81R4061 TJS/AJA/KCR/PB/PMO-D
By: Hegar S.B. No. 1007
A BILL TO BE ENTITLED
AN ACT
relating to the continuation and operation of the Texas Department
of Insurance and the operation of certain insurance programs;
imposing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. GENERAL PROVISIONS
SECTION 1.001. Section 31.002, Insurance Code, is amended
to read as follows:
Sec. 31.002. DUTIES OF DEPARTMENT. In addition to the
other duties required of the Texas Department of Insurance, the
department shall:
(1) regulate the business of insurance in this state;
(2) administer the workers' compensation system of
this state as provided by Title 5, Labor Code; [and]
(3) ensure that this code and other laws regarding
insurance and insurance companies are executed;
(4) protect and ensure the fair treatment of
consumers; and
(5) ensure fair competition in the insurance industry
in order to foster a competitive market.
SECTION 1.002. Section 31.004(a), Insurance Code, is
amended to read as follows:
(a) The Texas Department of Insurance is subject to Chapter
325, Government Code (Texas Sunset Act). Unless continued in
existence as provided by that chapter, the department is abolished
September 1, 2021 [2009].
SECTION 1.003. Section 33.004, Insurance Code, is amended
to read as follows:
Sec. 33.004. TRADE ASSOCIATIONS. (a) In this section,
"Texas trade association" means a cooperative and voluntarily
joined statewide association of business or professional
competitors in this state designed to assist its members and its
industry or profession in dealing with mutual business or
professional problems and in promoting their common interest.
(b) A person may not be the commissioner and may not be a
department employee employed in a "bona fide executive,
administrative, or professional capacity," as that phrase is used
for purposes of establishing an exemption to the overtime
provisions of the federal Fair Labor Standards Act of 1938 (29
U.S.C. Section 201 et seq.), if:
(1) the person is an officer, employee, or paid
consultant of a Texas trade association in the field of insurance;
or
(2) the person's spouse is an officer, manager, or paid
consultant of a Texas trade association in the field of insurance.
(c) A person may not be the commissioner or act as the
general counsel to the commissioner or the department if the person
is required to register as a lobbyist under Chapter 305, Government
Code, because of the person's activities for compensation on behalf
of a profession related to the operation of the department [A person
who is an officer, employee, or paid consultant of a trade
association in the field of insurance may not be:
[(1) the commissioner; or
[(2) an employee of the department who is exempt from
the state's position classification plan or is compensated at or
above the amount prescribed by the General Appropriations Act for
step 1, salary group A17, of the position classification salary
schedule].
[(b) A person who is the spouse of an officer, manager, or
paid consultant of a trade association in the field of insurance may
not be:
[(1) the commissioner; or
[(2) an employee of the department who is exempt from
the state's position classification plan or is compensated at or
above the amount prescribed by the General Appropriations Act for
step 1, salary group A17, of the position classification salary
schedule.
[(c) In this section, "trade association" means a
nonprofit, cooperative, and voluntarily joined association of
business or professional competitors designed to assist its members
and its industry or profession in dealing with mutual business or
professional problems and in promoting their common interest.]
SECTION 1.004. Section 521.003, Insurance Code, is amended
to read as follows:
Sec. 521.003. COMPLAINTS [NOTIFICATION OF COMPLAINT
STATUS]. (a) The department shall maintain a system to promptly
and efficiently act on complaints filed with the department. The
department shall maintain information about parties to the
complaint, the subject matter of the complaint, a summary of the
results of the review or investigation of the complaint, and its
disposition.
(b) The department shall make information available
describing its procedures for complaint investigation and
resolution.
(c) The department shall periodically notify the complaint
parties of the status of the complaint until final disposition. [If
a written complaint is filed with the department, the department,
at least quarterly and until final disposition of the complaint,
shall notify each party to the complaint of the complaint's status
unless the notice would jeopardize an undercover investigation.]
SECTION 1.005. Subchapter B, Chapter 36, Insurance Code, is
amended by adding Sections 36.110 and 36.111 to read as follows:
Sec. 36.110. USE OF TECHNOLOGY. The commissioner shall
implement a policy requiring the department to use appropriate
technological solutions to improve the department's ability to
perform its functions. The policy must ensure that the public is
able to interact with the department on the Internet.
Sec. 36.111. NEGOTIATED RULEMAKING AND ALTERNATIVE DISPUTE
RESOLUTION POLICY. (a) The commissioner shall develop and
implement a policy to encourage the use of:
(1) negotiated rulemaking procedures under Chapter
2008, Government Code, for the adoption of department rules; and
(2) appropriate alternative dispute resolution
procedures under Chapter 2009, Government Code, to assist in the
resolution of internal and external disputes under the department's
jurisdiction.
(b) The department's procedures relating to alternative
dispute resolution must conform, to the extent possible, to any
model guidelines issued by the State Office of Administrative
Hearings for the use of alternative dispute resolution by state
agencies.
(c) The commissioner shall designate a trained person to:
(1) coordinate the implementation of the policy
adopted under Subsection (a);
(2) serve as a resource for any training needed to
implement the procedures for negotiated rulemaking or alternative
dispute resolution; and
(3) collect data concerning the effectiveness of those
procedures, as implemented by the department.
SECTION 1.006. Sections 33.005 and 521.004, Insurance Code,
are repealed.
ARTICLE 2. CERTAIN ADVISORY BOARDS, COMMITTEES, AND COUNCILS
SECTION 2.001. Chapter 32, Insurance Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. RULES REGARDING USE OF ADVISORY COMMITTEES
Sec. 32.151. RULEMAKING AUTHORITY. (a) The commissioner
shall adopt rules, in compliance with Section 39.003 of this code
and Chapter 2110, Government Code, regarding the purpose,
structure, and use of advisory committees by the commissioner, the
state fire marshal, or department staff, including rules governing
an advisory committee's:
(1) purpose, role, responsibility, and goals;
(2) size and quorum requirements;
(3) qualifications for membership, including
experience requirements and geographic representation;
(4) appointment procedures;
(5) terms of service;
(6) training requirements; and
(7) duration.
(b) An advisory committee must be structured and used to
advise the commissioner, the state fire marshal, or department
staff. An advisory committee may not be responsible for rulemaking
or policymaking.
Sec. 32.152. PERIODIC EVALUATION. The commissioner shall
by rule establish a process by which the department shall
periodically evaluate an advisory committee to ensure its continued
necessity. The department may retain or develop committees as
appropriate to meet changing needs.
Sec. 32.153. COMPLIANCE WITH OPEN MEETINGS ACT. A
department advisory committee must comply with Chapter 551,
Government Code.
SECTION 2.002. Section 523.003, Insurance Code, is amended
to read as follows:
Sec. 523.003. IMMUNITY. The market assistance program[,
the members of the executive committee,] and participating insurers
and agents are not personally liable for:
(1) an act performed in good faith in the scope of the
person's authority as determined under this chapter; or
(2) damages arising from the person's official acts or
omissions, other than a corrupt or malicious act or omission.
SECTION 2.003. Section 523.055, Insurance Code, is amended
to read as follows:
Sec. 523.055. AMENDMENT OF PLAN OF OPERATION. [(a)] The
department [executive committee] may develop amendments to the plan
of operation and submit the amendments to the commissioner for
adoption by rule.
[(b) If the executive committee fails to submit suitable
amendments to the plan of operation, the department shall develop
and submit to the commissioner suitable amendments and the
commissioner shall, after notice and hearing, adopt the amendments
by rule.]
SECTION 2.004. Section 523.201, Insurance Code, is amended
to read as follows:
Sec. 523.201. COLLECTION OF PROGRAM INFORMATION.
Information concerning the number and type of applications received
and placed by the market assistance program and other information
about the program the [executive committee or the] commissioner
considers appropriate shall be collected.
SECTION 2.005. Section 1660.102(b), Insurance Code, is
amended to read as follows:
(b) The commissioner may consider [the] recommendations [of
the advisory committee] or any other information provided in
response to a department-issued request for information relating to
electronic data exchange, including identification card programs,
before adopting rules regarding:
(1) information to be included on the identification
cards;
(2) technology to be used to implement the
identification card pilot program; and
(3) confidentiality and accuracy of the information
required to be included on the identification cards.
SECTION 2.006. The following laws are repealed:
(1) Sections 523.053, 523.202, 524.004, 1660.002(2),
1660.101(c), 4004.002, and 4101.006, Insurance Code;
(2) Subchapter M, Chapter 843, Insurance Code;
(3) Subchapter B, Chapter 1660, Insurance Code;
(4) Subchapter G, Chapter 2210, Insurance Code;
(5) Subchapter C, Chapter 6001, Insurance Code;
(6) Subchapter C, Chapter 6002, Insurance Code;
(7) Subchapter C, Chapter 6003, Insurance Code;
(8) Chapter 1212, Insurance Code; and
(9) Sections 2154.054 and 2154.055(c), Occupations
Code.
SECTION 2.007. (a) The following boards, committees,
councils, and task forces are abolished on the effective date of
this Act:
(1) the advisory council on continuing education for
insurance agents;
(2) the fire detection and alarm devices advisory
council;
(3) the fire extinguisher advisory council;
(4) the fire protection advisory council;
(5) the fireworks advisory council;
(6) the health maintenance organization solvency
surveillance committee;
(7) the insurance adjuster examination advisory
board;
(8) the technical advisory committee on claims
processing;
(9) the technical advisory committee on electronic
data exchange;
(10) the health coverage public awareness and
education program task force;
(11) the executive committee of the residential
property insurance market assistance program; and
(12) the windstorm building code advisory committee on
specifications and maintenance.
(b) All powers, duties, obligations, rights, contracts,
funds, records, and real or personal property of a board,
committee, council, or task force listed under Subsection (a) of
this section shall be transferred to the Texas Department of
Insurance not later than February 28, 2010.
SECTION 2.008. The changes in law made by this Act by
amending Section 523.003, Insurance Code, and repealing Section
843.439, Insurance Code, apply only to a cause of action that
accrues on or after the effective date of this Act. A cause of
action that accrues before the effective date of this Act is
governed by the law in effect immediately before that date, and that
law is continued in effect for that purpose.
ARTICLE 3. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
SECTION 3.001. Subtitle D, Title 8, Insurance Code, is
amended by adding Chapter 1302 to read as follows:
CHAPTER 1302. REGULATION OF INDEPENDENT
PREFERRED PROVIDER ORGANIZATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1302.001. DEFINITIONS. In this chapter:
(1) "Person" means an individual, corporation,
association, or other legal entity.
(2) "Preferred provider organization" means an
insurer, third-party administrator, or other person that contracts
with physicians or health care providers regarding reimbursements
to be accepted prospectively by the physicians and health care
providers in providing health care services to enrollees of health
benefit plans contractually entitled to benefit from the
reimbursement agreements.
Sec. 1302.002. APPLICABILITY. (a) This chapter does not
apply to a self-funded health benefit plan exempt from regulation
by this state as an employee welfare benefit plan under the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.).
(b) Except as specifically provided by this chapter, a
reference in Chapter 1301 to a duty imposed under Chapter 1301 on an
insurer or third-party administrator in the operation of a
preferred provider benefit plan applies to a preferred provider
organization that operates a preferred provider benefit plan under
a certificate of authority issued under Subchapter B but that is not
an insurer or third-party administrator under this code.
Sec. 1302.003. RULES. The commissioner shall adopt rules
as necessary to implement this chapter.
Sec. 1302.004. COMPLAINTS. The department shall track and
analyze complaints made against preferred provider organizations
regulated under this chapter.
[Sections 1302.005-1302.050 reserved for expansion]
SUBCHAPTER B. REGULATION OF PREFERRED PROVIDER ORGANIZATIONS
Sec. 1302.051. CERTIFICATE OF AUTHORITY REQUIRED;
EXCEPTION. (a) Except as provided by Subsection (b), a person may
not organize or operate as a preferred provider organization in
this state, or sell or offer to sell or solicit offers to purchase
or receive consideration in conjunction with a preferred provider
benefit plan, without holding a certificate of authority under this
chapter.
(b) An insurer that holds a certificate of authority to
engage in the business of insurance in this state or is otherwise
authorized under this code to engage in the business of insurance in
this state is not required to obtain an additional certificate of
authority under this subchapter to operate a proprietary preferred
provider organization.
Sec. 1302.052. USE OF CERTAIN TERMS. A person may not use
the term "preferred provider organization" or "PPO" in the course
of operation unless the person:
(1) complies with this chapter and rules adopted by
the commissioner under this chapter; and
(2) holds a certificate of authority under this
chapter.
Sec. 1302.053. DURATION OF CERTIFICATE OF AUTHORITY. A
certificate of authority issued under this chapter continues in
effect:
(1) while the certificate holder meets the
requirements of this chapter and rules adopted under this chapter;
or
(2) until the commissioner suspends or revokes the
certificate or the commissioner terminates the certificate at the
request of the certificate holder.
[Sections 1302.054-1302.100 reserved for expansion]
SUBCHAPTER C. APPLICATION; ISSUANCE OF CERTIFICATE
Sec. 1302.101. APPLICATION. (a) A person may apply to the
department for and obtain a certificate of authority to organize
and operate a preferred provider organization.
(b) An application for a certificate of authority must:
(1) be on a form prescribed by rules adopted by the
commissioner; and
(2) be verified by the applicant or an officer or other
authorized representative of the applicant.
Sec. 1302.102. CONTENTS OF APPLICATION. (a) An
application for a certificate of authority must include:
(1) a copy of the applicant's basic organizational
document, if any, such as the articles of incorporation, articles
of association, partnership agreement, trust agreement, or other
applicable documents;
(2) all amendments to the applicant's basic
organizational document; and
(3) a copy of the bylaws, rules and regulations, or
similar documents, if any, regulating the conduct of the
applicant's internal affairs.
(b) An application for a certificate of authority must
include a list of the names, addresses, and official positions of
the persons responsible for the conduct of the applicant's affairs,
including:
(1) each member of the board of directors, board of
trustees, executive committee, or other governing body or
committee;
(2) the principal officer, if the applicant is a
corporation; and
(3) each partner or member, if the applicant is a
partnership or association.
(c) An application for a certificate of authority must
include a template of any contract made or to be made between the
applicant and any physician or health care provider.
Sec. 1302.103. APPLICATION FEE. (a) An applicant for a
certificate of authority under this chapter shall pay to the
department a filing fee not to exceed $1,000 for processing an
original application for a certificate of authority for a preferred
provider organization.
(b) The commissioner shall deposit a fee collected under
this section to the credit of the Texas Department of Insurance
operating account.
Sec. 1302.104. REQUIREMENTS FOR APPROVAL OF APPLICATION.
The commissioner shall approve an application for a certificate of
authority to engage in business in this state as a preferred
provider organization on payment of the application fee prescribed
by Section 1302.103 and if the commissioner is satisfied that:
(1) granting the application would not violate a
federal or state law;
(2) the applicant has not attempted to obtain the
certificate of authority through fraud or bad faith;
(3) the applicant has complied with this chapter and
rules adopted by the commissioner under this chapter; and
(4) the name under which the applicant will engage in
business in this state is not so similar to that of another
preferred provider organization that it is likely to mislead the
public.
Sec. 1302.105. DENIAL OF APPLICATION. (a) If the
commissioner is unable to approve an application for a certificate
of authority under this chapter, the commissioner shall:
(1) provide the applicant with written notice
specifying each deficiency in the application; and
(2) offer the applicant the opportunity for a hearing
to address each reason and circumstance for possible denial of the
application.
(b) The commissioner must provide an opportunity for a
hearing before the commissioner finally denies an application.
(c) At the hearing, the applicant has the burden to produce
sufficient competent evidence on which the commissioner can make
the determinations required by Section 1302.104.
[Sections 1302.106-1302.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 1302.151. GROUNDS FOR DENIAL, SUSPENSION, OR
REVOCATION OF CERTIFICATE OF AUTHORITY. The denial, suspension, or
revocation of a certificate of authority under this chapter to act
as a preferred provider organization is subject to:
(1) Subchapter C, Chapter 4005; and
(2) Chapter 82.
SECTION 3.002. Not later than November 1, 2009, the
commissioner of insurance shall adopt rules as necessary to
implement Chapter 1302, Insurance Code, as added by this Act.
SECTION 3.003. (a) Except as provided by Subsections (b)
and (c) of this section, a preferred provider organization that is
operating before the effective date of this Act and that has not
previously submitted an application for a certificate of authority
under the Insurance Code must apply for a certificate of authority
under Chapter 1302, Insurance Code, as added by this Act, not later
than the 60th day after the effective date of this Act.
(b) A preferred provider organization operating in this
state that, as of August 31, 2009, holds a certificate of authority
as an insurer under Chapter 801, Insurance Code, or a certificate of
authority as a third-party administrator under Chapter 4151,
Insurance Code, is not required to obtain a certificate of
authority under Chapter 1302, Insurance Code, as added by this Act.
(c) A preferred provider organization in this state that has
not applied for or does not hold, as of the effective date of this
Act, a certificate of authority under Chapter 801 or 4151,
Insurance Code, and that applies for a certificate of authority
under Chapter 1302, Insurance Code, as added by this Act, may
continue to operate, if the applicant otherwise complies with
applicable law, until the commissioner of insurance acts on the
application.
ARTICLE 4. RATE REGULATION
SECTION 4.001. Subchapter A, Chapter 2251, Insurance Code,
is amended by adding Section 2251.009 to read as follows:
Sec. 2251.009. FILING OF CERTAIN CLAIMS INFORMATION. (a)
This section applies only to an insurer subject to this subchapter
who writes personal automobile insurance or residential property
insurance in this state.
(b) The commissioner shall require each insurer described
by Subsection (a) to file with the commissioner personal automobile
insurance and residential property insurance claims information
for the period covered by the filing, including the number of
claims:
(1) filed during the reporting period;
(2) pending on the last day of the reporting period,
including pending litigation;
(3) paid during the reporting period;
(4) denied during the reporting period; and
(5) carrying over from the reporting period
immediately preceding the current reporting period.
(c) The commissioner may require insurers described by
Subsection (a) to file the information described by Subsection (b)
quarterly or annually.
(d) The commissioner may adopt rules necessary to implement
this section.
SECTION 4.002. Section 2251.101(b), Insurance Code, is
amended to read as follows:
(b) The commissioner by rule shall:
(1) determine the information required to be included
in the filing, including:
(A) [(1)] categories of supporting information
and supplementary rating information;
(B) [(2)] statistics or other information to
support the rates to be used by the insurer, including information
necessary to evidence that the computation of the rate does not
include disallowed expenses; and
(C) [(3)] information concerning policy fees,
service fees, and other fees that are charged or collected by the
insurer under Section 550.001 or 4005.003; and
(2) prescribe the process through which the department
requests supplementary rating information and supporting
information under this section, including:
(A) any time limits concerning and the time frame
in which requests for the information may be made;
(B) the number of times the department may make a
request for information; and
(C) the types of information the department may
request when reviewing a rate filing.
SECTION 4.003. Section 2251.103, Insurance Code, is amended
to read as follows:
Sec. 2251.103. COMMISSIONER ACTION CONCERNING [DISAPPROVAL
OF RATE IN] RATE FILING; HEARING AND ANALYSIS. (a) Not later than
the 30th day after the date a rate is filed with the department
under Section 2251.101, the [The] commissioner shall disapprove
the [a] rate if the commissioner determines that the rate [filing
made under this chapter] does not comply with the requirements of
this chapter [meet the standards established under Subchapter B].
(b) Except as provided by Subsection (c), if a rate has not
been disapproved by the commissioner before the expiration of the
30-day period described by Subsection (a), the rate is considered
approved.
(c) For good cause, the commissioner may, on the expiration
of the 30-day period described by Subsection (a), extend the period
for disapproval of a rate for one additional 30-day period. The
commissioner and the insurer may not by agreement extend the 30-day
period described by Subsection (a).
(d) If the commissioner disapproves a rate under this
section [filing], the commissioner shall issue an order specifying
in what respects the rate [filing] fails to meet the requirements of
this chapter.
(e) An insurer that files a rate that is disapproved under
this section [(c) The filer] is entitled to a hearing on written
request made to the commissioner not later than the 30th day after
the date the order disapproving the rate [filing] takes effect.
(f) The department shall track, compile, and routinely
analyze the factors that contribute to the disapproval of rates
under this section.
SECTION 4.004. Subchapter C, Chapter 2251, Insurance Code,
is amended by adding Section 2251.1031 to read as follows:
Sec. 2251.1031. REQUESTS FOR ADDITIONAL INFORMATION. (a)
If the department determines that the information filed by an
insurer under this subchapter or Subchapter D is incomplete or
otherwise deficient, the department may request additional
information from the insurer.
(b) If the department requests additional information from
the insurer during the 30-day period described by Section
2251.103(a) or 2251.153(a) or under a second 30-day period
described by Section 2251.103(c) or 2251.153(c), as applicable, the
time between the date the department submits the request to the
insurer and the date the department receives the information
requested is not included in the computation of the first 30-day
period or the second 30-day period, as applicable.
(c) For purposes of this section, the date of the
department's submission of a request for additional information is:
(1) the date of the department's electronic mailing or
telephone call relating to the request for additional information;
or
(2) the postmarked date on the department's letter
relating to the request for additional information.
(d) The department shall track, compile, and routinely
analyze the volume and content of requests for additional
information made under this section to ensure that all requests for
additional information are fair and reasonable.
SECTION 4.005. The heading to Section 2251.104, Insurance
Code, is amended to read as follows:
Sec. 2251.104. COMMISSIONER DISAPPROVAL OF RATE IN EFFECT;
HEARING.
SECTION 4.006. Section 2251.107, Insurance Code, is amended
to read as follows:
Sec. 2251.107. PUBLIC [INSPECTION OF] INFORMATION. (a)
Each filing made, and any supporting information filed, under this
chapter, including a claims information filing under Section
2251.009, are [is] open to public inspection as of the date of the
filing.
(b) The department shall make available to the public
information concerning best practices for rate development by
insurers in this state and the factors that contribute to the
disapproval of rates under Section 2251.103. Information provided
under this subsection must be general in nature and may not reveal
proprietary or trade secret information of any insurer.
(c) The department shall post the data contained in claims
information filings under Section 2251.009 on the department's
Internet website. The commissioner by rule may establish a
procedure for posting data under this subsection that includes a
description of the data that must be posted and the manner in which
the data must be posted.
SECTION 4.007. Section 2251.151, Insurance Code, is amended
by adding Subsections (c-1) and (f) and amending Subsection (e) to
read as follows:
(c-1) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall
periodically assess whether the conditions described by Subsection
(a) continue to exist. If the commissioner determines that the
conditions no longer exist, the commissioner shall issue an order
excusing the insurer from filing the insurer's rates under this
section.
(e) If the commissioner requires an insurer to file the
insurer's rates under this section, the commissioner shall issue an
order specifying the commissioner's reasons for requiring the rate
filing and explaining any steps the insurer must take and any
conditions the insurer must meet in order to be excused from filing
the insurer's rates under this section. An affected insurer is
entitled to a hearing on written request made to the commissioner
not later than the 30th day after the date the order is issued.
(f) The commissioner by rule shall define:
(1) the financial conditions and rating practices that
may subject an insurer to this section under Subsection (a)(1); and
(2) the process by which the commissioner determines
that a statewide insurance emergency exists under Subsection
(a)(2).
SECTION 4.008. Section 2251.156, Insurance Code, is amended
to read as follows:
Sec. 2251.156. RATE FILING DISAPPROVAL BY COMMISSIONER;
HEARING. (a) If the commissioner disapproves a rate filing under
Section 2251.153(a)(2), the commissioner shall issue an order
disapproving the filing in accordance with Section 2251.103(d)
[2251.103(b)].
(b) An insurer whose rate filing is disapproved is entitled
to a hearing in accordance with Section 2251.103(e) [2251.103(c)].
SECTION 4.009. Sections 2251.252(a) and (b), Insurance
Code, are amended to read as follows:
(a) Except as provided by Subsections (b) and (c), an
insurer is exempt from the rate filing and approval requirements of
this chapter if the insurer, during the calendar year preceding the
date filing is otherwise required under this chapter, issued
residential property insurance policies in this state that
accounted for less than four [two] percent of the total amount of
premiums collected by insurers for residential property insurance
policies issued in this state, more than 50 percent of which cover
property:
(1) valued at less than $100,000; and
(2) located in an area designated by the commissioner
as underserved for residential property insurance under Chapter
2004.
(b) If an insurer described by Subsection (a) is a member of
an affiliated insurance group, this subchapter applies to the
insurer only if the total aggregate premium collected by the group
accounts for less than four [two] percent of the total amount of
premiums collected by insurers for residential property insurance
policies issued in this state.
SECTION 4.010. Section 2251.154, Insurance Code, is
repealed.
SECTION 4.011. The commissioner of insurance shall require
an insurer to make the insurer's first claims information filing
under Section 2251.009, Insurance Code, as added by this Act,
beginning on or after January 1, 2010.
SECTION 4.012. Section 2251.103, Insurance Code, as amended
by this Act, and Section 2251.1031, Insurance Code, as added by this
Act, apply only to a rate filing made on or after the effective date
of this Act. A rate filing made before the effective date of this
Act is governed by the law in effect at the time the filing was made,
and that law is continued in effect for that purpose.
SECTION 4.013. Section 2251.151(c-1), Insurance Code, as
added by this Act, applies to an insurer that is required to file
the insurer's rates for approval under Section 2251.151, Insurance
Code, on or after the effective date of this Act, regardless of when
the order requiring the insurer to file the insurer's rates for
approval under that section is first issued.
SECTION 4.014. Section 2251.151(e), Insurance Code, as
amended by this Act, applies only to an order issued by the
commissioner of insurance on or after the effective date of this
Act. An order of the commissioner issued before the effective date
of this Act is governed by the law in effect on the date the order
was issued, and that law is continued in effect for that purpose.
ARTICLE 5. STATE FIRE MARSHAL'S OFFICE
SECTION 5.001. Section 417.008, Government Code, is amended
by adding Subsection (f) to read as follows:
(f) The commissioner by rule shall prescribe a reasonable
fee for an inspection performed by the state fire marshal that may
be charged to a property owner or occupant who requests the
inspection, as the commissioner considers appropriate. In
prescribing the fee, the commissioner shall consider the overall
cost to the state fire marshal to perform the inspections,
including the approximate amount of time the staff of the state fire
marshal needs to perform an inspection, travel costs, and other
expenses.
SECTION 5.002. Section 417.0081, Government Code, is amended
to read as follows:
Sec. 417.0081. INSPECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS. (a) The state fire marshal, at the
commissioner's direction, shall periodically inspect public
buildings under the charge and control of the Texas Facilities
[General Services] Commission and buildings leased for the use of a
state agency by the Texas Facilities Commission.
(b) For the purpose of determining a schedule for conducting
inspections under this section, the commissioner by rule shall
adopt guidelines for assigning potential fire safety risk to
state-owned and state-leased buildings. Rules adopted under this
subsection must provide for the inspection of each state-owned and
state-leased building to which this section applies, regardless of
how low the potential fire safety risk of the building may be.
(c) On or before January 1 of each year, the state fire
marshal shall report to the governor, lieutenant governor, speaker
of the house of representatives, and appropriate standing
committees of the legislature regarding the state fire marshal's
findings in conducting inspections under this section.
SECTION 5.003. Section 417.0082, Government Code, is amended
to read as follows:
Sec. 417.0082. PROTECTION OF CERTAIN STATE-OWNED OR
STATE-LEASED BUILDINGS AGAINST FIRE HAZARDS. (a) The state fire
marshal, under the direction of the commissioner, shall take any
action necessary to protect a public building under the charge and
control of the Texas Facilities [Building and Procurement]
Commission, and the building's occupants, and the occupants of a
building leased for the use of a state agency by the Texas
Facilities Commission, against an existing or threatened fire
hazard. The state fire marshal and the Texas Facilities [Building
and Procurement] Commission shall include the State Office of Risk
Management in all communication concerning fire hazards.
(b) The commissioner, the Texas Facilities [Building and
Procurement] Commission, and the risk management board shall make
and each adopt by rule a memorandum of understanding that
coordinates the agency's duties under this section.
SECTION 5.004. Section 417.010, Government Code, is amended
to read as follows:
Sec. 417.010. DISCIPLINARY AND ENFORCEMENT ACTIONS;
ADMINISTRATIVE PENALTIES [ALTERNATE REMEDIES]. (a) This section
applies to each person and firm licensed, registered, or otherwise
regulated by the department through the state fire marshal,
including:
(1) a person regulated under Title 20, Insurance Code;
and
(2) a person licensed under Chapter 2154, Occupations
Code.
(b) The commissioner by rule shall delegate to the state
fire marshal the authority to take disciplinary and enforcement
actions, including the imposition of administrative penalties in
accordance with this section on a person regulated under a law
listed under Subsection (a) who violates that law or a rule or order
adopted under that law. In the rules adopted under this subsection,
the commissioner shall:
(1) specify which types of disciplinary and
enforcement actions are delegated to the state fire marshal; and
(2) outline the process through which the state fire
marshal may, subject to Subsection (e), impose administrative
penalties or take other disciplinary and enforcement actions.
(c) The commissioner by rule shall adopt a schedule of
administrative penalties for violations subject to a penalty under
this section to ensure that the amount of an administrative penalty
imposed is appropriate to the violation. The department shall
provide the administrative penalty schedule to the public on
request. The amount of an administrative penalty imposed under
this section must be based on:
(1) the seriousness of the violation, including:
(A) the nature, circumstances, extent, and
gravity of the violation; and
(B) the hazard or potential hazard created to the
health, safety, or economic welfare of the public;
(2) the economic harm to the public interest or public
confidence caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation;
(6) whether the violation was intentional; and
(7) any other matter that justice may require.
(d) In [The state fire marshal, in] the enforcement of a law
that is enforced by or through the state fire marshal, the state
fire marshal may, in lieu of cancelling, revoking, or suspending a
license or certificate of registration, impose on the holder of the
license or certificate of registration an order directing the
holder to do one or more of the following:
(1) cease and desist from a specified activity;
(2) pay an administrative penalty imposed under this
section [remit to the commissioner within a specified time a
monetary forfeiture not to exceed $10,000 for each violation of an
applicable law or rule]; or [and]
(3) make restitution to a person harmed by the holder's
violation of an applicable law or rule.
(e) The state fire marshal shall impose an administrative
penalty under this section in the manner prescribed for imposition
of an administrative penalty under Subchapter B, Chapter 84,
Insurance Code. The state fire marshal may impose an
administrative penalty under this section without referring the
violation to the department for commissioner action.
(f) An affected person may dispute the imposition of the
penalty or the amount of the penalty imposed in the manner
prescribed by Subchapter C, Chapter 84, Insurance Code. Failure to
pay an administrative penalty imposed under this section is subject
to enforcement by the department.
ARTICLE 6. TITLE INSURANCE
SECTION 6.001. Section 2602.107, Insurance Code, is amended
by adding Subsection (d) to read as follows:
(d) The association shall pay, from the guaranty fee
account, fees and reasonable and necessary expenses that the
department incurs in an examination of a title agent or direct
operation under Subchapter H, Chapter 2651.
SECTION 6.002. Subchapter D, Chapter 2651, Insurance Code,
is amended by adding Section 2651.1511 and amending Sections
2651.153 and 2651.155 to read as follows:
Sec. 2651.1511. ANNUAL AUDIT OF OPERATING ACCOUNTS: TITLE
INSURANCE AGENTS AND DIRECT OPERATIONS. (a) Each title insurance
agent and direct operation shall submit to the department an annual
audit of operating accounts that is verified by an officer of:
(1) the audited title insurance agent; or
(2) the audited direct operation.
(b) The title insurance agent or direct operation shall pay
for an audit of operating accounts under this section.
(c) Not later than the 90th day after the date of the end of
the agent's or direct operation's fiscal year, the agent or direct
operation shall send by certified mail, postage prepaid, to the
department one copy of the audit report with a transmittal letter.
(d) Notwithstanding Subsection (a), the commissioner may
exempt a title insurance agent or direct operation with an annual
premium volume of less than $100,000 from the requirements of
Subsections (a)-(c).
Sec. 2651.153. RULES. The commissioner by rule shall
adopt:
(1) the standards for an audit conducted under this
subchapter; [and]
(2) the form of the required audit report; and
(3) a process to exempt a title insurance agent under
Section 2651.1511(d).
Sec. 2651.155. CONFIDENTIALITY OF AUDIT. (a) The
commissioner may classify an audit report that is filed with the
department by a title insurance company under this subchapter as
confidential and privileged.
(b) Information obtained in an audit of the operating
accounts of a title insurance agent or direct operation under this
subchapter is confidential and not subject to disclosure under this
code or Chapter 552, Government Code.
SECTION 6.003. Chapter 2651, Insurance Code, is amended by
adding Subchapter H to read as follows:
SUBCHAPTER H. EXAMINATION OF TITLE INSURANCE AGENTS AND DIRECT
OPERATIONS
Sec. 2651.351. EXAMINATION OF TITLE INSURANCE AGENTS AND
DIRECT OPERATIONS. (a) The department shall examine each title
insurance agent and direct operation licensed in this state as
provided by this subchapter.
(b) The department shall:
(1) examine the title insurance agent's or direct
operation's:
(A) financial condition;
(B) trust, escrow, and operating accounts;
(C) ability to meet its liabilities; and
(D) compliance with the laws of this state and
rules adopted by the commissioner that affect the business conduct
of the title insurance agent or direct operation; and
(2) verify the data reported for rate promulgation.
(c) The department shall conduct the examination at the
principal office of the title insurance agent or direct operation,
and may conduct the examination alone or with representatives of
the insurance supervising departments of other states.
(d) Subject to Subsection (e), the department shall examine
a title insurance agent or direct operation as frequently as the
department considers necessary. At a minimum, the department shall
examine a title insurance agent or direct operation not less
frequently than once every three years.
(e) The commissioner shall adopt rules governing the
frequency of examinations of a title insurance agent or direct
operation licensed for less than three years.
Sec. 2652.352. EXAMINATION PERIOD. Unless the department
requests that an examination cover a longer period, the examination
must cover the period beginning on the last day covered by the most
recent examination and ending on December 31 of the year preceding
the year in which the examination is being conducted.
Sec. 2651.353. POWERS RELATED TO EXAMINATION. The
department or the examiner appointed by the department:
(1) has free access, and may require the title
insurance agent or direct operation to provide free access, to all
books and papers of the title insurance agent or direct operation
that relate to the business and affairs of the title insurance agent
or direct operation; and
(2) has the authority to summon and examine under
oath, if necessary, an officer, agent, or employee of the title
insurance agent or direct operation or any other person in relation
to the affairs and condition of the title insurance agent or direct
operation.
Sec. 2651.354. EFFECT OF SUBCHAPTER ON AUTHORITY TO USE
INFORMATION. This subchapter does not limit the commissioner's
authority to use a final or preliminary examination report, the
work papers of an examiner, title insurance agent, or direct
operation, or other documents, or any other information discovered
or developed during an examination in connection with a legal or
regulatory action that the commissioner, in the commissioner's sole
discretion, considers appropriate.
Sec. 2651.355. CONFIDENTIALITY OF REPORTS AND RELATED
INFORMATION. (a) A final or preliminary examination report and any
information obtained during an examination are confidential and are
not subject to disclosure under Chapter 552, Government Code.
(b) Subsection (a) applies if the examined title insurance
agent or direct operation is under supervision or conservatorship.
(c) Subsection (a) does not apply to an examination
conducted in connection with a liquidation or receivership under
this code or another insurance law of this state.
Sec. 2651.356. DISCIPLINARY ACTION FOR FAILURE TO COMPLY
WITH SUBCHAPTER. A title insurance agent or direct operation is
subject to disciplinary action under Chapter 82 for failure or
refusal to comply with:
(1) this subchapter or a rule adopted under this
subchapter; or
(2) a request by the department or an appointed
examiner to be examined or to provide information requested as part
of an examination.
SECTION 6.004. Section 2703.153(c), Insurance Code, is
amended to read as follows:
(c) Not less frequently than once every five years, the
commissioner shall evaluate the information required under this
section to determine whether the department needs additional or
different information or no longer needs certain information to
promulgate rates. If the department requires a title insurance
company or title insurance agent to include new or different
information in the statistical report, that information may be
considered by the commissioner in fixing premium rates if the
information collected is reasonably credible for the purposes for
which the information is to be used.
SECTION 6.005. Sections 2602.103(b), (c), and (d),
Insurance Code, are repealed.
ARTICLE 7. TEXAS WINDSTORM INSURANCE ASSOCIATION
SECTION 7.001. Section 2210.008, Insurance Code, is amended
to read as follows:
Sec. 2210.008. DEPARTMENT RULES; ORDERS. (a) The
commissioner shall adopt rules in the manner prescribed by
Subchapter A, Chapter 36, as the commissioner considers necessary
to implement this chapter. The commissioner shall adopt rules as
provided by this chapter to approve proposed changes to the
operations of the association.
(b) The [After notice and hearing as provided by Subsection
(b), the] commissioner may issue any orders that the commissioner
considers necessary to implement this chapter[, including orders
regarding maximum rates, competitive rates, and policy forms].
[(b) Before the commissioner adopts an order, the
department shall post notice of the hearing on the order at the
secretary of state's office in Austin and shall hold a hearing to
consider the proposed order. Any person may appear at the hearing
and testify for or against the adoption of the order.]
SECTION 7.002. Section 2210.102, Insurance Code, is amended
to read as follows:
Sec. 2210.102. COMPOSITION. (a) The board of directors
is composed of 11 [the following nine] members appointed by the
commissioner as follows:
(1) five representatives of different insurers who are
members of the association[, elected by the members as provided by
the plan of operation];
(2) four [two] public representatives [who are
nominated by the office of public insurance counsel and] who, as of
the date of the appointment:
(A) reside in a catastrophe area; and
(B) are policyholders of the association; and
(3) two property and casualty agents, each of whom
must:
(A) have demonstrated experience in the
association;
(B) maintain the agent's principal office, as of
the date of the appointment, in a catastrophe area; and
(C) hold a license under Chapter 4051 as a
general property and casualty agent or a personal lines property
and casualty agent.
(b) Insurers who are members of the association shall
nominate, from among those members, persons to fill any vacancy in
the five board of director seats reserved for insurers. The board
of directors shall solicit nominations from the members and submit
the nominations to the commissioner. The nominee slate submitted
to the commissioner under this subsection must include more names
than the number of vacancies. The commissioner shall appoint
replacement insurer members from the nominee slate.
(c) The persons appointed under Subsections (a)(2) and (3)
must be from different counties.
SECTION 7.003. Section 2210.103(a), Insurance Code, is
amended to read as follows:
(a) Members of the board of directors serve three-year
staggered terms, with the terms of three members or four members, as
applicable, expiring on the third Tuesday of March of each year.
SECTION 7.004. Section 2210.104, Insurance Code, is amended
to read as follows:
Sec. 2210.104. OFFICERS. The commissioner shall appoint a
presiding officer [board of directors shall elect] from the board's
membership [an executive committee consisting of a presiding
officer, assistant presiding officer, and secretary-treasurer. At
least one of the officers must be a member appointed under Section
2210.102(a)(2) or (3)]. The board of directors may elect other
officers from the board's membership as considered necessary to
conduct the duties of the board.
SECTION 7.005. Section 2210.152(a), Insurance Code, is
amended to read as follows:
(a) The plan of operation must:
(1) provide for the efficient, economical, fair, and
nondiscriminatory administration of the association; and
(2) include:
(A) a plan for the equitable assessment of the
members of the association to defray losses and expenses;
(B) underwriting standards;
(C) procedures for accepting and ceding
reinsurance;
(D) procedures for determining the amount of
insurance to be provided to specific risks;
(E) time limits and procedures for processing
applications for insurance; [and]
(F) a plan for property inspections for windstorm
and hail insurance; and
(G) other provisions as considered necessary by
the department to implement the purposes of this chapter.
SECTION 7.006. Section 2210.153, Insurance Code, is amended
to read as follows:
Sec. 2210.153. AMENDMENTS TO PLAN OF OPERATION. (a) The
association shall [may] present a recommendation for a change in
the plan of operation to the department [at:
[(1) periodic hearings conducted by the department for
that purpose; or
[(2) hearings relating to property and casualty
insurance rates.
[(b) The association must present a proposed change to the
department] in writing in the manner prescribed by the
commissioner. A proposed change does not take effect unless
adopted by the commissioner by rule.
(b) [(c)] An interested person may, in accordance with
Chapter 2001, Government Code, petition the commissioner to modify
the plan of operation.
SECTION 7.007. Section 2210.202(a), Insurance Code, is
amended to read as follows:
(a) A person who has an insurable interest in insurable
property may apply to the association for insurance coverage
provided under the plan of operation and an inspection of the
property, subject to any rules, including any inspection fee,
established by the board of directors and approved by the
commissioner. The association shall make insurance available to
each applicant in the catastrophe area whose property is insurable
property but who, after diligent efforts, is unable to obtain
property insurance through the voluntary market, as evidenced by
two declinations, cancellations, or a combination of declinations
and cancellations from insurers authorized to engage in the
business of, and writing, property insurance in this state. For
purposes of this section, "declination" has the meaning assigned by
the plan of operation and may include a refusal to offer coverage
and the inability to obtain substantially equivalent insurance
coverage and rates. Notwithstanding Section 2210.203(c), evidence
of two declinations or other comparable evidence is required with
an application for renewal of an association policy unless the
association has evidence that comparable voluntary market coverage
is not available in the area of the property to be insured for the
same class of risk.
SECTION 7.008. Section 2210.207(e), Insurance Code, is
amended to read as follows:
(e) Notwithstanding this chapter or any other law, the
commissioner[, after notice and hearing,] may adopt rules to:
(1) authorize the association to provide actual cash
value coverage instead of replacement cost coverage on the roof
covering of a building insured by the association; and
(2) establish:
(A) the conditions under which the association
may provide that actual cash value coverage;
(B) the appropriate premium reductions when
coverage for the roof covering is provided on an actual cash value
basis; and
(C) the disclosure that must be provided to the
policyholder, prominently displayed on the face of the windstorm
and hail insurance policy.
SECTION 7.009. Section 2210.251, Insurance Code, is amended
by amending Subsections (a), (c), (f), and (g) and adding
Subsections (i), (j), and (k) to read as follows:
(a) Except as provided by this section, to be considered
insurable property eligible for windstorm and hail insurance
coverage from the association, a structure that is constructed or
repaired or to which additions are made on or after January 1, 1988,
must be inspected or approved by the association [department] for
compliance with the plan of operation.
(c) After January 1, 2004, a person must submit a notice of a
windstorm inspection to the association [unit responsible for
certification of windstorm inspections at the department] before
beginning to construct, alter, remodel, enlarge, or repair a
structure.
(f) The association [department] shall issue a certificate
of compliance for each structure that qualifies for coverage. The
certificate is evidence of insurability of the structure by the
association.
(g) The association [department] may enter into agreements
and contracts as necessary to implement this section.
(i) The association may charge a reasonable fee for each
inspection in an amount set by commissioner rule. The association
may use fees collected under this section for operating expenses.
(j) Without limitation of the department's authority to
otherwise enforce this chapter, the department shall monitor the
association's compliance with this subchapter. To facilitate the
department's oversight of the inspection program, the association
shall report to the department monthly, in the manner prescribed by
the commissioner, regarding:
(1) the number of inspections performed;
(2) the number of structures inspected;
(3) the number and a general description of the type of
inspection deficiencies discovered through the inspection program;
and
(4) any actions taken to resolve problems with
inspections.
(k) The commissioner may adopt rules in the manner
prescribed by Subchapter A, Chapter 36, as necessary to implement
this section.
SECTION 7.010. Sections 2210.254(a) and (c), Insurance
Code, are amended to read as follows:
(a) For purposes of this chapter, a "qualified inspector"
includes:
(1) a person determined by the association
[department] to be qualified because of training or experience to
perform building inspections;
(2) a licensed professional engineer who meets the
requirements specified by the association [commissioner rule] for
appointment to conduct windstorm inspections; and
(3) an inspector who:
(A) is certified by the International Code
Council, the Building Officials and Code Administrators
International, Inc., the International Conference of Building
Officials, or the Southern Building Code Congress International,
Inc.;
(B) has certifications as a buildings inspector
and coastal construction inspector; and
(C) complies with other requirements specified
by the board of directors [commissioner rule].
(c) Before performing building inspections, a qualified
inspector must enter into a contract with the association [be
approved and appointed or employed by the department].
SECTION 7.011. Subchapter F, Chapter 2210, Insurance Code,
is amended by adding Section 2210.2541 to read as follows:
Sec. 2210.2541. ASSOCIATION INSPECTION PROGRAM. (a) The
association shall develop an inspection program to perform
inspections for windstorm and hail insurance as required by this
subchapter.
(b) The association shall adopt inspection standards and
regulations regarding the operation of the inspection program,
including:
(1) inspection training and education requirements,
as determined necessary by the association, for licensed engineers
who contract with the association under Section 2210.255;
(2) guidelines for inspection fees assessed under
Section 2210.251(i) and for fees collected by inspectors under this
subchapter; and
(3) procedures for handling complaints made to the
association regarding inspectors.
(c) The association shall include in the inspection program
an oversight process that includes regular reinspections by the
association to ensure that association inspectors perform duties
under this subchapter appropriately.
(d) The association shall report possible licensing
violations by an inspector selected under Sections 2210.254 and
2210.255 to perform inspections under this subchapter to the Texas
Board of Professional Engineers.
(e) The association shall establish procedures as part of
the inspection program as necessary to issue certificates of
compliance under Section 2210.251(f).
(f) As part of the report required under Section
2210.251(j), the association shall report to the department
regarding the operation of the inspection program.
SECTION 7.012. Section 2210.255, Insurance Code, is amended
to read as follows:
Sec. 2210.255. CONTRACT WITH [APPOINTMENT OF] LICENSED
ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by
the Texas Board of Professional Engineers, the association may
enter into a contract with [commissioner shall appoint] the
engineer under which the engineer serves as an inspector under this
subchapter. The association may enter into a contract under this
subsection only on receipt of information satisfactory to the board
[not later than the 10th day after the date the engineer delivers to
the commissioner information demonstrating] that the engineer is
qualified to perform windstorm inspections under this subchapter.
(b) The association shall consult with the commissioner
regarding [shall adopt rules establishing] the information to be
considered in contracting with [appointing] engineers under this
section.
SECTION 7.013. Subchapter F, Chapter 2210, Insurance Code,
is amended by adding Section 2210.2565 to read as follows:
Sec. 2210.2565. PROCEDURES REGARDING CONTRACTING WITH
INSPECTORS. The board of directors shall develop procedures for
contracting with and oversight of inspectors selected under
Sections 2210.254 and 2210.255, including procedures relating to
the grounds for the suspension, modification, or revocation of a
contract under this subchapter with an inspector.
SECTION 7.014. Section 2210.351, Insurance Code, is amended
to read as follows:
Sec. 2210.351. ASSOCIATION RATE FILINGS AND SUPPORTING
INFORMATION; USE OF RATE. (a) Except as provided by Section
2210.3562, the [The] association shall [must] file with the
department each manual of classifications, rules, rates, including
condition charges, [and] each rating plan, [and] each modification
of those items that the association proposes to use, supplementary
rating information, and additional information as required by the
commissioner.
(b) The commissioner by rule shall determine the
information required to be included in the filing, including:
(1) categories of supporting information and
supplementary rating information;
(2) statistics or other information to support the
rates to be used by the association, including information
necessary to evidence that the computation of the rate does not
include disallowed expenses; and
(3) information concerning policy fees, service fees,
and other fees that are charged or collected by the association.
(c) After the filing has been made, the association may use
a filed rate. A filed rate is subject to disapproval by the
commissioner in the manner prescribed by this subchapter.
(d) A filing under this section must indicate the character
and the extent of the coverage contemplated and must be accompanied
by the policy and endorsement forms proposed to be used. The forms
may be designed specifically for use by the association without
regard to other forms filed with, approved by, or prescribed by the
department for use in this state.
[(c) As soon as reasonably possible after the filing has
been made, the commissioner in writing shall approve, modify, or
disapprove the filing. A filing is considered approved unless
modified or disapproved on or before the 30th day after the date of
the filing.
[(d) If at any time the commissioner determines that a
filing approved under Subsection (c) no longer meets the
requirements of this chapter, the commissioner may, after a hearing
held on at least 20 days' notice to the association that specifies
the matters to be considered at the hearing, issue an order
withdrawing approval of the filing. The order must specify in what
respects the commissioner determines that the filing no longer
meets the requirements of this chapter. An order issued under this
subsection may not take effect before the 30th day after the date of
issuance of the order.]
(e) The department shall value the loss and loss adjustment
expense data to be used for a filing not earlier than March 31 of the
year before the year in which the filing is to be made.
SECTION 7.015. Sections 2210.352 and 2210.353, Insurance
Code, are amended to read as follows:
Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a)
Not later than August 15 of each year, the association shall file
with the department [for approval by the commissioner] a proposed
manual rate for all types and classes of risks written by the
association. Chapter 40 does not apply to:
(1) a filing made under this subsection; or
(2) a department action with respect to the filing.
(b) The [Before approving, disapproving, or modifying a
filing, the] commissioner shall provide all interested persons a
reasonable opportunity to:
(1) review the filing;
(2) obtain copies of the filing on payment of any
legally required copying cost; and
(3) submit to the commissioner written comments or
information related to the filing.
(c) [The commissioner shall schedule an open meeting not
later than the 45th day after the date the department receives a
filing at which interested persons may present written or oral
comments relating to the filing.
[(d) An open meeting under Subsection (c) is subject to
Chapter 551, Government Code, but is not a contested case hearing
under Chapter 2001, Government Code.
[(e)] The department shall file with the secretary of state
for publication in the Texas Register notice that a filing has been
made under Subsection (a) not later than the seventh day after the
date the department receives the filing. The notice must include
information relating to:
(1) the availability of the filing for public
inspection at the department during regular business hours and the
procedures for obtaining copies of the filing; and
(2) procedures for making written comments related to
the filing[; and
[(3) the time, place, and date of the open meeting
scheduled under Subsection (c) at which interested persons may
present written or oral comments relating to the filing].
(d) The [(f) After the conclusion of the open meeting, the]
commissioner shall approve, disapprove, or modify the filing in
writing not later than November 15 of the year in which the filing
was made. If the filing is not approved, disapproved, or modified
on or before that date, the filing is considered approved.
(e) [(g)] If the commissioner disapproves a filing, the
commissioner shall state in the order issued under Section
2210.3561 [writing] the reasons for the disapproval and the
criteria the association is required to meet to obtain approval.
Sec. 2210.353. MANUAL RATE FILINGS: AMENDED FILING. (a)
Not later than the 30th day after the date the association receives
the commissioner's written disapproval under Section 2210.352(d)
[2210.352(f)], the association may file with the commissioner an
amended filing that conforms to all criteria stated in that written
disapproval.
(b) Not later than the 30th day after the date an amended
filing made under Subsection (a) is received, the commissioner
shall approve the amended filing with or without modifications or
disapprove the amended filing. If the filing is not modified or
disapproved on or before the 30th day after the date of receipt, the
filing is considered approved without modification.
(c) Before approving or disapproving an amended filing, the
commissioner shall, in the manner provided by Section 2210.352(b),
provide all interested persons a reasonable opportunity to:
(1) review the amended filing;
(2) obtain copies of the amended filing on payment of
any legally required copying cost; and
(3) submit to the commissioner written comments or
information related to the amended filing.
[(d) The commissioner may, in the manner provided by
Sections 2210.352(c) and (d), hold a hearing regarding an amended
filing not later than the 20th day after the date the department
receives the amended filing.
[(e) Not later than the 10th day after the date the hearing
is concluded, the commissioner shall approve or disapprove the
amended filing.
[(f) The requirements imposed under Subsection (a) and
under Sections 2210.352(e), (f), and (g) apply to a hearing
conducted under this section and the commissioner's decision
resulting from that hearing.]
SECTION 7.016. Section 2210.356, Insurance Code, is amended
to read as follows:
Sec. 2210.356. UNIFORM RATE REQUIREMENTS[; INFORMATION
USED IN DEVELOPING RATES]. (a) Each rate used under [approved by
the commissioner in accordance with] this subchapter must be
uniform throughout the first tier coastal counties.
(b) The catastrophe element used to develop rates under this
subchapter applicable to risks written by the association must be
uniform throughout the seacoast territory. [The catastrophe
element of the rates must be developed using:
[(1) 90 percent of both the monoline extended coverage
loss experience and related premium income for all insurers, other
than the association, for covered property located in the seacoast
territory, using not less than the most recent 30 years of
experience available; and
[(2) 100 percent of both the loss experience and
related premium income for the association for covered property,
using not less than the most recent 30 years of experience
available.
[(c) The noncatastrophe element of the noncommercial rates
must be developed using:
[(1) 90 percent of both the monoline extended coverage
loss experience and related premium income for all insurers, other
than the association, for covered property located in the
catastrophe area of the seacoast territory, using the most recent
10 years of experience available; and
[(2) 100 percent of both the loss experience and
related premium income for the association for covered property,
using the most recent 10 years of experience available.
[(d) The noncatastrophe element of the commercial rates
must be developed using 100 percent of both the loss experience and
related premium income for the association for covered property,
using the most recent 10 years of experience available.]
SECTION 7.017. Subchapter H, Chapter 2210, Insurance Code,
is amended by adding Sections 2210.3561 and 2210.3562 to read as
follows:
Sec. 2210.3561. DISAPPROVAL OF RATE IN RATE FILING;
HEARING. (a) The commissioner shall disapprove a rate before its
use if the commissioner determines that the rate filing made under
Section 2210.351 does not meet the standards established under
Section 2210.355 or 2210.356.
(b) If the commissioner disapproves a filing, the
commissioner shall issue an order specifying in what respects the
filing fails to meet the requirements of this subchapter.
Sec. 2210.3562. PRIOR APPROVAL OF CERTAIN RATE INCREASES
REQUIRED. (a) The association shall file with the department all
rates, all supplementary rating information, and any supporting
information in accordance with this section if the association
proposes an average rate change of five percent or more during any
12-month period. The commissioner may specify any rate information
and additional information, as described by Section 2210.351(a), to
be filed with the department under this section.
(b) Not later than the 30th day after the date the
association files a proposed rate under Subsection (a), the
commissioner shall enter an order approving or disapproving the
proposed rate. The commissioner may, on notice to the association,
extend the period for entering an order under this section an
additional 30 days.
(c) An order disapproving a rate under this section must
state:
(1) the grounds for the disapproval; and
(2) the findings in support of the disapproval.
(d) The association may not issue an insurance policy or
endorsement subject to this section until the commissioner approves
the rates to be applied to the policy or endorsement. From the date
of the filing of the proposed rate with the department to the
effective date of the new rate, the association's previously filed
rate that is in effect on the date of the filing remains in effect.
(e) For purposes of this section, a rate is filed with the
department on the date the department receives the rate filing.
SECTION 7.018. Section 2210.359, Insurance Code, is amended
to read as follows:
Sec. 2210.359. LIMITATION ON CERTAIN RATE CHANGES. (a)
Except as otherwise provided by this subsection, a rate approved by
the commissioner under this subchapter may not reflect an average
rate change that is more than 10 percent higher or lower than the
rate for commercial windstorm and hail insurance or 10 percent
higher or lower than the rate for noncommercial windstorm and hail
insurance in effect on the date the filing is made. The rate may not
reflect a rate change for an individual rating class that is 15
percent higher or lower than the rate for that individual rating
class in effect on the date the filing is made. This subsection
does not apply to a rate filed under Section 2210.351 [Sections
2210.351(a)-(d)].
(b) The commissioner may, by an order issued under Section
2210.008 after notice and hearing, suspend this section on a
finding that a catastrophe loss or series of occurrences resulting
in losses in the catastrophe area justify a need to ensure:
(1) rate adequacy in the catastrophe area; and
(2) availability of insurance outside the catastrophe
area.
SECTION 7.019. Subchapter H, Chapter 2210, Insurance Code,
is amended by adding Section 2210.364 to read as follows:
Sec. 2210.364. BOARD RATE MEETINGS; PUBLICATION OF PROPOSED
RATE CHANGES. (a) The board of directors shall discuss and make
decisions on proposed rate changes in public meetings of the board.
(b) The board of directors shall publish each proposed rate
change in the Texas Register for public comment before the public
meeting at which that change is to be discussed.
SECTION 7.020. Chapter 2210, Insurance Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. POLICY FORMS AND ENDORSEMENTS
Sec. 2210.401. FILING OF POLICY FORMS AND ENDORSEMENTS.
(a) The association shall file with the department each policy and
endorsement form proposed to be used. The forms may be designed
specifically for use by the association without regard to other
forms filed with, approved by, or prescribed by the department for
use in this state.
(b) Not later than the 30th day after the date the
association files a proposed form or endorsement under Subsection
(a), the commissioner shall enter an order approving or
disapproving the proposed form or endorsement. The commissioner
may, on notice to the association, extend the period for entering an
order under this section an additional 30 days.
(c) An order disapproving a policy form or endorsement under
this section must state:
(1) the grounds for the disapproval; and
(2) the findings in support of the disapproval.
(d) The association may not use a policy form or endorsement
disapproved under Subsection (b) until the commissioner approves
the policy form or endorsement.
Sec. 2210.402. BOARD MEETINGS RELATING TO FORMS;
PUBLICATION OF PROPOSED CHANGES TO FORMS. (a) The board of
directors shall discuss and make decisions on proposed changes to
policy forms and endorsements used by the association in public
meetings of the board.
(b) The board of directors shall publish each proposed
change to a policy form or endorsement in the Texas Register for
public comment before the public meeting at which that change is to
be discussed.
SECTION 7.021. Section 2210.453, Insurance Code, is amended
to read as follows:
Sec. 2210.453. REINSURANCE PROGRAM. (a) The association
shall:
(1) make payments into the trust fund; or
(2) establish a reinsurance program approved by the
commissioner by rule [department].
(b) With the approval of the commissioner by rule
[department], the association may establish a reinsurance program
that operates in addition to or in concert with the trust fund.
(c) The commissioner is not required to conduct a hearing
under this section to approve a reinsurance program.
SECTION 7.022. Section 2210.454(b), Insurance Code, is
amended to read as follows:
(b) Each state fiscal year, the department may fund the
mitigation and preparedness plan using the investment income of the
trust fund in an amount not less than $1 million and not more than 10
percent of the investment income of the prior fiscal year. [From
that amount and as part of that plan, the department may use in each
fiscal year $1 million for the windstorm inspection program
established under Section 2210.251.]
SECTION 7.023. Section 2210.502(b), Insurance Code, is
amended to read as follows:
(b) An adjustment to the maximum liability limits must be
[that is] approved by the commissioner by rule. An adjustment
applies to each windstorm and hail insurance policy delivered,
issued for delivery, or renewed on or after January 1 of the year
following the date of the approval by the commissioner. The
indexing of the limits shall adjust for changes occurring on and
after January 1, 1997.
SECTION 7.024. Section 2210.504(a), Insurance Code, is
amended to read as follows:
(a) Not later than the 60th day after the date of receipt of
a filing under Section 2210.503, [and after notice and hearing,]
the commissioner by rule [order] shall adopt a [approve,
disapprove, or modify the] proposed adjustment to the maximum
liability limits, as provided by Section 2210.502.
SECTION 7.025. The following laws are repealed:
(1) Section 2210.207(f), Insurance Code;
(2) Section 2210.254(d), Insurance Code; and
(3) Sections 2210.256 and 2210.257, Insurance Code.
SECTION 7.026. (a) The board of directors of the Texas
Windstorm Insurance Association established under Section
2210.102, Insurance Code, as that section existed before amendment
by this Act, is abolished effective January 1, 2010.
(b) Not later than December 31, 2009, the commissioner of
insurance shall appoint the members of the board of directors of the
Texas Windstorm Insurance Association under Section 2210.102,
Insurance Code, as amended by this Act.
(c) The term of a person who is serving as a member of the
board of directors of the Texas Windstorm Insurance Association
immediately before the abolition of that board under Subsection (a)
of this section expires on January 1, 2010. Such a person is
eligible for appointment by the commissioner of insurance to the
new board of directors of the Texas Windstorm Insurance Association
under Section 2210.102, Insurance Code, as amended by this Act.
SECTION 7.027. Section 2210.202, Insurance Code, as amended
by this Act, applies only to an insurance policy delivered, issued
for delivery, or renewed on or after January 1, 2010. A policy
delivered, issued for delivery, or renewed before January 1, 2010,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
ARTICLE 8. ELECTRONIC TRANSACTIONS
SECTION 8.001. Subtitle A, Title 2, Insurance Code, is
amended by adding Chapter 35 to read as follows:
CHAPTER 35. ELECTRONIC TRANSACTIONS
Sec. 35.001. DEFINITIONS. In this chapter:
(1) "Conduct business" includes engaging in or
transacting any business in which a regulated entity is authorized
to engage or is authorized to transact under the law of this state.
(2) "Regulated entity" means each insurer or other
organization regulated by the department, including:
(A) a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
(B) a domestic or foreign, stock or mutual, fire
or casualty insurance company;
(C) a Mexican casualty company;
(D) a domestic or foreign Lloyd's plan;
(E) a domestic or foreign reciprocal or
interinsurance exchange;
(F) a domestic or foreign fraternal benefit
society;
(G) a domestic or foreign title insurance
company;
(H) an attorney's title insurance company;
(I) a stipulated premium company;
(J) a nonprofit legal service corporation;
(K) a health maintenance organization;
(L) a statewide mutual assessment company;
(M) a local mutual aid association;
(N) a local mutual burial association;
(O) an association exempt under Section 887.102;
(P) a nonprofit hospital, medical, or dental
service corporation, including a company subject to Chapter 842;
(Q) a county mutual insurance company; and
(R) a farm mutual insurance company.
Sec. 35.002. CONSTRUCTION WITH OTHER LAW. (a)
Notwithstanding any other provision of this code, a regulated
entity may conduct business electronically in accordance with this
chapter and the rules adopted under Section 35.004.
(b) To the extent of any conflict between another provision
of this code and a provision of this chapter, the provision of this
chapter controls.
Sec. 35.003. ELECTRONIC TRANSACTIONS AUTHORIZED. A
regulated entity may conduct business electronically to the same
extent that the entity is authorized to conduct business otherwise
if before the conduct of business each party to the business agrees
to conduct the business electronically.
Sec. 35.004. RULES. (a) The commissioner shall adopt rules
necessary to implement and enforce this chapter.
(b) The rules adopted by the commissioner under this section
must include rules that establish minimum standards with which a
regulated entity must comply in the entity's electronic conduct of
business with other regulated entities and consumers.
SECTION 8.002. Chapter 35, Insurance Code, as added by this
Act, applies only to business conducted on or after the effective
date of this Act. Business conducted before the effective date of
this Act is governed by the law in effect on the date the business
was conducted, and that law is continued in effect for that purpose.
ARTICLE 9. TRANSITION; EFFECTIVE DATE
SECTION 9.001. Except as otherwise provided by this Act,
this Act applies only to an insurance policy, contract, or evidence
of coverage that is delivered, issued for delivery, or renewed on or
after January 1, 2010. A policy, contract, or evidence of coverage
delivered, issued for delivery, or renewed before January 1, 2010,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 9.002. This Act takes effect September 1, 2009.