Texas 2009 - 81st Regular

Texas House Bill HB911 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R11268 PB-D
2	2	By: Smithee H.B. No. 911
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to adoption of a temporary program for the operation and
8	8	funding of the Texas Windstorm Insurance Association.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Chapter 2210, Insurance Code, is amended by
11	11	adding Subchapter I to read as follows:
12	12	SUBCHAPTER I. OPERATION AND FUNDING OF ASSOCIATION BETWEEN JUNE 1,
13	13	2009, AND SEPTEMBER 1, 2013
14	14	Sec. 2210.401. CONSTRUCTION WITH OTHER LAW.
15	15	Notwithstanding any other provision of this chapter or other law,
16	16	for the period beginning June 1, 2009, and ending September 1, 2013,
17	17	the operation and funding of the association is subject to this
18	18	subchapter.
19	19	Sec. 2210.402. INSURABLE PROPERTY. (a) For purposes of
20	20	this subchapter and subject to this section, "insurable property"
21	21	means only immovable property at a fixed location in a catastrophe
22	22	area, or corporeal movable property located in that immovable
23	23	property, that is determined by the association according to the
24	24	criteria specified in the plan of operation to be in an insurable
25	25	condition against windstorm and hail, as determined by normal
26	26	underwriting standards. A structure located in a catastrophe area
27	27	that is not built in compliance with applicable building codes or
28	28	continued in compliance with those building codes does not
29	29	constitute an insurable risk for purposes of windstorm and hail
30	30	insurance under this subchapter.
31	31	(b) Residential property is insurable property for purposes
32	32	of this subchapter only if the property is classified as the
33	33	policyholder's residential homestead property under Section 11.13,
34	34	Tax Code, or is used as the primary residence of a tenant of the
35	35	policyholder. To be eligible for coverage through the association,
36	36	the policyholder must certify, in the manner prescribed by the
37	37	commissioner, that the property to be insured is the policyholder's
38	38	primary residence or the primary residence of the policyholder's
39	39	tenant. Residential property that is not used as a primary
40	40	residence is not insurable property for purposes of this subchapter
41	41	and is not eligible for coverage through the association.
42	42	(c) For purposes of this subchapter, a residential
43	43	structure is insurable property if:
44	44	(1) the residential structure is not:
45	45	(A) a condominium, apartment, duplex, or other
46	46	multifamily residence; or
47	47	(B) a hotel or resort facility;
48	48	(2) the residential structure is located within an
49	49	area designated as a unit under the Coastal Barrier Resources Act
50	50	(Pub. L. No. 97-348); and
51	51	(3) a building permit or plat for the residential
52	52	structure was filed with the municipality, the county, or the
53	53	United States Army Corps of Engineers before June 11, 2003.
54	54	(d) Commercial property is eligible for coverage through
55	55	the association only as provided by this subchapter.
56	56	(e) Except as otherwise provided by this section, if repair
57	57	of damage to a structure involves replacement of items covered in
58	58	the building specifications set forth in the applicable building
59	59	codes, the repairs must be completed in a manner that complies with
60	60	those specifications for the structure to continue to be insurable
61	61	property for windstorm and hail insurance.
62	62	(f) For purposes of this subchapter, a structure is not
63	63	insurable property if the commissioner of the General Land Office
64	64	notifies the association of a determination that the structure is
65	65	located on the public beach under procedures established under
66	66	Section 61.011, Natural Resources Code, and that the structure:
67	67	(1) constitutes an imminent hazard to safety, health,
68	68	or public welfare; or
69	69	(2) substantially interferes with the free and
70	70	unrestricted right of the public to enter or leave the public beach
71	71	or traverse any part of the public beach.
72	72	(g) The commissioner, by rule, may adopt inspection
73	73	requirements for this subchapter to supplement or replace the
74	74	inspection requirements adopted under Subchapter F.
75	75	Sec. 2210.403. FLOOD INSURANCE REQUIRED. (a)
76	76	Notwithstanding Section 2210.402, if all or any part of the
77	77	property for which an application for new or renewal insurance
78	78	coverage is made is located in Zone V or another similar zone with
79	79	an additional hazard associated with storm waves, as defined by the
80	80	National Flood Insurance Program, and if flood insurance under that
81	81	federal program is available, the association may not issue a new or
82	82	renewal insurance policy unless evidence that the property is
83	83	covered by a flood insurance policy is submitted to the
84	84	association.
85	85	(b) If flood insurance described by Subsection (a) is
86	86	unavailable in any portion of the seacoast territory, an
87	87	association policy insuring a residential structure described by
88	88	Section 2210.402(b) is subject to a premium surcharge for the
89	89	insurance coverage obtained through the association in an amount
90	90	equal to not less than 10 percent of the premium, as set by the
91	91	commissioner after notice and a hearing.
92	92	Sec. 2210.404. MAXIMUM LIABILITY LIMITS. The maximum
93	93	liability limits for coverage through the association under this
94	94	subchapter on a single insurable property may not exceed:
95	95	(1) $250,000 for a dwelling, and the corporeal movable
96	96	property located in or about the dwelling, as provided under the
97	97	policy;
98	98	(2) $2,192,000 for a building, and the corporeal
99	99	movable property located in the building, if the building is:
100	100	(A) owned by, and at least 75 percent of which is
101	101	occupied by, a governmental entity; or
102	102	(B) not owned by, but is wholly and exclusively
103	103	occupied by, a governmental entity; and
104	104	(3) $1 million for a structure other than a dwelling or
105	105	a public building, and the corporeal movable property located in
106	106	that structure, as provided under the policy.
107	107	Sec. 2210.405. ISSUANCE OF COVERAGE; TERM; RENEWAL. (a) If
108	108	the association determines that the property for which an
109	109	application for insurance coverage is made is insurable property
110	110	under this subchapter, the association, on payment of the premium,
111	111	shall direct the issuance of an insurance policy as provided by the
112	112	plan of operation and commissioner rules for this subchapter. The
113	113	policy is subject to the waiting period described by Section
114	114	2210.406.
115	115	(b) A policy issued under this section must be for a term of
116	116	at least 12 months.
117	117	(c) A policy may be renewed annually on application for
118	118	renewal as long as the property continues to be insurable property.
119	119	(d) Coverage under this subchapter does not include
120	120	coverage for loss of use of insurable property.
121	121	Sec. 2210.406. WAITING PERIOD. (a) A policy of windstorm
122	122	and hail insurance issued under this subchapter is subject to a
123	123	60-day waiting period before the policyholder is eligible to
124	124	recover for losses under the policy.
125	125	(b) The waiting period under Subsection (a) begins on the
126	126	date that the policy is first issued under this chapter.
127	127	Sec. 2210.407. FILE AND USE RATING. (a) Notwithstanding
128	128	Subchapter H, rates for coverage issued by the association on and
129	129	after June 1, 2009, are subject to this section.
130	130	(b) The association shall file with the department in the
131	131	manner prescribed by Section 2251.101 each manual of
132	132	classifications, rules, and rates, including condition charges,
133	133	and each rating plan, and each modification of those items that the
134	134	association proposes to use.
135	135	(c) After the filing has been made, the association may use
136	136	a filed rate, and a filed rate is subject to disapproval by the
137	137	commissioner in the manner prescribed by Subchapter C, Chapter
138	138	2251.
139	139	(d) If at any time the commissioner determines that a filed
140	140	rate in effect under Subsection (c) no longer meets the
141	141	requirements of this chapter, the commissioner may disapprove the
142	142	filed rate in the manner prescribed by Section 2251.104 for
143	143	disapproval of a rate.
144	144	(e) In adopting rates under this chapter, the association
145	145	shall:
146	146	(1) comply with the rate standards adopted under
147	147	Section 2251.052, to the extent that those standards are determined
148	148	by the commissioner to be applicable to the purposes of the
149	149	association;
150	150	(2) ensure that the rates are actuarially sound;
151	151	(3) use territorial rating within the catastrophe
152	152	area, adjusted for relative risks; and
153	153	(4) include rating factors as necessary to:
154	154	(A) fund the catastrophe reserve trust fund; and
155	155	(B) pay the losses and expenses of the
156	156	association, regardless of the ultimate source of funding for those
157	157	losses and expenses.
158	158	(f) The catastrophe element used to develop rates under this
159	159	subchapter must be developed using industry data, association data,
160	160	and catastrophe models approved by the department for use in
161	161	association filings. The commissioner shall adopt rules
162	162	establishing:
163	163	(1) the procedure for approval by the department of
164	164	catastrophe models used by the association in the development of
165	165	its rates; and
166	166	(2) the methodology of use for those models.
167	167	(g) A person who is aggrieved by a rate under this
168	168	subchapter may proceed as provided by Chapter 2251.
169	169	Sec. 2210.408. FUNDING OF LOSSES. (a) If, in any calendar
170	170	year, an occurrence or series of occurrences in a catastrophe area
171	171	results in insured losses and operating expenses of the association
172	172	in excess of premium and other revenue of the association, the
173	173	excess losses shall be paid as provided by this section.
174	174	(b) Losses in excess of those paid under Subsection (a)
175	175	shall be paid with the proceeds of $1.5 billion in loans obtained by
176	176	the association from the economic stabilization fund established
177	177	under Section 49-g, Article III, Texas Constitution. Loans
178	178	obtained by the association under this subsection are subject to
179	179	the loan terms approved in advance by the Legislative Budget Board.
180	180	The board of directors shall assess the members of the association
181	181	for the repayment to the Legislative Budget Board of loan proceeds
182	182	described by this subsection.
183	183	(c) Losses in excess of those paid under Subsections (a) and
184	184	(b) shall be paid through reinsurance as provided by this
185	185	subsection. Not later than July 1, 2009, the association shall
186	186	purchase reinsurance for the coverage of losses in a minimum amount
187	187	of $2 billion. The initial cost of reinsurance purchased under this
188	188	subsection shall be paid by assessments on the members of the
189	189	association. The association may recoup the costs of reinsurance
190	190	under this subsection through pro-rata assessments on association
191	191	policyholders made on or before December 31, 2009, in the manner
192	192	prescribed by Subsection (e).
193	193	(d) Losses in excess of those paid under Subsections (a),
194	194	(b), and (c) shall be paid with the proceeds of additional loans
195	195	obtained by the association from the economic stabilization fund
196	196	established under Section 49-g, Article III, Texas Constitution.
197	197	Loans obtained by the association under this subsection are subject
198	198	to the loan terms approved in advance by the Legislative Budget
199	199	Board and shall be repaid from the general revenue fund.
200	200	(e) The commissioner shall notify each member of the
201	201	association of the amount of the member's assessment to repay loan
202	202	proceeds described by Subsection (b) and to purchase reinsurance
203	203	described by Subsection (c). The association may recoup the
204	204	assessments through premium surcharges on each policy of windstorm
205	205	and hail insurance written by the association. A premium surcharge
206	206	under this section is a separate charge in addition to the premiums
207	207	collected and is not subject to premium tax or commissions. Failure
208	208	to pay the premium surcharge by a policyholder constitutes failure
209	209	to pay premium for purposes of policy cancellation.
210	210	Sec. 2210.409. RULES. The commissioner shall adopt rules
211	211	in the manner provided by Subchapter A, Chapter 36, as necessary to
212	212	implement this subchapter.
213	213	Sec. 2210.410. EXPIRATION. This subchapter expires
214	214	September 1, 2013.
215	215	SECTION 2. Subchapter I, Chapter 2210, Insurance Code, as
216	216	added by this Act, takes effect June 1, 2009.
217	217	SECTION 3. This Act takes effect immediately if it receives
218	218	a vote of two-thirds of all the members elected to each house, as
219	219	provided by Section 39, Article III, Texas Constitution. If this
220	220	Act does not receive the vote necessary for immediate effect, this
221	221	Act takes effect September 1, 2009.