Texas 2009 - 81st Regular

Texas Senate Bill SB1007 Compare Versions

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1	1	81R4061 TJS/AJA/KCR/PB/PMO-D
2	2	By: Hegar S.B. No. 1007
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the continuation and operation of the Texas Department
8	8	of Insurance and the operation of certain insurance programs;
9	9	imposing administrative penalties.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	ARTICLE 1. GENERAL PROVISIONS
12	12	SECTION 1.001. Section 31.002, Insurance Code, is amended
13	13	to read as follows:
14	14	Sec. 31.002. DUTIES OF DEPARTMENT. In addition to the
15	15	other duties required of the Texas Department of Insurance, the
16	16	department shall:
17	17	(1) regulate the business of insurance in this state;
18	18	(2) administer the workers' compensation system of
19	19	this state as provided by Title 5, Labor Code; [and]
20	20	(3) ensure that this code and other laws regarding
21	21	insurance and insurance companies are executed;
22	22	(4) protect and ensure the fair treatment of
23	23	consumers; and
24	24	(5) ensure fair competition in the insurance industry
25	25	in order to foster a competitive market.
26	26	SECTION 1.002. Section 31.004(a), Insurance Code, is
27	27	amended to read as follows:
28	28	(a) The Texas Department of Insurance is subject to Chapter
29	29	325, Government Code (Texas Sunset Act). Unless continued in
30	30	existence as provided by that chapter, the department is abolished
31	31	September 1, 2021 [2009].
32	32	SECTION 1.003. Section 33.004, Insurance Code, is amended
33	33	to read as follows:
34	34	Sec. 33.004. TRADE ASSOCIATIONS. (a) In this section,
35	35	"Texas trade association" means a cooperative and voluntarily
36	36	joined statewide association of business or professional
37	37	competitors in this state designed to assist its members and its
38	38	industry or profession in dealing with mutual business or
39	39	professional problems and in promoting their common interest.
40	40	(b) A person may not be the commissioner and may not be a
41	41	department employee employed in a "bona fide executive,
42	42	administrative, or professional capacity," as that phrase is used
43	43	for purposes of establishing an exemption to the overtime
44	44	provisions of the federal Fair Labor Standards Act of 1938 (29
45	45	U.S.C. Section 201 et seq.), if:
46	46	(1) the person is an officer, employee, or paid
47	47	consultant of a Texas trade association in the field of insurance;
48	48	or
49	49	(2) the person's spouse is an officer, manager, or paid
50	50	consultant of a Texas trade association in the field of insurance.
51	51	(c) A person may not be the commissioner or act as the
52	52	general counsel to the commissioner or the department if the person
53	53	is required to register as a lobbyist under Chapter 305, Government
54	54	Code, because of the person's activities for compensation on behalf
55	55	of a profession related to the operation of the department [A person
56	56	who is an officer, employee, or paid consultant of a trade
57	57	association in the field of insurance may not be:
58	58	[(1) the commissioner; or
59	59	[(2) an employee of the department who is exempt from
60	60	the state's position classification plan or is compensated at or
61	61	above the amount prescribed by the General Appropriations Act for
62	62	step 1, salary group A17, of the position classification salary
63	63	schedule].
64	64	[(b) A person who is the spouse of an officer, manager, or
65	65	paid consultant of a trade association in the field of insurance may
66	66	not be:
67	67	[(1) the commissioner; or
68	68	[(2) an employee of the department who is exempt from
69	69	the state's position classification plan or is compensated at or
70	70	above the amount prescribed by the General Appropriations Act for
71	71	step 1, salary group A17, of the position classification salary
72	72	schedule.
73	73	[(c) In this section, "trade association" means a
74	74	nonprofit, cooperative, and voluntarily joined association of
75	75	business or professional competitors designed to assist its members
76	76	and its industry or profession in dealing with mutual business or
77	77	professional problems and in promoting their common interest.]
78	78	SECTION 1.004. Section 521.003, Insurance Code, is amended
79	79	to read as follows:
80	80	Sec. 521.003. COMPLAINTS [NOTIFICATION OF COMPLAINT
81	81	STATUS]. (a) The department shall maintain a system to promptly
82	82	and efficiently act on complaints filed with the department. The
83	83	department shall maintain information about parties to the
84	84	complaint, the subject matter of the complaint, a summary of the
85	85	results of the review or investigation of the complaint, and its
86	86	disposition.
87	87	(b) The department shall make information available
88	88	describing its procedures for complaint investigation and
89	89	resolution.
90	90	(c) The department shall periodically notify the complaint
91	91	parties of the status of the complaint until final disposition. [If
92	92	a written complaint is filed with the department, the department,
93	93	at least quarterly and until final disposition of the complaint,
94	94	shall notify each party to the complaint of the complaint's status
95	95	unless the notice would jeopardize an undercover investigation.]
96	96	SECTION 1.005. Subchapter B, Chapter 36, Insurance Code, is
97	97	amended by adding Sections 36.110 and 36.111 to read as follows:
98	98	Sec. 36.110. USE OF TECHNOLOGY. The commissioner shall
99	99	implement a policy requiring the department to use appropriate
100	100	technological solutions to improve the department's ability to
101	101	perform its functions. The policy must ensure that the public is
102	102	able to interact with the department on the Internet.
103	103	Sec. 36.111. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE
104	104	RESOLUTION POLICY. (a) The commissioner shall develop and
105	105	implement a policy to encourage the use of:
106	106	(1) negotiated rulemaking procedures under Chapter
107	107	2008, Government Code, for the adoption of department rules; and
108	108	(2) appropriate alternative dispute resolution
109	109	procedures under Chapter 2009, Government Code, to assist in the
110	110	resolution of internal and external disputes under the department's
111	111	jurisdiction.
112	112	(b) The department's procedures relating to alternative
113	113	dispute resolution must conform, to the extent possible, to any
114	114	model guidelines issued by the State Office of Administrative
115	115	Hearings for the use of alternative dispute resolution by state
116	116	agencies.
117	117	(c) The commissioner shall designate a trained person to:
118	118	(1) coordinate the implementation of the policy
119	119	adopted under Subsection (a);
120	120	(2) serve as a resource for any training needed to
121	121	implement the procedures for negotiated rulemaking or alternative
122	122	dispute resolution; and
123	123	(3) collect data concerning the effectiveness of those
124	124	procedures, as implemented by the department.
125	125	SECTION 1.006. Sections 33.005 and 521.004, Insurance Code,
126	126	are repealed.
127	127	ARTICLE 2. CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS
128	128	SECTION 2.001. Chapter 32, Insurance Code, is amended by
129	129	adding Subchapter E to read as follows:
130	130	SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES
131	131	Sec. 32.151. RULEMAKING AUTHORITY. (a) The commissioner
132	132	shall adopt rules, in compliance with Section 39.003 of this code
133	133	and Chapter 2110, Government Code, regarding the purpose,
134	134	structure, and use of advisory committees by the commissioner, the
135	135	state fire marshal, or department staff, including rules governing
136	136	an advisory committee's:
137	137	(1) purpose, role, responsibility, and goals;
138	138	(2) size and quorum requirements;
139	139	(3) qualifications for membership, including
140	140	experience requirements and geographic representation;
141	141	(4) appointment procedures;
142	142	(5) terms of service;
143	143	(6) training requirements; and
144	144	(7) duration.
145	145	(b) An advisory committee must be structured and used to
146	146	advise the commissioner, the state fire marshal, or department
147	147	staff. An advisory committee may not be responsible for rulemaking
148	148	or policymaking.
149	149	Sec. 32.152. PERIODIC EVALUATION. The commissioner shall
150	150	by rule establish a process by which the department shall
151	151	periodically evaluate an advisory committee to ensure its continued
152	152	necessity. The department may retain or develop committees as
153	153	appropriate to meet changing needs.
154	154	Sec. 32.153. COMPLIANCE WITH OPEN MEETINGS ACT. A
155	155	department advisory committee must comply with Chapter 551,
156	156	Government Code.
157	157	SECTION 2.002. Section 523.003, Insurance Code, is amended
158	158	to read as follows:
159	159	Sec. 523.003. IMMUNITY. The market assistance program[,
160	160	the members of the executive committee,] and participating insurers
161	161	and agents are not personally liable for:
162	162	(1) an act performed in good faith in the scope of the
163	163	person's authority as determined under this chapter; or
164	164	(2) damages arising from the person's official acts or
165	165	omissions, other than a corrupt or malicious act or omission.
166	166	SECTION 2.003. Section 523.055, Insurance Code, is amended
167	167	to read as follows:
168	168	Sec. 523.055. AMENDMENT OF PLAN OF OPERATION. [(a)] The
169	169	department [executive committee] may develop amendments to the plan
170	170	of operation and submit the amendments to the commissioner for
171	171	adoption by rule.
172	172	[(b) If the executive committee fails to submit suitable
173	173	amendments to the plan of operation, the department shall develop
174	174	and submit to the commissioner suitable amendments and the
175	175	commissioner shall, after notice and hearing, adopt the amendments
176	176	by rule.]
177	177	SECTION 2.004. Section 523.201, Insurance Code, is amended
178	178	to read as follows:
179	179	Sec. 523.201. COLLECTION OF PROGRAM INFORMATION.
180	180	Information concerning the number and type of applications received
181	181	and placed by the market assistance program and other information
182	182	about the program the [executive committee or the] commissioner
183	183	considers appropriate shall be collected.
184	184	SECTION 2.005. Section 1660.102(b), Insurance Code, is
185	185	amended to read as follows:
186	186	(b) The commissioner may consider [the] recommendations [of
187	187	the advisory committee] or any other information provided in
188	188	response to a department-issued request for information relating to
189	189	electronic data exchange, including identification card programs,
190	190	before adopting rules regarding:
191	191	(1) information to be included on the identification
192	192	cards;
193	193	(2) technology to be used to implement the
194	194	identification card pilot program; and
195	195	(3) confidentiality and accuracy of the information
196	196	required to be included on the identification cards.
197	197	SECTION 2.006. The following laws are repealed:
198	198	(1) Sections 523.053, 523.202, 524.004, 1660.002(2),
199	199	1660.101(c), 4004.002, and 4101.006, Insurance Code;
200	200	(2) Subchapter M, Chapter 843, Insurance Code;
201	201	(3) Subchapter B, Chapter 1660, Insurance Code;
202	202	(4) Subchapter G, Chapter 2210, Insurance Code;
203	203	(5) Subchapter C, Chapter 6001, Insurance Code;
204	204	(6) Subchapter C, Chapter 6002, Insurance Code;
205	205	(7) Subchapter C, Chapter 6003, Insurance Code;
206	206	(8) Chapter 1212, Insurance Code; and
207	207	(9) Sections 2154.054 and 2154.055(c), Occupations
208	208	Code.
209	209	SECTION 2.007. (a) The following boards, committees,
210	210	councils, and task forces are abolished on the effective date of
211	211	this Act:
212	212	(1) the advisory council on continuing education for
213	213	insurance agents;
214	214	(2) the fire detection and alarm devices advisory
215	215	council;
216	216	(3) the fire extinguisher advisory council;
217	217	(4) the fire protection advisory council;
218	218	(5) the fireworks advisory council;
219	219	(6) the health maintenance organization solvency
220	220	surveillance committee;
221	221	(7) the insurance adjuster examination advisory
222	222	board;
223	223	(8) the technical advisory committee on claims
224	224	processing;
225	225	(9) the technical advisory committee on electronic
226	226	data exchange;
227	227	(10) the health coverage public awareness and
228	228	education program task force;
229	229	(11) the executive committee of the residential
230	230	property insurance market assistance program; and
231	231	(12) the windstorm building code advisory committee on
232	232	specifications and maintenance.
233	233	(b) All powers, duties, obligations, rights, contracts,
234	234	funds, records, and real or personal property of a board,
235	235	committee, council, or task force listed under Subsection (a) of
236	236	this section shall be transferred to the Texas Department of
237	237	Insurance not later than February 28, 2010.
238	238	SECTION 2.008. The changes in law made by this Act by
239	239	amending Section 523.003, Insurance Code, and repealing Section
240	240	843.439, Insurance Code, apply only to a cause of action that
241	241	accrues on or after the effective date of this Act. A cause of
242	242	action that accrues before the effective date of this Act is
243	243	governed by the law in effect immediately before that date, and that
244	244	law is continued in effect for that purpose.
245	245	ARTICLE 3. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
246	246	SECTION 3.001. Subtitle D, Title 8, Insurance Code, is
247	247	amended by adding Chapter 1302 to read as follows:
248	248	CHAPTER 1302. REGULATION OF INDEPENDENT
249	249	PREFERRED PROVIDER ORGANIZATIONS
250	250	SUBCHAPTER A. GENERAL PROVISIONS
251	251	Sec. 1302.001. DEFINITIONS. In this chapter:
252	252	(1) "Person" means an individual, corporation,
253	253	association, or other legal entity.
254	254	(2) "Preferred provider organization" means an
255	255	insurer, third-party administrator, or other person that contracts
256	256	with physicians or health care providers regarding reimbursements
257	257	to be accepted prospectively by the physicians and health care
258	258	providers in providing health care services to enrollees of health
259	259	benefit plans contractually entitled to benefit from the
260	260	reimbursement agreements.
261	261	Sec. 1302.002. APPLICABILITY. (a) This chapter does not
262	262	apply to a self-funded health benefit plan exempt from regulation
263	263	by this state as an employee welfare benefit plan under the Employee
264	264	Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
265	265	seq.).
266	266	(b) Except as specifically provided by this chapter, a
267	267	reference in Chapter 1301 to a duty imposed under Chapter 1301 on an
268	268	insurer or third-party administrator in the operation of a
269	269	preferred provider benefit plan applies to a preferred provider
270	270	organization that operates a preferred provider benefit plan under
271	271	a certificate of authority issued under Subchapter B but that is not
272	272	an insurer or third-party administrator under this code.
273	273	Sec. 1302.003. RULES. The commissioner shall adopt rules
274	274	as necessary to implement this chapter.
275	275	Sec. 1302.004. COMPLAINTS. The department shall track and
276	276	analyze complaints made against preferred provider organizations
277	277	regulated under this chapter.
278	278	[Sections 1302.005-1302.050 reserved for expansion]
279	279	SUBCHAPTER B. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
280	280	Sec. 1302.051. CERTIFICATE OF AUTHORITY REQUIRED;
281	281	EXCEPTION. (a) Except as provided by Subsection (b), a person may
282	282	not organize or operate as a preferred provider organization in
283	283	this state, or sell or offer to sell or solicit offers to purchase
284	284	or receive consideration in conjunction with a preferred provider
285	285	benefit plan, without holding a certificate of authority under this
286	286	chapter.
287	287	(b) An insurer that holds a certificate of authority to
288	288	engage in the business of insurance in this state or is otherwise
289	289	authorized under this code to engage in the business of insurance in
290	290	this state is not required to obtain an additional certificate of
291	291	authority under this subchapter to operate a proprietary preferred
292	292	provider organization.
293	293	Sec. 1302.052. USE OF CERTAIN TERMS. A person may not use
294	294	the term "preferred provider organization" or "PPO" in the course
295	295	of operation unless the person:
296	296	(1) complies with this chapter and rules adopted by
297	297	the commissioner under this chapter; and
298	298	(2) holds a certificate of authority under this
299	299	chapter.
300	300	Sec. 1302.053. DURATION OF CERTIFICATE OF AUTHORITY. A
301	301	certificate of authority issued under this chapter continues in
302	302	effect:
303	303	(1) while the certificate holder meets the
304	304	requirements of this chapter and rules adopted under this chapter;
305	305	or
306	306	(2) until the commissioner suspends or revokes the
307	307	certificate or the commissioner terminates the certificate at the
308	308	request of the certificate holder.
309	309	[Sections 1302.054-1302.100 reserved for expansion]
310	310	SUBCHAPTER C. APPLICATION; ISSUANCE OF CERTIFICATE
311	311	Sec. 1302.101. APPLICATION. (a) A person may apply to the
312	312	department for and obtain a certificate of authority to organize
313	313	and operate a preferred provider organization.
314	314	(b) An application for a certificate of authority must:
315	315	(1) be on a form prescribed by rules adopted by the
316	316	commissioner; and
317	317	(2) be verified by the applicant or an officer or other
318	318	authorized representative of the applicant.
319	319	Sec. 1302.102. CONTENTS OF APPLICATION. (a) An
320	320	application for a certificate of authority must include:
321	321	(1) a copy of the applicant's basic organizational
322	322	document, if any, such as the articles of incorporation, articles
323	323	of association, partnership agreement, trust agreement, or other
324	324	applicable documents;
325	325	(2) all amendments to the applicant's basic
326	326	organizational document; and
327	327	(3) a copy of the bylaws, rules and regulations, or
328	328	similar documents, if any, regulating the conduct of the
329	329	applicant's internal affairs.
330	330	(b) An application for a certificate of authority must
331	331	include a list of the names, addresses, and official positions of
332	332	the persons responsible for the conduct of the applicant's affairs,
333	333	including:
334	334	(1) each member of the board of directors, board of
335	335	trustees, executive committee, or other governing body or
336	336	committee;
337	337	(2) the principal officer, if the applicant is a
338	338	corporation; and
339	339	(3) each partner or member, if the applicant is a
340	340	partnership or association.
341	341	(c) An application for a certificate of authority must
342	342	include a template of any contract made or to be made between the
343	343	applicant and any physician or health care provider.
344	344	Sec. 1302.103. APPLICATION FEE. (a) An applicant for a
345	345	certificate of authority under this chapter shall pay to the
346	346	department a filing fee not to exceed $1,000 for processing an
347	347	original application for a certificate of authority for a preferred
348	348	provider organization.
349	349	(b) The commissioner shall deposit a fee collected under
350	350	this section to the credit of the Texas Department of Insurance
351	351	operating account.
352	352	Sec. 1302.104. REQUIREMENTS FOR APPROVAL OF APPLICATION.
353	353	The commissioner shall approve an application for a certificate of
354	354	authority to engage in business in this state as a preferred
355	355	provider organization on payment of the application fee prescribed
356	356	by Section 1302.103 and if the commissioner is satisfied that:
357	357	(1) granting the application would not violate a
358	358	federal or state law;
359	359	(2) the applicant has not attempted to obtain the
360	360	certificate of authority through fraud or bad faith;
361	361	(3) the applicant has complied with this chapter and
362	362	rules adopted by the commissioner under this chapter; and
363	363	(4) the name under which the applicant will engage in
364	364	business in this state is not so similar to that of another
365	365	preferred provider organization that it is likely to mislead the
366	366	public.
367	367	Sec. 1302.105. DENIAL OF APPLICATION. (a) If the
368	368	commissioner is unable to approve an application for a certificate
369	369	of authority under this chapter, the commissioner shall:
370	370	(1) provide the applicant with written notice
371	371	specifying each deficiency in the application; and
372	372	(2) offer the applicant the opportunity for a hearing
373	373	to address each reason and circumstance for possible denial of the
374	374	application.
375	375	(b) The commissioner must provide an opportunity for a
376	376	hearing before the commissioner finally denies an application.
377	377	(c) At the hearing, the applicant has the burden to produce
378	378	sufficient competent evidence on which the commissioner can make
379	379	the determinations required by Section 1302.104.
380	380	[Sections 1302.106-1302.150 reserved for expansion]
381	381	SUBCHAPTER D. ENFORCEMENT
382	382	Sec. 1302.151. GROUNDS FOR DENIAL, SUSPENSION, OR
383	383	REVOCATION OF CERTIFICATE OF AUTHORITY. The denial, suspension, or
384	384	revocation of a certificate of authority under this chapter to act
385	385	as a preferred provider organization is subject to:
386	386	(1) Subchapter C, Chapter 4005; and
387	387	(2) Chapter 82.
388	388	SECTION 3.002. Not later than November 1, 2009, the
389	389	commissioner of insurance shall adopt rules as necessary to
390	390	implement Chapter 1302, Insurance Code, as added by this Act.
391	391	SECTION 3.003. (a) Except as provided by Subsections (b)
392	392	and (c) of this section, a preferred provider organization that is
393	393	operating before the effective date of this Act and that has not
394	394	previously submitted an application for a certificate of authority
395	395	under the Insurance Code must apply for a certificate of authority
396	396	under Chapter 1302, Insurance Code, as added by this Act, not later
397	397	than the 60th day after the effective date of this Act.
398	398	(b) A preferred provider organization operating in this
399	399	state that, as of August 31, 2009, holds a certificate of authority
400	400	as an insurer under Chapter 801, Insurance Code, or a certificate of
401	401	authority as a third-party administrator under Chapter 4151,
402	402	Insurance Code, is not required to obtain a certificate of
403	403	authority under Chapter 1302, Insurance Code, as added by this Act.
404	404	(c) A preferred provider organization in this state that has
405	405	not applied for or does not hold, as of the effective date of this
406	406	Act, a certificate of authority under Chapter 801 or 4151,
407	407	Insurance Code, and that applies for a certificate of authority
408	408	under Chapter 1302, Insurance Code, as added by this Act, may
409	409	continue to operate, if the applicant otherwise complies with
410	410	applicable law, until the commissioner of insurance acts on the
411	411	application.
412	412	ARTICLE 4. RATE REGULATION
413	413	SECTION 4.001. Subchapter A, Chapter 2251, Insurance Code,
414	414	is amended by adding Section 2251.009 to read as follows:
415	415	Sec. 2251.009. FILING OF CERTAIN CLAIMS INFORMATION. (a)
416	416	This section applies only to an insurer subject to this subchapter
417	417	who writes personal automobile insurance or residential property
418	418	insurance in this state.
419	419	(b) The commissioner shall require each insurer described
420	420	by Subsection (a) to file with the commissioner personal automobile
421	421	insurance and residential property insurance claims information
422	422	for the period covered by the filing, including the number of
423	423	claims:
424	424	(1) filed during the reporting period;
425	425	(2) pending on the last day of the reporting period,
426	426	including pending litigation;
427	427	(3) paid during the reporting period;
428	428	(4) denied during the reporting period; and
429	429	(5) carrying over from the reporting period
430	430	immediately preceding the current reporting period.
431	431	(c) The commissioner may require insurers described by
432	432	Subsection (a) to file the information described by Subsection (b)
433	433	quarterly or annually.
434	434	(d) The commissioner may adopt rules necessary to implement
435	435	this section.
436	436	SECTION 4.002. Section 2251.101(b), Insurance Code, is
437	437	amended to read as follows:
438	438	(b) The commissioner by rule shall:
439	439	(1) determine the information required to be included
440	440	in the filing, including:
441	441	(A) [(1)] categories of supporting information
442	442	and supplementary rating information;
443	443	(B) [(2)] statistics or other information to
444	444	support the rates to be used by the insurer, including information
445	445	necessary to evidence that the computation of the rate does not
446	446	include disallowed expenses; and
447	447	(C) [(3)] information concerning policy fees,
448	448	service fees, and other fees that are charged or collected by the
449	449	insurer under Section 550.001 or 4005.003; and
450	450	(2) prescribe the process through which the department
451	451	requests supplementary rating information and supporting
452	452	information under this section, including:
453	453	(A) any time limits concerning and the time frame
454	454	in which requests for the information may be made;
455	455	(B) the number of times the department may make a
456	456	request for information; and
457	457	(C) the types of information the department may
458	458	request when reviewing a rate filing.
459	459	SECTION 4.003. Section 2251.103, Insurance Code, is amended
460	460	to read as follows:
461	461	Sec. 2251.103. COMMISSIONER ACTION CONCERNING [DISAPPROVAL
462	462	OF RATE IN] RATE FILING; HEARING AND ANALYSIS. (a) Not later than
463	463	the 30th day after the date a rate is filed with the department
464	464	under Section 2251.101, the [The] commissioner shall disapprove
465	465	the [a] rate if the commissioner determines that the rate [filing
466	466	made under this chapter] does not comply with the requirements of
467	467	this chapter [meet the standards established under Subchapter B].
468	468	(b) Except as provided by Subsection (c), if a rate has not
469	469	been disapproved by the commissioner before the expiration of the
470	470	30-day period described by Subsection (a), the rate is considered
471	471	approved.
472	472	(c) For good cause, the commissioner may, on the expiration
473	473	of the 30-day period described by Subsection (a), extend the period
474	474	for disapproval of a rate for one additional 30-day period. The
475	475	commissioner and the insurer may not by agreement extend the 30-day
476	476	period described by Subsection (a).
477	477	(d) If the commissioner disapproves a rate under this
478	478	section [filing], the commissioner shall issue an order specifying
479	479	in what respects the rate [filing] fails to meet the requirements of
480	480	this chapter.
481	481	(e) An insurer that files a rate that is disapproved under
482	482	this section [(c) The filer] is entitled to a hearing on written
483	483	request made to the commissioner not later than the 30th day after
484	484	the date the order disapproving the rate [filing] takes effect.
485	485	(f) The department shall track, compile, and routinely
486	486	analyze the factors that contribute to the disapproval of rates
487	487	under this section.
488	488	SECTION 4.004. Subchapter C, Chapter 2251, Insurance Code,
489	489	is amended by adding Section 2251.1031 to read as follows:
490	490	Sec. 2251.1031. REQUESTS FOR ADDITIONAL INFORMATION. (a)
491	491	If the department determines that the information filed by an
492	492	insurer under this subchapter or Subchapter D is incomplete or
493	493	otherwise deficient, the department may request additional
494	494	information from the insurer.
495	495	(b) If the department requests additional information from
496	496	the insurer during the 30-day period described by Section
497	497	2251.103(a) or 2251.153(a) or under a second 30-day period
498	498	described by Section 2251.103(c) or 2251.153(c), as applicable, the
499	499	time between the date the department submits the request to the
500	500	insurer and the date the department receives the information
501	501	requested is not included in the computation of the first 30-day
502	502	period or the second 30-day period, as applicable.
503	503	(c) For purposes of this section, the date of the
504	504	department's submission of a request for additional information is:
505	505	(1) the date of the department's electronic mailing or
506	506	telephone call relating to the request for additional information;
507	507	or
508	508	(2) the postmarked date on the department's letter
509	509	relating to the request for additional information.
510	510	(d) The department shall track, compile, and routinely
511	511	analyze the volume and content of requests for additional
512	512	information made under this section to ensure that all requests for
513	513	additional information are fair and reasonable.
514	514	SECTION 4.005. The heading to Section 2251.104, Insurance
515	515	Code, is amended to read as follows:
516	516	Sec. 2251.104. COMMISSIONER DISAPPROVAL OF RATE IN EFFECT;
517	517	HEARING.
518	518	SECTION 4.006. Section 2251.107, Insurance Code, is amended
519	519	to read as follows:
520	520	Sec. 2251.107. PUBLIC [INSPECTION OF] INFORMATION. (a)
521	521	Each filing made, and any supporting information filed, under this
522	522	chapter, including a claims information filing under Section
523	523	2251.009, are [is] open to public inspection as of the date of the
524	524	filing.
525	525	(b) The department shall make available to the public
526	526	information concerning best practices for rate development by
527	527	insurers in this state and the factors that contribute to the
528	528	disapproval of rates under Section 2251.103. Information provided
529	529	under this subsection must be general in nature and may not reveal
530	530	proprietary or trade secret information of any insurer.
531	531	(c) The department shall post the data contained in claims
532	532	information filings under Section 2251.009 on the department's
533	533	Internet website. The commissioner by rule may establish a
534	534	procedure for posting data under this subsection that includes a
535	535	description of the data that must be posted and the manner in which
536	536	the data must be posted.
537	537	SECTION 4.007. Section 2251.151, Insurance Code, is amended
538	538	by adding Subsections (c-1) and (f) and amending Subsection (e) to
539	539	read as follows:
540	540	(c-1) If the commissioner requires an insurer to file the
541	541	insurer's rates under this section, the commissioner shall
542	542	periodically assess whether the conditions described by Subsection
543	543	(a) continue to exist. If the commissioner determines that the
544	544	conditions no longer exist, the commissioner shall issue an order
545	545	excusing the insurer from filing the insurer's rates under this
546	546	section.
547	547	(e) If the commissioner requires an insurer to file the
548	548	insurer's rates under this section, the commissioner shall issue an
549	549	order specifying the commissioner's reasons for requiring the rate
550	550	filing and explaining any steps the insurer must take and any
551	551	conditions the insurer must meet in order to be excused from filing
552	552	the insurer's rates under this section. An affected insurer is
553	553	entitled to a hearing on written request made to the commissioner
554	554	not later than the 30th day after the date the order is issued.
555	555	(f) The commissioner by rule shall define:
556	556	(1) the financial conditions and rating practices that
557	557	may subject an insurer to this section under Subsection (a)(1); and
558	558	(2) the process by which the commissioner determines
559	559	that a statewide insurance emergency exists under Subsection
560	560	(a)(2).
561	561	SECTION 4.008. Section 2251.156, Insurance Code, is amended
562	562	to read as follows:
563	563	Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
564	564	HEARING. (a) If the commissioner disapproves a rate filing under
565	565	Section 2251.153(a)(2), the commissioner shall issue an order
566	566	disapproving the filing in accordance with Section 2251.103(d)
567	567	[2251.103(b)].
568	568	(b) An insurer whose rate filing is disapproved is entitled
569	569	to a hearing in accordance with Section 2251.103(e) [2251.103(c)].
570	570	SECTION 4.009. Sections 2251.252(a) and (b), Insurance
571	571	Code, are amended to read as follows:
572	572	(a) Except as provided by Subsections (b) and (c), an
573	573	insurer is exempt from the rate filing and approval requirements of
574	574	this chapter if the insurer, during the calendar year preceding the
575	575	date filing is otherwise required under this chapter, issued
576	576	residential property insurance policies in this state that
577	577	accounted for less than four [two] percent of the total amount of
578	578	premiums collected by insurers for residential property insurance
579	579	policies issued in this state, more than 50 percent of which cover
580	580	property:
581	581	(1) valued at less than $100,000; and
582	582	(2) located in an area designated by the commissioner
583	583	as underserved for residential property insurance under Chapter
584	584	2004.
585	585	(b) If an insurer described by Subsection (a) is a member of
586	586	an affiliated insurance group, this subchapter applies to the
587	587	insurer only if the total aggregate premium collected by the group
588	588	accounts for less than four [two] percent of the total amount of
589	589	premiums collected by insurers for residential property insurance
590	590	policies issued in this state.
591	591	SECTION 4.010. Section 2251.154, Insurance Code, is
592	592	repealed.
593	593	SECTION 4.011. The commissioner of insurance shall require
594	594	an insurer to make the insurer's first claims information filing
595	595	under Section 2251.009, Insurance Code, as added by this Act,
596	596	beginning on or after January 1, 2010.
597	597	SECTION 4.012. Section 2251.103, Insurance Code, as amended
598	598	by this Act, and Section 2251.1031, Insurance Code, as added by this
599	599	Act, apply only to a rate filing made on or after the effective date
600	600	of this Act. A rate filing made before the effective date of this
601	601	Act is governed by the law in effect at the time the filing was made,
602	602	and that law is continued in effect for that purpose.
603	603	SECTION 4.013. Section 2251.151(c-1), Insurance Code, as
604	604	added by this Act, applies to an insurer that is required to file
605	605	the insurer's rates for approval under Section 2251.151, Insurance
606	606	Code, on or after the effective date of this Act, regardless of when
607	607	the order requiring the insurer to file the insurer's rates for
608	608	approval under that section is first issued.
609	609	SECTION 4.014. Section 2251.151(e), Insurance Code, as
610	610	amended by this Act, applies only to an order issued by the
611	611	commissioner of insurance on or after the effective date of this
612	612	Act. An order of the commissioner issued before the effective date
613	613	of this Act is governed by the law in effect on the date the order
614	614	was issued, and that law is continued in effect for that purpose.
615	615	ARTICLE 5. STATE FIRE MARSHAL'S OFFICE
616	616	SECTION 5.001. Section 417.008, Government Code, is amended
617	617	by adding Subsection (f) to read as follows:
618	618	(f) The commissioner by rule shall prescribe a reasonable
619	619	fee for an inspection performed by the state fire marshal that may
620	620	be charged to a property owner or occupant who requests the
621	621	inspection, as the commissioner considers appropriate. In
622	622	prescribing the fee, the commissioner shall consider the overall
623	623	cost to the state fire marshal to perform the inspections,
624	624	including the approximate amount of time the staff of the state fire
625	625	marshal needs to perform an inspection, travel costs, and other
626	626	expenses.
627	627	SECTION 5.002. Section 417.0081, Government Code, is amended
628	628	to read as follows:
629	629	Sec. 417.0081. INSPECTION OF CERTAIN STATE-OWNED OR
630	630	STATE-LEASED BUILDINGS. (a) The state fire marshal, at the
631	631	commissioner's direction, shall periodically inspect public
632	632	buildings under the charge and control of the Texas Facilities
633	633	[General Services] Commission and buildings leased for the use of a
634	634	state agency by the Texas Facilities Commission.
635	635	(b) For the purpose of determining a schedule for conducting
636	636	inspections under this section, the commissioner by rule shall
637	637	adopt guidelines for assigning potential fire safety risk to
638	638	state-owned and state-leased buildings. Rules adopted under this
639	639	subsection must provide for the inspection of each state-owned and
640	640	state-leased building to which this section applies, regardless of
641	641	how low the potential fire safety risk of the building may be.
642	642	(c) On or before January 1 of each year, the state fire
643	643	marshal shall report to the governor, lieutenant governor, speaker
644	644	of the house of representatives, and appropriate standing
645	645	committees of the legislature regarding the state fire marshal's
646	646	findings in conducting inspections under this section.
647	647	SECTION 5.003. Section 417.0082, Government Code, is amended
648	648	to read as follows:
649	649	Sec. 417.0082. PROTECTION OF CERTAIN STATE-OWNED OR
650	650	STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS. (a) The state fire
651	651	marshal, under the direction of the commissioner, shall take any
652	652	action necessary to protect a public building under the charge and
653	653	control of the Texas Facilities [Building and Procurement]
654	654	Commission, and the building's occupants, and the occupants of a
655	655	building leased for the use of a state agency by the Texas
656	656	Facilities Commission, against an existing or threatened fire
657	657	hazard. The state fire marshal and the Texas Facilities [Building
658	658	and Procurement] Commission shall include the State Office of Risk
659	659	Management in all communication concerning fire hazards.
660	660	(b) The commissioner, the Texas Facilities [Building and
661	661	Procurement] Commission, and the risk management board shall make
662	662	and each adopt by rule a memorandum of understanding that
663	663	coordinates the agency's duties under this section.
664	664	SECTION 5.004. Section 417.010, Government Code, is amended
665	665	to read as follows:
666	666	Sec. 417.010. DISCIPLINARY AND ENFORCEMENT ACTIONS;
667	667	ADMINISTRATIVE PENALTIES [ALTERNATE REMEDIES]. (a) This section
668	668	applies to each person and firm licensed, registered, or otherwise
669	669	regulated by the department through the state fire marshal,
670	670	including:
671	671	(1) a person regulated under Title 20, Insurance Code;
672	672	and
673	673	(2) a person licensed under Chapter 2154, Occupations
674	674	Code.
675	675	(b) The commissioner by rule shall delegate to the state
676	676	fire marshal the authority to take disciplinary and enforcement
677	677	actions, including the imposition of administrative penalties in
678	678	accordance with this section on a person regulated under a law
679	679	listed under Subsection (a) who violates that law or a rule or order
680	680	adopted under that law. In the rules adopted under this subsection,
681	681	the commissioner shall:
682	682	(1) specify which types of disciplinary and
683	683	enforcement actions are delegated to the state fire marshal; and
684	684	(2) outline the process through which the state fire
685	685	marshal may, subject to Subsection (e), impose administrative
686	686	penalties or take other disciplinary and enforcement actions.
687	687	(c) The commissioner by rule shall adopt a schedule of
688	688	administrative penalties for violations subject to a penalty under
689	689	this section to ensure that the amount of an administrative penalty
690	690	imposed is appropriate to the violation. The department shall
691	691	provide the administrative penalty schedule to the public on
692	692	request. The amount of an administrative penalty imposed under
693	693	this section must be based on:
694	694	(1) the seriousness of the violation, including:
695	695	(A) the nature, circumstances, extent, and
696	696	gravity of the violation; and
697	697	(B) the hazard or potential hazard created to the
698	698	health, safety, or economic welfare of the public;
699	699	(2) the economic harm to the public interest or public
700	700	confidence caused by the violation;
701	701	(3) the history of previous violations;
702	702	(4) the amount necessary to deter a future violation;
703	703	(5) efforts to correct the violation;
704	704	(6) whether the violation was intentional; and
705	705	(7) any other matter that justice may require.
706	706	(d) In [The state fire marshal, in] the enforcement of a law
707	707	that is enforced by or through the state fire marshal, the state
708	708	fire marshal may, in lieu of cancelling, revoking, or suspending a
709	709	license or certificate of registration, impose on the holder of the
710	710	license or certificate of registration an order directing the
711	711	holder to do one or more of the following:
712	712	(1) cease and desist from a specified activity;
713	713	(2) pay an administrative penalty imposed under this
714	714	section [remit to the commissioner within a specified time a
715	715	monetary forfeiture not to exceed $10,000 for each violation of an
716	716	applicable law or rule]; or [and]
717	717	(3) make restitution to a person harmed by the holder's
718	718	violation of an applicable law or rule.
719	719	(e) The state fire marshal shall impose an administrative
720	720	penalty under this section in the manner prescribed for imposition
721	721	of an administrative penalty under Subchapter B, Chapter 84,
722	722	Insurance Code. The state fire marshal may impose an
723	723	administrative penalty under this section without referring the
724	724	violation to the department for commissioner action.
725	725	(f) An affected person may dispute the imposition of the
726	726	penalty or the amount of the penalty imposed in the manner
727	727	prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to
728	728	pay an administrative penalty imposed under this section is subject
729	729	to enforcement by the department.
730	730	ARTICLE 6. TITLE INSURANCE
731	731	SECTION 6.001. Section 2602.107, Insurance Code, is amended
732	732	by adding Subsection (d) to read as follows:
733	733	(d) The association shall pay, from the guaranty fee
734	734	account, fees and reasonable and necessary expenses that the
735	735	department incurs in an examination of a title agent or direct
736	736	operation under Subchapter H, Chapter 2651.
737	737	SECTION 6.002. Subchapter D, Chapter 2651, Insurance Code,
738	738	is amended by adding Section 2651.1511 and amending Sections
739	739	2651.153 and 2651.155 to read as follows:
740	740	Sec. 2651.1511. ANNUAL AUDIT OF OPERATING ACCOUNTS: TITLE
741	741	INSURANCE AGENTS AND DIRECT OPERATIONS. (a) Each title insurance
742	742	agent and direct operation shall submit to the department an annual
743	743	audit of operating accounts that is verified by an officer of:
744	744	(1) the audited title insurance agent; or
745	745	(2) the audited direct operation.
746	746	(b) The title insurance agent or direct operation shall pay
747	747	for an audit of operating accounts under this section.
748	748	(c) Not later than the 90th day after the date of the end of
749	749	the agent's or direct operation's fiscal year, the agent or direct
750	750	operation shall send by certified mail, postage prepaid, to the
751	751	department one copy of the audit report with a transmittal letter.
752	752	(d) Notwithstanding Subsection (a), the commissioner may
753	753	exempt a title insurance agent or direct operation with an annual
754	754	premium volume of less than $100,000 from the requirements of
755	755	Subsections (a)-(c).
756	756	Sec. 2651.153. RULES. The commissioner by rule shall
757	757	adopt:
758	758	(1) the standards for an audit conducted under this
759	759	subchapter; [and]
760	760	(2) the form of the required audit report; and
761	761	(3) a process to exempt a title insurance agent under
762	762	Section 2651.1511(d).
763	763	Sec. 2651.155. CONFIDENTIALITY OF AUDIT. (a) The
764	764	commissioner may classify an audit report that is filed with the
765	765	department by a title insurance company under this subchapter as
766	766	confidential and privileged.
767	767	(b) Information obtained in an audit of the operating
768	768	accounts of a title insurance agent or direct operation under this
769	769	subchapter is confidential and not subject to disclosure under this
770	770	code or Chapter 552, Government Code.
771	771	SECTION 6.003. Chapter 2651, Insurance Code, is amended by
772	772	adding Subchapter H to read as follows:
773	773	SUBCHAPTER H. EXAMINATION OF TITLE INSURANCE AGENTS AND DIRECT
774	774	OPERATIONS
775	775	Sec. 2651.351. EXAMINATION OF TITLE INSURANCE AGENTS AND
776	776	DIRECT OPERATIONS. (a) The department shall examine each title
777	777	insurance agent and direct operation licensed in this state as
778	778	provided by this subchapter.
779	779	(b) The department shall:
780	780	(1) examine the title insurance agent's or direct
781	781	operation's:
782	782	(A) financial condition;
783	783	(B) trust, escrow, and operating accounts;
784	784	(C) ability to meet its liabilities; and
785	785	(D) compliance with the laws of this state and
786	786	rules adopted by the commissioner that affect the business conduct
787	787	of the title insurance agent or direct operation; and
788	788	(2) verify the data reported for rate promulgation.
789	789	(c) The department shall conduct the examination at the
790	790	principal office of the title insurance agent or direct operation,
791	791	and may conduct the examination alone or with representatives of
792	792	the insurance supervising departments of other states.
793	793	(d) Subject to Subsection (e), the department shall examine
794	794	a title insurance agent or direct operation as frequently as the
795	795	department considers necessary. At a minimum, the department shall
796	796	examine a title insurance agent or direct operation not less
797	797	frequently than once every three years.
798	798	(e) The commissioner shall adopt rules governing the
799	799	frequency of examinations of a title insurance agent or direct
800	800	operation licensed for less than three years.
801	801	Sec. 2652.352. EXAMINATION PERIOD. Unless the department
802	802	requests that an examination cover a longer period, the examination
803	803	must cover the period beginning on the last day covered by the most
804	804	recent examination and ending on December 31 of the year preceding
805	805	the year in which the examination is being conducted.
806	806	Sec. 2651.353. POWERS RELATED TO EXAMINATION. The
807	807	department or the examiner appointed by the department:
808	808	(1) has free access, and may require the title
809	809	insurance agent or direct operation to provide free access, to all
810	810	books and papers of the title insurance agent or direct operation
811	811	that relate to the business and affairs of the title insurance agent
812	812	or direct operation; and
813	813	(2) has the authority to summon and examine under
814	814	oath, if necessary, an officer, agent, or employee of the title
815	815	insurance agent or direct operation or any other person in relation
816	816	to the affairs and condition of the title insurance agent or direct
817	817	operation.
818	818	Sec. 2651.354. EFFECT OF SUBCHAPTER ON AUTHORITY TO USE
819	819	INFORMATION. This subchapter does not limit the commissioner's
820	820	authority to use a final or preliminary examination report, the
821	821	work papers of an examiner, title insurance agent, or direct
822	822	operation, or other documents, or any other information discovered
823	823	or developed during an examination in connection with a legal or
824	824	regulatory action that the commissioner, in the commissioner's sole
825	825	discretion, considers appropriate.
826	826	Sec. 2651.355. CONFIDENTIALITY OF REPORTS AND RELATED
827	827	INFORMATION. (a) A final or preliminary examination report and any
828	828	information obtained during an examination are confidential and are
829	829	not subject to disclosure under Chapter 552, Government Code.
830	830	(b) Subsection (a) applies if the examined title insurance
831	831	agent or direct operation is under supervision or conservatorship.
832	832	(c) Subsection (a) does not apply to an examination
833	833	conducted in connection with a liquidation or receivership under
834	834	this code or another insurance law of this state.
835	835	Sec. 2651.356. DISCIPLINARY ACTION FOR FAILURE TO COMPLY
836	836	WITH SUBCHAPTER. A title insurance agent or direct operation is
837	837	subject to disciplinary action under Chapter 82 for failure or
838	838	refusal to comply with:
839	839	(1) this subchapter or a rule adopted under this
840	840	subchapter; or
841	841	(2) a request by the department or an appointed
842	842	examiner to be examined or to provide information requested as part
843	843	of an examination.
844	844	SECTION 6.004. Section 2703.153(c), Insurance Code, is
845	845	amended to read as follows:
846	846	(c) Not less frequently than once every five years, the
847	847	commissioner shall evaluate the information required under this
848	848	section to determine whether the department needs additional or
849	849	different information or no longer needs certain information to
850	850	promulgate rates. If the department requires a title insurance
851	851	company or title insurance agent to include new or different
852	852	information in the statistical report, that information may be
853	853	considered by the commissioner in fixing premium rates if the
854	854	information collected is reasonably credible for the purposes for
855	855	which the information is to be used.
856	856	SECTION 6.005. Sections 2602.103(b), (c), and (d),
857	857	Insurance Code, are repealed.
858	858	ARTICLE 7. TEXAS WINDSTORM INSURANCE ASSOCIATION
859	859	SECTION 7.001. Section 2210.008, Insurance Code, is amended
860	860	to read as follows:
861	861	Sec. 2210.008. DEPARTMENT RULES; ORDERS. (a) The
862	862	commissioner shall adopt rules in the manner prescribed by
863	863	Subchapter A, Chapter 36, as the commissioner considers necessary
864	864	to implement this chapter. The commissioner shall adopt rules as
865	865	provided by this chapter to approve proposed changes to the
866	866	operations of the association.
867	867	(b) The [After notice and hearing as provided by Subsection
868	868	(b), the] commissioner may issue any orders that the commissioner
869	869	considers necessary to implement this chapter[, including orders
870	870	regarding maximum rates, competitive rates, and policy forms].
871	871	[(b) Before the commissioner adopts an order, the
872	872	department shall post notice of the hearing on the order at the
873	873	secretary of state's office in Austin and shall hold a hearing to
874	874	consider the proposed order. Any person may appear at the hearing
875	875	and testify for or against the adoption of the order.]
876	876	SECTION 7.002. Section 2210.102, Insurance Code, is amended
877	877	to read as follows:
878	878	Sec. 2210.102. COMPOSITION. (a) The board of directors
879	879	is composed of 11 [the following nine] members appointed by the
880	880	commissioner as follows:
881	881	(1) five representatives of different insurers who are
882	882	members of the association[, elected by the members as provided by
883	883	the plan of operation];
884	884	(2) four [two] public representatives [who are
885	885	nominated by the office of public insurance counsel and] who, as of
886	886	the date of the appointment:
887	887	(A) reside in a catastrophe area; and
888	888	(B) are policyholders of the association; and
889	889	(3) two property and casualty agents, each of whom
890	890	must:
891	891	(A) have demonstrated experience in the
892	892	association;
893	893	(B) maintain the agent's principal office, as of
894	894	the date of the appointment, in a catastrophe area; and
895	895	(C) hold a license under Chapter 4051 as a
896	896	general property and casualty agent or a personal lines property
897	897	and casualty agent.
898	898	(b) Insurers who are members of the association shall
899	899	nominate, from among those members, persons to fill any vacancy in
900	900	the five board of director seats reserved for insurers. The board
901	901	of directors shall solicit nominations from the members and submit
902	902	the nominations to the commissioner. The nominee slate submitted
903	903	to the commissioner under this subsection must include more names
904	904	than the number of vacancies. The commissioner shall appoint
905	905	replacement insurer members from the nominee slate.
906	906	(c) The persons appointed under Subsections (a)(2) and (3)
907	907	must be from different counties.
908	908	SECTION 7.003. Section 2210.103(a), Insurance Code, is
909	909	amended to read as follows:
910	910	(a) Members of the board of directors serve three-year
911	911	staggered terms, with the terms of three members or four members, as
912	912	applicable, expiring on the third Tuesday of March of each year.
913	913	SECTION 7.004. Section 2210.104, Insurance Code, is amended
914	914	to read as follows:
915	915	Sec. 2210.104. OFFICERS. The commissioner shall appoint a
916	916	presiding officer [board of directors shall elect] from the board's
917	917	membership [an executive committee consisting of a presiding
918	918	officer, assistant presiding officer, and secretary-treasurer. At
919	919	least one of the officers must be a member appointed under Section
920	920	2210.102(a)(2) or (3)]. The board of directors may elect other
921	921	officers from the board's membership as considered necessary to
922	922	conduct the duties of the board.
923	923	SECTION 7.005. Section 2210.152(a), Insurance Code, is
924	924	amended to read as follows:
925	925	(a) The plan of operation must:
926	926	(1) provide for the efficient, economical, fair, and
927	927	nondiscriminatory administration of the association; and
928	928	(2) include:
929	929	(A) a plan for the equitable assessment of the
930	930	members of the association to defray losses and expenses;
931	931	(B) underwriting standards;
932	932	(C) procedures for accepting and ceding
933	933	reinsurance;
934	934	(D) procedures for determining the amount of
935	935	insurance to be provided to specific risks;
936	936	(E) time limits and procedures for processing
937	937	applications for insurance; [and]
938	938	(F) a plan for property inspections for windstorm
939	939	and hail insurance; and
940	940	(G) other provisions as considered necessary by
941	941	the department to implement the purposes of this chapter.
942	942	SECTION 7.006. Section 2210.153, Insurance Code, is amended
943	943	to read as follows:
944	944	Sec. 2210.153. AMENDMENTS TO PLAN OF OPERATION. (a) The
945	945	association shall [may] present a recommendation for a change in
946	946	the plan of operation to the department [at:
947	947	[(1) periodic hearings conducted by the department for
948	948	that purpose; or
949	949	[(2) hearings relating to property and casualty
950	950	insurance rates.
951	951	[(b) The association must present a proposed change to the
952	952	department] in writing in the manner prescribed by the
953	953	commissioner. A proposed change does not take effect unless
954	954	adopted by the commissioner by rule.
955	955	(b) [(c)] An interested person may, in accordance with
956	956	Chapter 2001, Government Code, petition the commissioner to modify
957	957	the plan of operation.
958	958	SECTION 7.007. Section 2210.202(a), Insurance Code, is
959	959	amended to read as follows:
960	960	(a) A person who has an insurable interest in insurable
961	961	property may apply to the association for insurance coverage
962	962	provided under the plan of operation and an inspection of the
963	963	property, subject to any rules, including any inspection fee,
964	964	established by the board of directors and approved by the
965	965	commissioner. The association shall make insurance available to
966	966	each applicant in the catastrophe area whose property is insurable
967	967	property but who, after diligent efforts, is unable to obtain
968	968	property insurance through the voluntary market, as evidenced by
969	969	two declinations, cancellations, or a combination of declinations
970	970	and cancellations from insurers authorized to engage in the
971	971	business of, and writing, property insurance in this state. For
972	972	purposes of this section, "declination" has the meaning assigned by
973	973	the plan of operation and may include a refusal to offer coverage
974	974	and the inability to obtain substantially equivalent insurance
975	975	coverage and rates. Notwithstanding Section 2210.203(c), evidence
976	976	of two declinations or other comparable evidence is required with
977	977	an application for renewal of an association policy unless the
978	978	association has evidence that comparable voluntary market coverage
979	979	is not available in the area of the property to be insured for the
980	980	same class of risk.
981	981	SECTION 7.008. Section 2210.207(e), Insurance Code, is
982	982	amended to read as follows:
983	983	(e) Notwithstanding this chapter or any other law, the
984	984	commissioner[, after notice and hearing,] may adopt rules to:
985	985	(1) authorize the association to provide actual cash
986	986	value coverage instead of replacement cost coverage on the roof
987	987	covering of a building insured by the association; and
988	988	(2) establish:
989	989	(A) the conditions under which the association
990	990	may provide that actual cash value coverage;
991	991	(B) the appropriate premium reductions when
992	992	coverage for the roof covering is provided on an actual cash value
993	993	basis; and
994	994	(C) the disclosure that must be provided to the
995	995	policyholder, prominently displayed on the face of the windstorm
996	996	and hail insurance policy.
997	997	SECTION 7.009. Section 2210.251, Insurance Code, is amended
998	998	by amending Subsections (a), (c), (f), and (g) and adding
999	999	Subsections (i), (j), and (k) to read as follows:
1000	1000	(a) Except as provided by this section, to be considered
1001	1001	insurable property eligible for windstorm and hail insurance
1002	1002	coverage from the association, a structure that is constructed or
1003	1003	repaired or to which additions are made on or after January 1, 1988,
1004	1004	must be inspected or approved by the association [department] for
1005	1005	compliance with the plan of operation.
1006	1006	(c) After January 1, 2004, a person must submit a notice of a
1007	1007	windstorm inspection to the association [unit responsible for
1008	1008	certification of windstorm inspections at the department] before
1009	1009	beginning to construct, alter, remodel, enlarge, or repair a
1010	1010	structure.
1011	1011	(f) The association [department] shall issue a certificate
1012	1012	of compliance for each structure that qualifies for coverage. The
1013	1013	certificate is evidence of insurability of the structure by the
1014	1014	association.
1015	1015	(g) The association [department] may enter into agreements
1016	1016	and contracts as necessary to implement this section.
1017	1017	(i) The association may charge a reasonable fee for each
1018	1018	inspection in an amount set by commissioner rule. The association
1019	1019	may use fees collected under this section for operating expenses.
1020	1020	(j) Without limitation of the department's authority to
1021	1021	otherwise enforce this chapter, the department shall monitor the
1022	1022	association's compliance with this subchapter. To facilitate the
1023	1023	department's oversight of the inspection program, the association
1024	1024	shall report to the department monthly, in the manner prescribed by
1025	1025	the commissioner, regarding:
1026	1026	(1) the number of inspections performed;
1027	1027	(2) the number of structures inspected;
1028	1028	(3) the number and a general description of the type of
1029	1029	inspection deficiencies discovered through the inspection program;
1030	1030	and
1031	1031	(4) any actions taken to resolve problems with
1032	1032	inspections.
1033	1033	(k) The commissioner may adopt rules in the manner
1034	1034	prescribed by Subchapter A, Chapter 36, as necessary to implement
1035	1035	this section.
1036	1036	SECTION 7.010. Sections 2210.254(a) and (c), Insurance
1037	1037	Code, are amended to read as follows:
1038	1038	(a) For purposes of this chapter, a "qualified inspector"
1039	1039	includes:
1040	1040	(1) a person determined by the association
1041	1041	[department] to be qualified because of training or experience to
1042	1042	perform building inspections;
1043	1043	(2) a licensed professional engineer who meets the
1044	1044	requirements specified by the association [commissioner rule] for
1045	1045	appointment to conduct windstorm inspections; and
1046	1046	(3) an inspector who:
1047	1047	(A) is certified by the International Code
1048	1048	Council, the Building Officials and Code Administrators
1049	1049	International, Inc., the International Conference of Building
1050	1050	Officials, or the Southern Building Code Congress International,
1051	1051	Inc.;
1052	1052	(B) has certifications as a buildings inspector
1053	1053	and coastal construction inspector; and
1054	1054	(C) complies with other requirements specified
1055	1055	by the board of directors [commissioner rule].
1056	1056	(c) Before performing building inspections, a qualified
1057	1057	inspector must enter into a contract with the association [be
1058	1058	approved and appointed or employed by the department].
1059	1059	SECTION 7.011. Subchapter F, Chapter 2210, Insurance Code,
1060	1060	is amended by adding Section 2210.2541 to read as follows:
1061	1061	Sec. 2210.2541. ASSOCIATION INSPECTION PROGRAM. (a) The
1062	1062	association shall develop an inspection program to perform
1063	1063	inspections for windstorm and hail insurance as required by this
1064	1064	subchapter.
1065	1065	(b) The association shall adopt inspection standards and
1066	1066	regulations regarding the operation of the inspection program,
1067	1067	including:
1068	1068	(1) inspection training and education requirements,
1069	1069	as determined necessary by the association, for licensed engineers
1070	1070	who contract with the association under Section 2210.255;
1071	1071	(2) guidelines for inspection fees assessed under
1072	1072	Section 2210.251(i) and for fees collected by inspectors under this
1073	1073	subchapter; and
1074	1074	(3) procedures for handling complaints made to the
1075	1075	association regarding inspectors.
1076	1076	(c) The association shall include in the inspection program
1077	1077	an oversight process that includes regular reinspections by the
1078	1078	association to ensure that association inspectors perform duties
1079	1079	under this subchapter appropriately.
1080	1080	(d) The association shall report possible licensing
1081	1081	violations by an inspector selected under Sections 2210.254 and
1082	1082	2210.255 to perform inspections under this subchapter to the Texas
1083	1083	Board of Professional Engineers.
1084	1084	(e) The association shall establish procedures as part of
1085	1085	the inspection program as necessary to issue certificates of
1086	1086	compliance under Section 2210.251(f).
1087	1087	(f) As part of the report required under Section
1088	1088	2210.251(j), the association shall report to the department
1089	1089	regarding the operation of the inspection program.
1090	1090	SECTION 7.012. Section 2210.255, Insurance Code, is amended
1091	1091	to read as follows:
1092	1092	Sec. 2210.255. CONTRACT WITH [APPOINTMENT OF] LICENSED
1093	1093	ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by
1094	1094	the Texas Board of Professional Engineers, the association may
1095	1095	enter into a contract with [commissioner shall appoint] the
1096	1096	engineer under which the engineer serves as an inspector under this
1097	1097	subchapter. The association may enter into a contract under this
1098	1098	subsection only on receipt of information satisfactory to the board
1099	1099	[not later than the 10th day after the date the engineer delivers to
1100	1100	the commissioner information demonstrating] that the engineer is
1101	1101	qualified to perform windstorm inspections under this subchapter.
1102	1102	(b) The association shall consult with the commissioner
1103	1103	regarding [shall adopt rules establishing] the information to be
1104	1104	considered in contracting with [appointing] engineers under this
1105	1105	section.
1106	1106	SECTION 7.013. Subchapter F, Chapter 2210, Insurance Code,
1107	1107	is amended by adding Section 2210.2565 to read as follows:
1108	1108	Sec. 2210.2565. PROCEDURES REGARDING CONTRACTING WITH
1109	1109	INSPECTORS. The board of directors shall develop procedures for
1110	1110	contracting with and oversight of inspectors selected under
1111	1111	Sections 2210.254 and 2210.255, including procedures relating to
1112	1112	the grounds for the suspension, modification, or revocation of a
1113	1113	contract under this subchapter with an inspector.
1114	1114	SECTION 7.014. Section 2210.351, Insurance Code, is amended
1115	1115	to read as follows:
1116	1116	Sec. 2210.351. ASSOCIATION RATE FILINGS AND SUPPORTING
1117	1117	INFORMATION; USE OF RATE. (a) Except as provided by Section
1118	1118	2210.3562, the [The] association shall [must] file with the
1119	1119	department each manual of classifications, rules, rates, including
1120	1120	condition charges, [and] each rating plan, [and] each modification
1121	1121	of those items that the association proposes to use, supplementary
1122	1122	rating information, and additional information as required by the
1123	1123	commissioner.
1124	1124	(b) The commissioner by rule shall determine the
1125	1125	information required to be included in the filing, including:
1126	1126	(1) categories of supporting information and
1127	1127	supplementary rating information;
1128	1128	(2) statistics or other information to support the
1129	1129	rates to be used by the association, including information
1130	1130	necessary to evidence that the computation of the rate does not
1131	1131	include disallowed expenses; and
1132	1132	(3) information concerning policy fees, service fees,
1133	1133	and other fees that are charged or collected by the association.
1134	1134	(c) After the filing has been made, the association may use
1135	1135	a filed rate. A filed rate is subject to disapproval by the
1136	1136	commissioner in the manner prescribed by this subchapter.
1137	1137	(d) A filing under this section must indicate the character
1138	1138	and the extent of the coverage contemplated and must be accompanied
1139	1139	by the policy and endorsement forms proposed to be used. The forms
1140	1140	may be designed specifically for use by the association without
1141	1141	regard to other forms filed with, approved by, or prescribed by the
1142	1142	department for use in this state.
1143	1143	[(c) As soon as reasonably possible after the filing has
1144	1144	been made, the commissioner in writing shall approve, modify, or
1145	1145	disapprove the filing. A filing is considered approved unless
1146	1146	modified or disapproved on or before the 30th day after the date of
1147	1147	the filing.
1148	1148	[(d) If at any time the commissioner determines that a
1149	1149	filing approved under Subsection (c) no longer meets the
1150	1150	requirements of this chapter, the commissioner may, after a hearing
1151	1151	held on at least 20 days' notice to the association that specifies
1152	1152	the matters to be considered at the hearing, issue an order
1153	1153	withdrawing approval of the filing. The order must specify in what
1154	1154	respects the commissioner determines that the filing no longer
1155	1155	meets the requirements of this chapter. An order issued under this
1156	1156	subsection may not take effect before the 30th day after the date of
1157	1157	issuance of the order.]
1158	1158	(e) The department shall value the loss and loss adjustment
1159	1159	expense data to be used for a filing not earlier than March 31 of the
1160	1160	year before the year in which the filing is to be made.
1161	1161	SECTION 7.015. Sections 2210.352 and 2210.353, Insurance
1162	1162	Code, are amended to read as follows:
1163	1163	Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a)
1164	1164	Not later than August 15 of each year, the association shall file
1165	1165	with the department [for approval by the commissioner] a proposed
1166	1166	manual rate for all types and classes of risks written by the
1167	1167	association. Chapter 40 does not apply to:
1168	1168	(1) a filing made under this subsection; or
1169	1169	(2) a department action with respect to the filing.
1170	1170	(b) The [Before approving, disapproving, or modifying a
1171	1171	filing, the] commissioner shall provide all interested persons a
1172	1172	reasonable opportunity to:
1173	1173	(1) review the filing;
1174	1174	(2) obtain copies of the filing on payment of any
1175	1175	legally required copying cost; and
1176	1176	(3) submit to the commissioner written comments or
1177	1177	information related to the filing.
1178	1178	(c) [The commissioner shall schedule an open meeting not
1179	1179	later than the 45th day after the date the department receives a
1180	1180	filing at which interested persons may present written or oral
1181	1181	comments relating to the filing.
1182	1182	[(d) An open meeting under Subsection (c) is subject to
1183	1183	Chapter 551, Government Code, but is not a contested case hearing
1184	1184	under Chapter 2001, Government Code.
1185	1185	[(e)] The department shall file with the secretary of state
1186	1186	for publication in the Texas Register notice that a filing has been
1187	1187	made under Subsection (a) not later than the seventh day after the
1188	1188	date the department receives the filing. The notice must include
1189	1189	information relating to:
1190	1190	(1) the availability of the filing for public
1191	1191	inspection at the department during regular business hours and the
1192	1192	procedures for obtaining copies of the filing; and
1193	1193	(2) procedures for making written comments related to
1194	1194	the filing[; and
1195	1195	[(3) the time, place, and date of the open meeting
1196	1196	scheduled under Subsection (c) at which interested persons may
1197	1197	present written or oral comments relating to the filing].
1198	1198	(d) The [(f) After the conclusion of the open meeting, the]
1199	1199	commissioner shall approve, disapprove, or modify the filing in
1200	1200	writing not later than November 15 of the year in which the filing
1201	1201	was made. If the filing is not approved, disapproved, or modified
1202	1202	on or before that date, the filing is considered approved.
1203	1203	(e) [(g)] If the commissioner disapproves a filing, the
1204	1204	commissioner shall state in the order issued under Section
1205	1205	2210.3561 [writing] the reasons for the disapproval and the
1206	1206	criteria the association is required to meet to obtain approval.
1207	1207	Sec. 2210.353. MANUAL RATE FILINGS: AMENDED FILING. (a)
1208	1208	Not later than the 30th day after the date the association receives
1209	1209	the commissioner's written disapproval under Section 2210.352(d)
1210	1210	[2210.352(f)], the association may file with the commissioner an
1211	1211	amended filing that conforms to all criteria stated in that written
1212	1212	disapproval.
1213	1213	(b) Not later than the 30th day after the date an amended
1214	1214	filing made under Subsection (a) is received, the commissioner
1215	1215	shall approve the amended filing with or without modifications or
1216	1216	disapprove the amended filing. If the filing is not modified or
1217	1217	disapproved on or before the 30th day after the date of receipt, the
1218	1218	filing is considered approved without modification.
1219	1219	(c) Before approving or disapproving an amended filing, the
1220	1220	commissioner shall, in the manner provided by Section 2210.352(b),
1221	1221	provide all interested persons a reasonable opportunity to:
1222	1222	(1) review the amended filing;
1223	1223	(2) obtain copies of the amended filing on payment of
1224	1224	any legally required copying cost; and
1225	1225	(3) submit to the commissioner written comments or
1226	1226	information related to the amended filing.
1227	1227	[(d) The commissioner may, in the manner provided by
1228	1228	Sections 2210.352(c) and (d), hold a hearing regarding an amended
1229	1229	filing not later than the 20th day after the date the department
1230	1230	receives the amended filing.
1231	1231	[(e) Not later than the 10th day after the date the hearing
1232	1232	is concluded, the commissioner shall approve or disapprove the
1233	1233	amended filing.
1234	1234	[(f) The requirements imposed under Subsection (a) and
1235	1235	under Sections 2210.352(e), (f), and (g) apply to a hearing
1236	1236	conducted under this section and the commissioner's decision
1237	1237	resulting from that hearing.]
1238	1238	SECTION 7.016. Section 2210.356, Insurance Code, is amended
1239	1239	to read as follows:
1240	1240	Sec. 2210.356. UNIFORM RATE REQUIREMENTS[; INFORMATION
1241	1241	USED IN DEVELOPING RATES]. (a) Each rate used under [approved by
1242	1242	the commissioner in accordance with] this subchapter must be
1243	1243	uniform throughout the first tier coastal counties.
1244	1244	(b) The catastrophe element used to develop rates under this
1245	1245	subchapter applicable to risks written by the association must be
1246	1246	uniform throughout the seacoast territory. [The catastrophe
1247	1247	element of the rates must be developed using:
1248	1248	[(1) 90 percent of both the monoline extended coverage
1249	1249	loss experience and related premium income for all insurers, other
1250	1250	than the association, for covered property located in the seacoast
1251	1251	territory, using not less than the most recent 30 years of
1252	1252	experience available; and
1253	1253	[(2) 100 percent of both the loss experience and
1254	1254	related premium income for the association for covered property,
1255	1255	using not less than the most recent 30 years of experience
1256	1256	available.
1257	1257	[(c) The noncatastrophe element of the noncommercial rates
1258	1258	must be developed using:
1259	1259	[(1) 90 percent of both the monoline extended coverage
1260	1260	loss experience and related premium income for all insurers, other
1261	1261	than the association, for covered property located in the
1262	1262	catastrophe area of the seacoast territory, using the most recent
1263	1263	10 years of experience available; and
1264	1264	[(2) 100 percent of both the loss experience and
1265	1265	related premium income for the association for covered property,
1266	1266	using the most recent 10 years of experience available.
1267	1267	[(d) The noncatastrophe element of the commercial rates
1268	1268	must be developed using 100 percent of both the loss experience and
1269	1269	related premium income for the association for covered property,
1270	1270	using the most recent 10 years of experience available.]
1271	1271	SECTION 7.017. Subchapter H, Chapter 2210, Insurance Code,
1272	1272	is amended by adding Sections 2210.3561 and 2210.3562 to read as
1273	1273	follows:
1274	1274	Sec. 2210.3561. DISAPPROVAL OF RATE IN RATE FILING;
1275	1275	HEARING. (a) The commissioner shall disapprove a rate before its
1276	1276	use if the commissioner determines that the rate filing made under
1277	1277	Section 2210.351 does not meet the standards established under
1278	1278	Section 2210.355 or 2210.356.
1279	1279	(b) If the commissioner disapproves a filing, the
1280	1280	commissioner shall issue an order specifying in what respects the
1281	1281	filing fails to meet the requirements of this subchapter.
1282	1282	Sec. 2210.3562. PRIOR APPROVAL OF CERTAIN RATE INCREASES
1283	1283	REQUIRED. (a) The association shall file with the department all
1284	1284	rates, all supplementary rating information, and any supporting
1285	1285	information in accordance with this section if the association
1286	1286	proposes an average rate change of five percent or more during any
1287	1287	12-month period. The commissioner may specify any rate information
1288	1288	and additional information, as described by Section 2210.351(a), to
1289	1289	be filed with the department under this section.
1290	1290	(b) Not later than the 30th day after the date the
1291	1291	association files a proposed rate under Subsection (a), the
1292	1292	commissioner shall enter an order approving or disapproving the
1293	1293	proposed rate. The commissioner may, on notice to the association,
1294	1294	extend the period for entering an order under this section an
1295	1295	additional 30 days.
1296	1296	(c) An order disapproving a rate under this section must
1297	1297	state:
1298	1298	(1) the grounds for the disapproval; and
1299	1299	(2) the findings in support of the disapproval.
1300	1300	(d) The association may not issue an insurance policy or
1301	1301	endorsement subject to this section until the commissioner approves
1302	1302	the rates to be applied to the policy or endorsement. From the date
1303	1303	of the filing of the proposed rate with the department to the
1304	1304	effective date of the new rate, the association's previously filed
1305	1305	rate that is in effect on the date of the filing remains in effect.
1306	1306	(e) For purposes of this section, a rate is filed with the
1307	1307	department on the date the department receives the rate filing.
1308	1308	SECTION 7.018. Section 2210.359, Insurance Code, is amended
1309	1309	to read as follows:
1310	1310	Sec. 2210.359. LIMITATION ON CERTAIN RATE CHANGES. (a)
1311	1311	Except as otherwise provided by this subsection, a rate approved by
1312	1312	the commissioner under this subchapter may not reflect an average
1313	1313	rate change that is more than 10 percent higher or lower than the
1314	1314	rate for commercial windstorm and hail insurance or 10 percent
1315	1315	higher or lower than the rate for noncommercial windstorm and hail
1316	1316	insurance in effect on the date the filing is made. The rate may not
1317	1317	reflect a rate change for an individual rating class that is 15
1318	1318	percent higher or lower than the rate for that individual rating
1319	1319	class in effect on the date the filing is made. This subsection
1320	1320	does not apply to a rate filed under Section 2210.351 [Sections
1321	1321	2210.351(a)-(d)].
1322	1322	(b) The commissioner may, by an order issued under Section
1323	1323	2210.008 after notice and hearing, suspend this section on a
1324	1324	finding that a catastrophe loss or series of occurrences resulting
1325	1325	in losses in the catastrophe area justify a need to ensure:
1326	1326	(1) rate adequacy in the catastrophe area; and
1327	1327	(2) availability of insurance outside the catastrophe
1328	1328	area.
1329	1329	SECTION 7.019. Subchapter H, Chapter 2210, Insurance Code,
1330	1330	is amended by adding Section 2210.364 to read as follows:
1331	1331	Sec. 2210.364. BOARD RATE MEETINGS; PUBLICATION OF PROPOSED
1332	1332	RATE CHANGES. (a) The board of directors shall discuss and make
1333	1333	decisions on proposed rate changes in public meetings of the board.
1334	1334	(b) The board of directors shall publish each proposed rate
1335	1335	change in the Texas Register for public comment before the public
1336	1336	meeting at which that change is to be discussed.
1337	1337	SECTION 7.020. Chapter 2210, Insurance Code, is amended by
1338	1338	adding Subchapter I to read as follows:
1339	1339	SUBCHAPTER I. POLICY FORMS AND ENDORSEMENTS
1340	1340	Sec. 2210.401. FILING OF POLICY FORMS AND ENDORSEMENTS.
1341	1341	(a) The association shall file with the department each policy and
1342	1342	endorsement form proposed to be used. The forms may be designed
1343	1343	specifically for use by the association without regard to other
1344	1344	forms filed with, approved by, or prescribed by the department for
1345	1345	use in this state.
1346	1346	(b) Not later than the 30th day after the date the
1347	1347	association files a proposed form or endorsement under Subsection
1348	1348	(a), the commissioner shall enter an order approving or
1349	1349	disapproving the proposed form or endorsement. The commissioner
1350	1350	may, on notice to the association, extend the period for entering an
1351	1351	order under this section an additional 30 days.
1352	1352	(c) An order disapproving a policy form or endorsement under
1353	1353	this section must state:
1354	1354	(1) the grounds for the disapproval; and
1355	1355	(2) the findings in support of the disapproval.
1356	1356	(d) The association may not use a policy form or endorsement
1357	1357	disapproved under Subsection (b) until the commissioner approves
1358	1358	the policy form or endorsement.
1359	1359	Sec. 2210.402. BOARD MEETINGS RELATING TO FORMS;
1360	1360	PUBLICATION OF PROPOSED CHANGES TO FORMS. (a) The board of
1361	1361	directors shall discuss and make decisions on proposed changes to
1362	1362	policy forms and endorsements used by the association in public
1363	1363	meetings of the board.
1364	1364	(b) The board of directors shall publish each proposed
1365	1365	change to a policy form or endorsement in the Texas Register for
1366	1366	public comment before the public meeting at which that change is to
1367	1367	be discussed.
1368	1368	SECTION 7.021. Section 2210.453, Insurance Code, is amended
1369	1369	to read as follows:
1370	1370	Sec. 2210.453. REINSURANCE PROGRAM. (a) The association
1371	1371	shall:
1372	1372	(1) make payments into the trust fund; or
1373	1373	(2) establish a reinsurance program approved by the
1374	1374	commissioner by rule [department].
1375	1375	(b) With the approval of the commissioner by rule
1376	1376	[department], the association may establish a reinsurance program
1377	1377	that operates in addition to or in concert with the trust fund.
1378	1378	(c) The commissioner is not required to conduct a hearing
1379	1379	under this section to approve a reinsurance program.
1380	1380	SECTION 7.022. Section 2210.454(b), Insurance Code, is
1381	1381	amended to read as follows:
1382	1382	(b) Each state fiscal year, the department may fund the
1383	1383	mitigation and preparedness plan using the investment income of the
1384	1384	trust fund in an amount not less than $1 million and not more than 10
1385	1385	percent of the investment income of the prior fiscal year. [From
1386	1386	that amount and as part of that plan, the department may use in each
1387	1387	fiscal year $1 million for the windstorm inspection program
1388	1388	established under Section 2210.251.]
1389	1389	SECTION 7.023. Section 2210.502(b), Insurance Code, is
1390	1390	amended to read as follows:
1391	1391	(b) An adjustment to the maximum liability limits must be
1392	1392	[that is] approved by the commissioner by rule. An adjustment
1393	1393	applies to each windstorm and hail insurance policy delivered,
1394	1394	issued for delivery, or renewed on or after January 1 of the year
1395	1395	following the date of the approval by the commissioner. The
1396	1396	indexing of the limits shall adjust for changes occurring on and
1397	1397	after January 1, 1997.
1398	1398	SECTION 7.024. Section 2210.504(a), Insurance Code, is
1399	1399	amended to read as follows:
1400	1400	(a) Not later than the 60th day after the date of receipt of
1401	1401	a filing under Section 2210.503, [and after notice and hearing,]
1402	1402	the commissioner by rule [order] shall adopt a [approve,
1403	1403	disapprove, or modify the] proposed adjustment to the maximum
1404	1404	liability limits, as provided by Section 2210.502.
1405	1405	SECTION 7.025. The following laws are repealed:
1406	1406	(1) Section 2210.207(f), Insurance Code;
1407	1407	(2) Section 2210.254(d), Insurance Code; and
1408	1408	(3) Sections 2210.256 and 2210.257, Insurance Code.
1409	1409	SECTION 7.026. (a) The board of directors of the Texas
1410	1410	Windstorm Insurance Association established under Section
1411	1411	2210.102, Insurance Code, as that section existed before amendment
1412	1412	by this Act, is abolished effective January 1, 2010.
1413	1413	(b) Not later than December 31, 2009, the commissioner of
1414	1414	insurance shall appoint the members of the board of directors of the
1415	1415	Texas Windstorm Insurance Association under Section 2210.102,
1416	1416	Insurance Code, as amended by this Act.
1417	1417	(c) The term of a person who is serving as a member of the
1418	1418	board of directors of the Texas Windstorm Insurance Association
1419	1419	immediately before the abolition of that board under Subsection (a)
1420	1420	of this section expires on January 1, 2010. Such a person is
1421	1421	eligible for appointment by the commissioner of insurance to the
1422	1422	new board of directors of the Texas Windstorm Insurance Association
1423	1423	under Section 2210.102, Insurance Code, as amended by this Act.
1424	1424	SECTION 7.027. Section 2210.202, Insurance Code, as amended
1425	1425	by this Act, applies only to an insurance policy delivered, issued
1426	1426	for delivery, or renewed on or after January 1, 2010. A policy
1427	1427	delivered, issued for delivery, or renewed before January 1, 2010,
1428	1428	is governed by the law as it existed immediately before the
1429	1429	effective date of this Act, and that law is continued in effect for
1430	1430	that purpose.
1431	1431	ARTICLE 8. ELECTRONIC TRANSACTIONS
1432	1432	SECTION 8.001. Subtitle A, Title 2, Insurance Code, is
1433	1433	amended by adding Chapter 35 to read as follows:
1434	1434	CHAPTER 35. ELECTRONIC TRANSACTIONS
1435	1435	Sec. 35.001. DEFINITIONS. In this chapter:
1436	1436	(1) "Conduct business" includes engaging in or
1437	1437	transacting any business in which a regulated entity is authorized
1438	1438	to engage or is authorized to transact under the law of this state.
1439	1439	(2) "Regulated entity" means each insurer or other
1440	1440	organization regulated by the department, including:
1441	1441	(A) a domestic or foreign, stock or mutual, life,
1442	1442	health, or accident insurance company;
1443	1443	(B) a domestic or foreign, stock or mutual, fire
1444	1444	or casualty insurance company;
1445	1445	(C) a Mexican casualty company;
1446	1446	(D) a domestic or foreign Lloyd's plan;
1447	1447	(E) a domestic or foreign reciprocal or
1448	1448	interinsurance exchange;
1449	1449	(F) a domestic or foreign fraternal benefit
1450	1450	society;
1451	1451	(G) a domestic or foreign title insurance
1452	1452	company;
1453	1453	(H) an attorney's title insurance company;
1454	1454	(I) a stipulated premium company;
1455	1455	(J) a nonprofit legal service corporation;
1456	1456	(K) a health maintenance organization;
1457	1457	(L) a statewide mutual assessment company;
1458	1458	(M) a local mutual aid association;
1459	1459	(N) a local mutual burial association;
1460	1460	(O) an association exempt under Section 887.102;
1461	1461	(P) a nonprofit hospital, medical, or dental
1462	1462	service corporation, including a company subject to Chapter 842;
1463	1463	(Q) a county mutual insurance company; and
1464	1464	(R) a farm mutual insurance company.
1465	1465	Sec. 35.002. CONSTRUCTION WITH OTHER LAW. (a)
1466	1466	Notwithstanding any other provision of this code, a regulated
1467	1467	entity may conduct business electronically in accordance with this
1468	1468	chapter and the rules adopted under Section 35.004.
1469	1469	(b) To the extent of any conflict between another provision
1470	1470	of this code and a provision of this chapter, the provision of this
1471	1471	chapter controls.
1472	1472	Sec. 35.003. ELECTRONIC TRANSACTIONS AUTHORIZED. A
1473	1473	regulated entity may conduct business electronically to the same
1474	1474	extent that the entity is authorized to conduct business otherwise
1475	1475	if before the conduct of business each party to the business agrees
1476	1476	to conduct the business electronically.
1477	1477	Sec. 35.004. RULES. (a) The commissioner shall adopt rules
1478	1478	necessary to implement and enforce this chapter.
1479	1479	(b) The rules adopted by the commissioner under this section
1480	1480	must include rules that establish minimum standards with which a
1481	1481	regulated entity must comply in the entity's electronic conduct of
1482	1482	business with other regulated entities and consumers.
1483	1483	SECTION 8.002. Chapter 35, Insurance Code, as added by this
1484	1484	Act, applies only to business conducted on or after the effective
1485	1485	date of this Act. Business conducted before the effective date of
1486	1486	this Act is governed by the law in effect on the date the business
1487	1487	was conducted, and that law is continued in effect for that purpose.
1488	1488	ARTICLE 9. TRANSITION; EFFECTIVE DATE
1489	1489	SECTION 9.001. Except as otherwise provided by this Act,
1490	1490	this Act applies only to an insurance policy, contract, or evidence
1491	1491	of coverage that is delivered, issued for delivery, or renewed on or
1492	1492	after January 1, 2010. A policy, contract, or evidence of coverage
1493	1493	delivered, issued for delivery, or renewed before January 1, 2010,
1494	1494	is governed by the law as it existed immediately before the
1495	1495	effective date of this Act, and that law is continued in effect for
1496	1496	that purpose.
1497	1497	SECTION 9.002. This Act takes effect September 1, 2009.