered insurable property
eligible for windstorm and hail insurance coverage from the
association, a structure that is constructed, altered, remodeled,
enlarged, or repaired or to which additions are made on or after
January 1, 1988, must be inspected or approved by the department for
compliance with the plan of operation.
(b) After January 1, 2004, for geographic areas specified by
the commissioner, the commissioner by rule shall adopt the 2003
International Residential Code for one- and two-family dwellings
published by the International Code Council. For those geographic
areas, the commissioner by rule may adopt a subsequent edition of
that code and may adopt any supplements published by the
International Code Council and amendments to that code.
(c) After January 1, 2004, a person must submit a notice of a
windstorm inspection to the unit responsible for certification of
windstorm inspections at the department before beginning to
construct, alter, remodel, enlarge, or repair a structure.
(d) A structure constructed, altered, remodeled, enlarged,
or repaired or to which additions were made before January 1, 1988,
that is located in an area that was governed at the time of the
construction, alteration, remodeling, enlargement, repair, or
addition by a building code recognized by the association is
insurable property eligible for windstorm and hail insurance
coverage from the association without compliance with the
inspection or approval requirements of this section or the plan of
operation.
(e) A structure constructed, altered, remodeled, enlarged,
or repaired or to which additions were made before January 1, 1988,
that is located in an area not governed by a building code
recognized by the association is insurable property eligible for
windstorm and hail insurance coverage from the association without
compliance with the inspection or approval requirements of this
section or the plan of operation if the structure was previously
insured by an insurer authorized to engage in the business of
insurance in this state and the structure is in essentially the same
condition as when previously insured, except for normal wear and
tear, and is without any structural change other than a change made
according to code. For purposes of this subsection, evidence of
previous insurance coverage must reflect coverage for the perils of
windstorm and hail for the property within the 12-month period
immediately preceding the date of the application for coverage
through the association and includes:
(1) a copy of a previous insurance policy;
(2) copies of canceled checks or agent's records that
show payments for previous policies; and
(3) a copy of the title to the structure or mortgage
company records that show previous policies.
(f) Notwithstanding any other provision of this section, a
residential structure insured by the association as of September
1, 2009, may continue coverage through the association subject to
the inspection requirements imposed under Section 2210.258.
(g) The department shall issue a certificate of compliance
for each structure that qualifies for coverage. The certificate is
evidence of insurability of the structure by the association.
(h) [(g)] The department may enter into agreements and
contracts as necessary to implement this section.
(i) [(h)] The department may charge a reasonable fee to
cover the cost of making building requirements and inspection
standards available to the public.
(j) The department shall charge a reasonable fee for each
inspection of each structure in an amount set by the commissioner.
(k) Without limitation of the department's authority to
otherwise enforce this chapter, the department shall monitor the
association's compliance with this subchapter.
(l) Except as otherwise provided by this subchapter, the
department may not consider any request that a structure be
certified as insurable property if, within six months after the
final inspection of a structure, the department has not received:
(1) fully completed documentation verifying that the
structure has been constructed, altered, remodeled, enlarged, or
repaired, or any addition to the structure has been made, in
compliance with the plan of operation; and
(2) full payment of all inspection fees owed to the
department, including any fees related to prior department
inspections.
(m) If a structure is rejected for coverage under Subsection
(l), a person may make a new request for certification and the
structure may be reinspected for compliance with the plan of
operation. A request for certification brought under this
subsection must meet the requirements of Subsection (l).
SECTION 31. Subchapter F, Chapter 2210, Insurance Code, is
amended by adding Sections 2210.258 and 2210.259 to read as
follows:
Sec. 2210.258. MANDATORY COMPLIANCE WITH BUILDING CODES;
ELIGIBILITY. (a) Notwithstanding any other provision of this
chapter, to be eligible for insurance through the association, all
construction, alteration, remodeling, enlargement, and repair of,
or addition to, any structure located in the catastrophe area that
is begun on or after the effective date of Sections 5 through 49,
H.B. No. 4409, Acts of the 81st Legislature, Regular Session, 2009,
must be performed in compliance with the applicable building code
standards, as set forth in the plan of operation.
(b) The association may not insure a structure described by
Subsection (a) until:
(1) the structure has been inspected for compliance
with the plan of operation in accordance with Section 2210.251(a);
and
(2) a certificate of compliance has been issued for
the structure in accordance with Section 2210.251(g).
Sec. 2210.259. SURCHARGE FOR CERTAIN NONCOMPLIANT
STRUCTURES. (a) A noncompliant residential structure insured by
the association as of September 1, 2009, under Section 2210.251(f)
that had been approved for insurability under the approval process
regulations in effect on September 1, 2009, is subject to an annual
premium surcharge in an amount equal to 15 percent of the premium
for insurance coverage obtained through the association. The
surcharge under this subsection applies to each policy issued or
renewed by the association on or after the effective date of
Sections 5 through 49, H.B. No. 4409, Acts of the 81st Legislature,
Regular Session, 2009, and is due on the issuance or renewal of the
policy.
(b) A premium surcharge collected under this section shall
be deposited in the catastrophe reserve trust fund. A premium
surcharge under this section is a separate nonrefundable charge in
addition to the premiums collected and is not subject to premium tax
or commissions. Failure to pay the surcharge by a policyholder
constitutes failure to pay premium for purposes of policy
cancellation.
SECTION 32. Subsections (c) and (d), Section 2210.351,
Insurance Code, are amended to read as follows:
(c) Except as provided by Subsection (d), as [As] soon as
reasonably possible after the filing has been made, the
commissioner in writing shall approve[, modify,] or disapprove the
filing. A filing is considered approved unless [modified or]
disapproved on or before the 30th day after the date of the filing.
If the commissioner disapproves a filing, the commissioner shall
state in writing the reasons for the disapproval and the criteria
the association is required to meet to obtain approval.
(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;
(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 [If
at any time the commissioner determines that a filing approved
under Subsection (c) no longer meets the requirements of this
chapter, the commissioner may, after a hearing held on at least 20
days' notice to the association that specifies the matters to be
considered at the hearing, issue an order withdrawing approval of
the filing. The order must specify in what respects the
commissioner determines that the filing no longer meets the
requirements of this chapter. An order issued under this
subsection may not take effect before the 30th day after the date of
issuance of the order].
SECTION 33. Section 2210.352, Insurance Code, is amended to
read as follows:
Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING.
(a) Not later than August 15 of each year, the association shall
file with the department [for approval by the commissioner] a
proposed manual rate for all types and classes of risks written by
the association[. Chapter 40 does not apply to:
[(1) a filing made under this subsection; or
[(2) a department action with respect to the filing].
(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;
(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-2) The association may not file to use a rate described
by Subsection (a-1) more than once per year.
(b) Except as provided by Subsection (a-1), before [Before]
approving or[,] disapproving[, or modifying] a filing under this
section, the commissioner shall provide all interested persons a
reasonable opportunity to:
(1) review the filing;
(2) obtain copies of the filing on payment of any
legally required copying cost; and
(3) submit to the commissioner written comments or
information related to the filing.
(c) Except as provided by Subsection (a-1), [The
commissioner shall schedule an open meeting not later than the 45th
day after the date the department receives a filing at which
interested persons may present written or oral comments relating to
the filing.
[(d) An open meeting under Subsection (c) is subject to
Chapter 551, Government Code, but is not a contested case hearing
under Chapter 2001, Government Code.
[(e) The department shall file with the secretary of state
for publication in the Texas Register notice that a filing has been
made under Subsection (a) not later than the seventh day after the
date the department receives the filing. The notice must include
information relating to:
[(1) the availability of the filing for public
inspection at the department during regular business hours and the
procedures for obtaining copies of the filing;
[(2) procedures for making written comments related to
the filing; and
[(3) the time, place, and date of the open meeting
scheduled under Subsection (c) at which interested persons may
present written or oral comments relating to the filing.
[(f) After the conclusion of the open meeting,] the
commissioner shall approve or[,] disapprove[, or modify] the filing
in writing not later than October [November] 15 of the year in which
the filing was made. If the filing is not approved or[,]
disapproved[, or modified] on or before that date, the filing is
considered approved.
(d) Except as provided by Subsection (a-1), if [(g) If] the
commissioner disapproves a filing, the commissioner shall state in
writing the reasons for the disapproval and the criteria the
association is required to meet to obtain approval.
SECTION 34. Section 2210.353, Insurance Code, is amended to
read as follows:
Sec. 2210.353. MANUAL RATE FILINGS: AMENDED ANNUAL FILING.
(a) Not later than the 30th day after the date the association
receives the commissioner's written disapproval under Section
2210.352(c) [2210.352(f)], the association may file with the
commissioner an amended annual filing that conforms to all criteria
stated in that written disapproval.
(b) Not later than the 30th day after the date an amended
filing made under Subsection (a) is received, the commissioner
shall approve [the amended filing with or without modifications] or
disapprove the amended filing. If the filing is not [modified or]
disapproved on or before the 30th day after the date of receipt, the
filing is considered approved [without modification]. If the
commissioner disapproves a filing, the commissioner shall state in
writing the reasons for the disapproval and the criteria the
association is required to meet to obtain approval.
(c) Before approving or disapproving an amended annual
filing under this section, the commissioner shall, in the manner
provided by Section 2210.352(b), provide all interested persons a
reasonable opportunity to:
(1) review the amended annual filing;
(2) obtain copies of the amended annual filing on
payment of any legally required copying cost; and
(3) submit to the commissioner written comments or
information related to the amended annual filing.
[(d) The commissioner may, in the manner provided by
Sections 2210.352(c) and (d), hold a hearing regarding an amended
filing not later than the 20th day after the date the department
receives the amended filing.
[(e) Not later than the 10th day after the date the hearing
is concluded, the commissioner shall approve or disapprove the
amended filing.
[(f) The requirements imposed under Subsection (a) and
under Sections 2210.352(e), (f), and (g) apply to a hearing
conducted under this section and the commissioner's decision
resulting from that hearing.]
SECTION 35. Subsections (a), (c), and (d), Section
2210.354, Insurance Code, are amended to read as follows:
(a) In conjunction with the review of a filing under Section
2210.352, other than a filing made under Subsection (a-1) of that
section [or 2210.353]:
(1) the commissioner may request the association to
provide additional supporting information relating to the filing;
and
(2) any interested person may file a written request
with the commissioner, during a period specified by the
commissioner by rule, for additional supporting information
relating to the filing.
(c) The commissioner shall submit to the association all
requests for additional supporting information made under this
section for the commissioner's use and the use of any interested
person not later than the 21st day after the date of receipt of the
filing.
(d) Unless a different period is requested by the
association and approved by the commissioner, the association shall
provide the information to the commissioner not later than the
fifth day after the date the written request for additional
supporting information is delivered to the association. [The
department shall notify an interested person who has requested
additional information of the availability of the information not
later than one business day after the date the commissioner
receives the information from the association.]
SECTION 36. Section 2210.355, Insurance Code, is amended by
adding Subsections (h) and (i) to read as follows:
(h) In adopting rates under this chapter, recognized
catastrophe models may be considered.
(i) The association may establish rating territories and
may vary rates among the territories as provided by this
subsection. A rating territory that subdivides a county may be used
only if the rate for any subdivision in the county is not more than:
(A) five percent higher than the rate used by the
association in 2009 in any other subdivision in the county;
(B) six percent higher than the rate used by the
association in 2010 in any other subdivision in the county;
(C) seven percent higher than the rate used by the
association in 2011 in any other subdivision in the county; and
(D) eight percent higher than the rate used by the
association in 2012 in any other subdivision in the county.
SECTION 37. Subsection (b), Section 2210.361, Insurance
Code, is amended to read as follows:
(b) After notice and hearing, the commissioner may accept[,
modify,] or reject a recommendation made by the association under
this section. [Chapter 40 does not apply to an action taken under
this section.]
SECTION 38. Subsections (a), (c), and (d), Section
2210.452, Insurance Code, are amended to read as follows:
(a) The commissioner shall adopt rules under which the
association makes [members relinquish their net equity on an annual
basis as provided by those rules by making] payments to the
catastrophe reserve trust fund. The trust fund may be used only to
fund[:
[(1)] the obligations of the trust fund under
Subchapter B-1 [Section 2210.058(a); and
[(2) the mitigation and preparedness plan established
under Section 2210.454 to reduce the potential for payments by
association members that give rise to tax credits in the event of
loss].
(c) At the end of each calendar year or policy year, the
association shall use [pay] the net gain from operations [equity]
of the association [a member], including all premium and other
revenue of the association in excess of incurred losses and
operating expenses, to make payments to the trust fund, to procure
[or a] reinsurance, or to make payments to the trust fund and to
procure reinsurance [program approved by the commissioner].
(d) The commissioner by rule shall establish the procedure
relating to the disbursement of money from the trust fund to
policyholders in the event of an occurrence or series of
occurrences within a catastrophe area that results in a
disbursement under Subchapter B-1 [Section 2210.058(a)].
SECTION 39. Section 2210.453, Insurance Code, is amended to
read as follows:
Sec. 2210.453. REINSURANCE [PROGRAM]. (a) The
association may [shall]:
(1) make payments into the trust fund; and [or]
(2) purchase [establish a] reinsurance [program
approved by the department].
(b) The [With the approval of the department, the]
association may purchase [establish a] reinsurance [program] that
operates in addition to or in concert with the trust fund, public
securities, financial instruments, and assessments authorized by
this chapter.
SECTION 40. Subsection (b), Section 2210.454, Insurance
Code, is amended to read as follows:
(b) Each state fiscal year, the department may fund the
mitigation and preparedness plan using available funds [the
investment income of the trust fund in an amount not less than $1
million and not more than 10 percent of the investment income of the
prior fiscal year. From that amount and as part of that plan, the
department may use in each fiscal year $1 million for the windstorm
inspection program established under Section 2210.251].
SECTION 41. Chapter 2210, Insurance Code, is amended by
adding Subchapters M and N to read as follows:
SUBCHAPTER M. PUBLIC SECURITIES PROGRAM
Sec. 2210.601. PURPOSE. The legislature finds that
authorizing the issuance of public securities to provide a method
to raise funds to provide windstorm and hail insurance through the
association in certain designated portions of the state is for the
benefit of the public and in furtherance of a public purpose.
Sec. 2210.602. DEFINITIONS. In this subchapter:
(1) "Board" means the board of directors of the Texas
Public Finance Authority.
(2) "Class 1 public securities" means public
securities authorized to be issued on or after an occurrence or
series of occurrences by Section 2210.072, including a commercial
paper program authorized before the occurrence of a catastrophic
event so long as no tranche of commercial paper is issued under the
program until after the catastrophic event.
(3) "Class 2 public securities" means public
securities authorized to be issued on or after the occurrence of a
catastrophic event by Section 2210.073.
(4) "Class 3 public securities" means public
securities authorized to be issued on or after the occurrence of a
catastrophic event by Section 2210.074.
(5) "Credit agreement" has the meaning assigned by
Chapter 1371, Government Code.
(6) "Insurer" means each property and casualty insurer
authorized to engage in the business of property and casualty
insurance in this state and an affiliate of such an insurer, as
described by Section 823.003, including an affiliate that is not
authorized to engage in the business of property and casualty
insurance in this state. The term specifically includes a county
mutual insurance company, a Lloyd's plan, and a reciprocal or
interinsurance exchange.
(7) "Public security" means a debt instrument or other
public security issued by the Texas Public Finance Authority.
(8) "Public security administrative expenses" means
expenses incurred to administer public securities issued under this
subchapter, including fees for credit enhancement, paying agents,
trustees, and attorneys, and for other professional services.
(9) "Public security obligations" means the principal
of a public security and any premium and interest on a public
security issued under this subchapter, together with any amount
owed under a related credit agreement.
(10) "Public security obligation revenue fund" means
the dedicated trust fund established by the association and held by
the Texas Safekeeping Trust Company outside the state treasury
under this subchapter.
(11) "Public security resolution" means the
resolution or order authorizing public securities to be issued
under this subchapter.
Sec. 2210.603. APPLICABILITY OF OTHER LAWS. (a) The board
shall issue the public securities as described by Section 2210.604
in accordance with and subject to the requirements of Chapter 1232,
Government Code, other than Section 1232.108 of that chapter, and
in accordance with and subject to other provisions of Title 9,
Government Code, that apply to issuance of a public security by a
state agency. In the event of a conflict, this subchapter controls.
(b) A purpose for which public securities are issued under
this chapter constitutes an eligible project for purposes of
Chapter 1371, Government Code.
Sec. 2210.604. ISSUANCE OF PUBLIC SECURITIES AUTHORIZED.
(a) At the request of the association and with the approval of the
commissioner, the Texas Public Finance Authority shall issue Class
1, Class 2, or Class 3 public securities. The association and the
commissioner must approve each tranche of commercial paper issued
under a commercial paper program established under this chapter.
(b) The association shall specify in the association's
request to the board the maximum principal amount of the public
securities and the maximum term of the public securities.
(c) The principal amount determined by the association
under Subsection (b) may be increased to include an amount
sufficient to:
(1) pay the costs related to issuance of the public
securities;
(2) provide a public security reserve fund; and
(3) capitalize interest for the period determined
necessary by the association, not to exceed two years.
Sec. 2210.605. TERMS OF ISSUANCE. (a) The board shall
determine the method of sale, type and form of public security,
maximum interest rates, and other terms of the public securities
that, in the board's judgment, best achieve the goals of the
association and effect the borrowing at the lowest practicable
cost. The board may enter into a credit agreement in connection
with the public securities.
(b) Public securities must be issued by the board on behalf
of the association.
(c) Public securities issued under this chapter are
eligible obligations under Section 404.027, Government Code.
Sec. 2210.606. ADDITIONAL COVENANTS. The board may make
additional covenants with respect to the public securities and the
designated income and receipts of the association pledged to their
payment, and provide for the flow of funds and the establishment,
maintenance, and investment of funds and accounts with respect to
the public securities, and the administration of those funds and
accounts, as provided in the proceedings authorizing the public
securities.
Sec. 2210.607. PUBLIC SECURITY PROCEEDS. The proceeds of
public securities issued by the board under this subchapter may be
deposited with the Texas Treasury Safekeeping Trust Company.
Sec. 2210.608. USE OF PUBLIC SECURITY PROCEEDS. (a) Public
security proceeds, including investment income, shall be held in
trust for the exclusive use and benefit of the association. The
association may use the proceeds to:
(1) pay incurred claims and operating expenses of the
association;
(2) purchase reinsurance for the association;
(3) pay the costs of issuing the public securities,
and public security administrative expenses, if any;
(4) provide a public security reserve; and
(5) pay capitalized interest and principal on the
public securities for the period determined necessary by the
association.
(b) Any excess public security proceeds remaining after the
purposes for which the public securities were issued are satisfied
may be used to purchase or redeem outstanding public securities. If
there are no outstanding public security obligations or public
security administrative expenses, the excess proceeds shall be
transferred to the catastrophe reserve trust fund.
Sec. 2210.609. REPAYMENT OF ASSOCIATION'S PUBLIC SECURITY
OBLIGATIONS. (a) The board and the association shall enter into
an agreement under which the association shall provide for the
payment of all public security obligations from available funds
collected by the association and deposited into the public security
obligation revenue fund. If the association determines that it is
unable to pay the public security obligations and public security
administrative expenses, if any, with available funds, the
association shall pay those obligations and expenses in accordance
with Sections 2210.612, 2210.613, and 2210.6135 as applicable.
Class 1, Class 2, or Class 3 public securities may be issued on a
parity or subordinate lien basis with other Class 1, Class 2, or
Class 3 public securities, respectively.
(b) The board shall notify the association of the amount of
the public security obligations and the estimated amount of public
security administrative expenses, if any, each year in a period
sufficient, as determined by the association, to permit the
association to determine the availability of funds and assess a
premium surcharge if necessary.
(c) The association shall deposit all revenue collected
under Sections 2210.612, 2210.613, and 2210.6135 in the public
security obligation revenue fund. Money deposited in the fund may
be invested as permitted by general law. Money in the fund required
to be used to pay public security obligations and public security
administrative expenses, if any, shall be transferred to the
appropriate funds in the manner and at the time specified in the
proceedings authorizing the public securities to ensure timely
payment of obligations and expenses. This may include the board
establishing funds and accounts with the comptroller that the board
determines are necessary to administer and repay the public
security obligations. If the association has not transferred
amounts sufficient to pay the public security obligations to the
board's designated interest and sinking fund in a timely manner,
the board may direct the Texas Treasury Safekeeping Trust Company
to transfer from the public security obligation revenue fund to the
appropriate account the amount necessary to pay the public security
obligation.
(d) The association shall provide for the payment of the
public security obligations and the public security administrative
expenses by irrevocably pledging revenues received from premiums,
premium surcharges, and amounts on deposit in the public security
obligation revenue fund, together with any public security reserve
fund, as provided in the proceedings authorizing the public
securities and related credit agreements.
(e) An amount owed by the board under a credit agreement
shall be payable from and secured by a pledge of revenues received
by the association or amounts from the obligation trust fund to the
extent provided in the proceedings authorizing the credit
agreement.
Sec. 2210.610. PUBLIC SECURITY PAYMENTS. (a) Revenues
received from the premium surcharges under Section 2210.613 may be
applied only as provided by this subchapter.
(b) The association may pay public security obligations
with other legally available funds.
(c) Public security obligations are payable only from
sources provided for payment in this subchapter.
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT
EARNINGS. Revenue collected in any year from a premium surcharge
under Section 2210.613 that exceeds the amount of the public
security obligations and public security administrative expenses
payable in that year and interest earned on the public security
obligation fund may, in the discretion of the association, be:
(1) used to pay public security obligations payable in
the subsequent year, offsetting the amount of the premium surcharge
that would otherwise be required to be levied for the year under
this subchapter;
(2) used to redeem or purchase outstanding public
securities; or
(3) deposited in the catastrophe reserve trust fund.
Sec. 2210.612. PAYMENT OF CLASS 1 PUBLIC SECURITIES. (a)
The association shall pay Class 1 public securities issued under
Section 2210.072 from its premium and other revenue.
(b) The association may enter financing arrangements as
described by Section 2210.072(d) as necessary to obtain public
securities issued under that section. Nothing in this subsection
shall prevent the authorization and creation of one or more
programs for the issuance of commercial paper before the date of an
occurrence that results in insured losses under Section 2210.072(a)
so long as no tranche of commercial paper is issued under a
commercial paper program until after such an occurrence.
Sec. 2210.613. PAYMENT OF CLASS 2 PUBLIC SECURITIES. (a)
The association shall pay Class 2 public securities issued under
Section 2210.073 as provided by this section. Thirty percent of the
cost of the public securities shall be paid through member
assessments as provided by this section. The association shall
notify each member of the association of the amount of the member's
assessment under this section. The proportion of the losses
allocable to each insurer under this section shall be determined in
the manner used to determine each insurer's participation in the
association for the year under Section 2210.052. A member of the
association may not recoup an assessment paid under this subsection
through a premium surcharge or tax credit.
(b) Seventy percent of the cost of the public securities
shall be paid by a nonrefundable premium surcharge collected under
this section in an amount set by the commissioner. On approval by
the commissioner, each insurer, the association, and the Texas FAIR
Plan Association shall assess a premium surcharge to its
policyholders as provided by this section. The premium surcharge
must be set in an amount sufficient to pay all debt service not
already covered by available funds and all related expenses on the
public securities.
(c) The premium surcharge under Subsection (b) shall be
assessed on all policyholders who reside or have operations in, or
whose insured property is located in a catastrophe area for each
Texas windstorm and hail insurance policy and each property and
casualty insurance policy issued for property located in the
catastrophe area. A premium surcharge under Subsection (b) applies
to all policies that provide coverage on any premises, locations,
operations, or property located in the area described by this
subsection for all property and casualty lines of insurance, other
than federal flood insurance, workers' compensation insurance,
accident and health insurance, and medical malpractice insurance.
(d) A premium surcharge under Subsection (b) is a separate
nonrefundable charge in addition to the premiums collected and is
not subject to premium tax or commissions. Failure by a
policyholder to pay the surcharge constitutes failure to pay
premium for purposes of policy cancellation.
Sec. 2210.6135. PAYMENT OF CLASS 3 PUBLIC SECURITIES. (a)
The association shall pay Class 3 public securities issued under
Section 2210.074 as provided by this section through member
assessments. The association shall assess the members of the
association an amount not to exceed $500 million per year for the
payment of the losses. The association shall notify each member of
the association of the amount of the member's assessment under this
section.
(b) The proportion of the losses allocable to each insurer
under this section shall be determined in the manner used to
determine each insurer's participation in the association for the
year under Section 2210.052.
(c) A member of the association may not recoup an assessment
paid under this section through a premium surcharge or tax credit.
Sec. 2210.614. REFINANCING PUBLIC SECURITIES. The
association may request the board to refinance any public
securities issued in accordance with Subchapter B-1, whether Class
1, Class 2, or Class 3 public securities, with public securities
payable from the same sources as the original public securities.
Sec. 2210.615. SOURCE OF PAYMENT; STATE DEBT NOT CREATED.
(a) A public security or credit agreement is payable solely from
revenue as provided by this subchapter.
(b) A public security issued under this subchapter, and any
related credit agreement, is not a debt of this state or any state
agency or political subdivision of this state, and does not
constitute a pledge of the faith and credit of this state or any
state agency or political subdivision of this state.
(c) Each public security, and any related credit agreement,
issued under this subchapter must state on the security's face
that:
(1) neither the state nor a state agency, political
corporation, or political subdivision of the state is obligated to
pay the principal of or interest on the public security except as
provided by this subchapter; and
(2) neither the faith and credit nor the taxing power
of the state or any state agency, political corporation, or
political subdivision of the state is pledged to the payment of the
principal of or interest on the public security.
Sec. 2210.616. STATE NOT TO IMPAIR PUBLIC SECURITY
OBLIGATIONS. If public securities under this subchapter are
outstanding, the state may not:
(1) take action to limit or restrict the rights of the
association to fulfill its responsibility to pay public security
obligations; or
(2) in any way impair the rights and remedies of the
public security owners until the public securities are fully
discharged.
Sec. 2210.617. ENFORCEMENT BY MANDAMUS. A writ of mandamus
and any other legal and equitable remedies are available to a party
at interest to require the association or another party to fulfill
an agreement and to perform functions and duties under:
(1) this subchapter;
(2) the Texas Constitution; or
(3) a relevant public security resolution.
Sec. 2210.618. EXEMPTION FROM TAXATION. A public security
issued under this subchapter, any transaction relating to the
public security, and profits made from the sale of the public
security are exempt from taxation by this state or by a municipality
or other political subdivision of this state.
Sec. 2210.619. NO PERSONAL LIABILITY. The members of the
association, members of the association board of directors,
association employees, the board, the employees of the Texas Public
Finance Authority, the commissioner, and department employees are
not personally liable as a result of exercising the rights and
responsibilities granted under this subchapter.
Sec. 2210.620. AUTHORIZED INVESTMENTS. Public securities
issued under this subchapter are authorized investments under:
(1) Subchapter B, Chapter 424;
(2) Subchapter C, Chapter 425; and
(3) Sections 425.203-425.213.
SUBCHAPTER N. LEGISLATIVE OVERSIGHT BOARD
Sec. 2210.651. DEFINITION. In this subchapter, "board"
means the windstorm insurance legislative oversight board.
Sec. 2210.652. COMPOSITION OF BOARD. The windstorm
insurance legislative oversight board is composed of eight members
as follows:
(1) four members of the senate appointed by the
lieutenant governor, including the chairperson of the Senate
Business and Commerce Committee, who shall serve as co-chairperson
of the board; and
(2) four members of the house of representatives
appointed by the speaker of the house of representatives.
Sec. 2210.653. POWERS AND DUTIES OF BOARD. (a) The board
shall:
(1) receive information about rules proposed by the
department relating to windstorm insurance and may submit comments
to the commissioner on the proposed rules;
(2) monitor windstorm insurance in this state,
including:
(A) the adequacy of rates;
(B) the operation of the association; and
(C) the availability of coverage; and
(3) review recommendations for legislation proposed
by the department or the association.
(b) The board may request reports and other information from
the department and the association as necessary to implement this
subchapter.
Sec. 2210.654. REPORT. (a) Not later than November 15 of
each even-numbered year, the board shall report on the board's
activities under Section 2210.653 to:
(1) the governor;
(2) the lieutenant governor; and
(3) the speaker of the house of representatives.
(b) The report must include:
(1) an analysis of any problems identified; and
(2) recommendations for any legislative action
necessary to address those problems and to foster stability,
availability, and competition within the windstorm insurance
industry.
SECTION 42. Section 941.003, Insurance Code, is amended by
adding Subsection (e) to read as follows:
(e) A Lloyd's plan is subject to Chapter 2210, as provided
by that chapter.
SECTION 43. Section 942.003, Insurance Code, is amended by
adding Subsection (f) to read as follows:
(f) An exchange is subject to Chapter 2210, as provided by
that chapter.
SECTION 44. The following laws are repealed:
(1) Subdivisions (5) and (12), Section 2210.003,
Insurance Code;
(2) Sections 2210.058 and 2210.059, Insurance Code;
(3) Sections 2210.205 and 2210.206, Insurance Code;
(4) Sections 2210.356, 2210.360, and 2210.363,
Insurance Code; and
(6) Subchapter G, Chapter 2210, Insurance Code.
SECTION 45. (a) The board of directors of the Texas
Windstorm Insurance Association established under Section
2210.102, Insurance Code, as that section existed before amendment
by this Act, is abolished effective December 31, 2009.
(b) The commissioner of insurance shall appoint the members
of the board of directors of the Texas Windstorm Insurance
Association under Section 2210.102, Insurance Code, as amended by
this Act, not later than December 31, 2009.
(c) The term of a person who is serving as a member of the
board of directors of the Texas Windstorm Insurance Association
immediately before the abolition of that board under Subsection (a)
of this section expires on December 31, 2009. Such a person is
eligible for appointment by the commissioner of insurance to the
new board of directors of the Texas Windstorm Insurance Association
under Section 2210.102, Insurance Code, as amended by this Act.
SECTION 46. (a) The commissioner of insurance shall adopt
rules as required by Chapter 2210, Insurance Code, as amended by
this Act, as soon as possible after the effective date of this Act,
but not later than the 30th day after the effective date of this
Act.
(b) The Texas Windstorm Insurance Association, through the
board of directors of that association, shall propose to the
commissioner of insurance amendments to the association's plan of
operation as required by Chapter 2210, Insurance Code, as amended
by this Act, not later than March 1, 2010.
SECTION 47. Sections 2210.202 and 2210.203, Insurance Code,
as amended by this Act, apply to an application for insurance
coverage submitted to the Texas Windstorm Insurance Association on
or after the effective date of this Act.
SECTION 48. Section 2210.251, Insurance Code, as amended by
this Act, applies to an inspection conducted on or after September
1, 2009. Except as otherwise specifically provided by that
section, a structure that has been inspected and is the subject of a
certificate of compliance issued by the Texas Department of
Insurance under Subsection (g), Section 2210.251, Insurance Code,
as that section existed immediately before September 1, 2009, is
not required to obtain a new inspection certificate to remain
eligible for insurance coverage through the Texas Windstorm
Insurance Association unless the structure is altered, remodeled,
enlarged, or repaired on or after September 1, 2009.
SECTION 49. The changes in law made by this Act in amending
Section 2210.251, Insurance Code, take effect September 1, 2009.
SECTION 50. Not later than January 1, 2010, the relevant
state agencies shall adopt the contracts required by Section
418.126, Government Code, as added by this Act.
SECTION 51. (a) Except as provided by Subsection (b) of
this section or otherwise provided by this Act, 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,
2009.
(b) Sections 1 through 4 and 50 of this Act take effect
September 1, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 4409 was passed by the House on May 6,
2009, by the following vote: Yeas 147, Nays 0, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 4409 on May 29, 2009, and requested the appointment of a
conference committee to consider the differences between the two
houses; that the House adopted the conference committee report on
H.B. No. 4409 on May 31, 2009, by the following vote: Yeas 147,
Nays 0, 1 present, not voting; and that the House adopted H.C.R. No.
287 authorizing certain corrections in H.B. No. 4409 on June 1,
2009, by the following vote: Yeas 147, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 4409 was passed by the Senate, with
amendments, on May 27, 2009, by the following vote: Yeas 31, Nays
0; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; that
the Senate adopted the conference committee report on H.B. No. 4409
on June 1, 2009, by the following vote: Yeas 31, Nays 0; and that
the Senate adopted H.C.R. No. 287 authorizing certain corrections
in H.B. No. 4409 on June 1, 2009, by the following vote: Yeas 31,
Nays 0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor