82R21589 KCR-D
By: Smithee H.B. No. 272
Substitute the following for H.B. No. 272:
By: Smithee C.S.H.B. No. 272
A BILL TO BE ENTITLED
AN ACT
relating to the operation of the Texas Windstorm Insurance
Association and to the resolution of certain disputes concerning
claims made to that association; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 83.002, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) This chapter also applies to:
(1) a person appointed as a qualified inspector under
Section 2210.254 or 2210.255; and
(2) a person acting as a qualified inspector under
Section 2210.254 or 2210.255 without being appointed as a qualified
inspector under either of those sections.
SECTION 2. Section 541.152, Insurance Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) Except as provided by Subsection (c), on [On] a finding
by the trier of fact that the defendant knowingly committed the act
complained of, the trier of fact may award an amount not to exceed
three times the amount of actual damages.
(c) Subsection (b) does not apply to an action under this
subchapter brought against the Texas Windstorm Insurance
Association by a person who is insured under Chapter 2210.
SECTION 3. Section 2210.002(b), Insurance Code, is amended
to read as follows:
(b) The association is subject to review under Chapter 325,
Government Code (Texas Sunset Act), but is not abolished under that
chapter. The association shall be reviewed during the period in
which state agencies abolished in 2013 [2015] are reviewed. The
association shall pay the costs incurred by the Sunset Advisory
Commission in performing the review of the association under this
subsection. The Sunset Advisory Commission shall determine the
costs of the review performed under this subsection, and the
association shall pay the amount of those costs promptly on receipt
of a statement from the Sunset Advisory Commission regarding those
costs. This subsection expires September 1, 2013 [2015].
SECTION 4. Subchapter A, Chapter 2210, Insurance Code, is
amended by adding Sections 2210.010, 2210.011, 2210.012, and
2210.013 to read as follows:
Sec. 2210.010. APPLICABILITY OF CERTAIN OTHER LAW. (a)
Except as otherwise provided by this chapter or Chapter 541 or 542,
Chapters 541 and 542 apply to the association and to the processing
and settlement of claims by the association. To the extent of any
conflict between this chapter and Chapter 541 or 542, this chapter
prevails.
(b) A person insured under this chapter may not bring a
private action against the association under Chapter 541.
(c) Section 33.004(e), Civil Practice and Remedies Code,
does not apply to an action against the association.
Sec. 2210.011. CERTAIN CONDUCT IN DISPUTE RESOLUTION
PROHIBITED. A person insured under this chapter may not preside
over a matter or action to which the association is a party,
including by sitting as a judge or serving as an arbitrator.
Sec. 2210.012. STANDARDS OF CONDUCT: BOARD OF DIRECTORS
AND EMPLOYEES. (a) A member of the board of directors or an
employee of the association may not:
(1) accept or solicit any gift, favor, or service that
might reasonably tend to influence the member or employee in the
discharge of duties related to the operation or business of the
association or that the member or employee knows or should know is
being offered with the intent to influence the member's or
employee's conduct related to the operation or business of the
association;
(2) accept other employment or engage in a business or
professional activity that the member or employee might reasonably
expect would require or induce the member or employee to disclose
confidential information acquired by reason of the member's or
employee's position with the association;
(3) accept other employment or compensation that could
reasonably be expected to impair the member's or employee's
independence of judgment in the performance of the member's or
employee's duties related to the operation or business of the
association;
(4) make personal investments that could reasonably be
expected to create a substantial conflict between the member's or
employee's private interest and the interest of the association; or
(5) intentionally or knowingly solicit, accept, or
agree to accept any benefit for having exercised the member's or
employee's powers related to the operation or business of the
association or having performed, in favor of another, the member's
or employee's duties related to the operation or business of the
association.
(b) An association employee who violates Subsection (a) or a
code of conduct established under Section 2210.107(a)(4) is subject
to an employment-related sanction, including termination of the
employee's employment with the association.
(c) A member of the board of directors or an association
employee who violates Subsection (a) is subject to any applicable
civil or criminal penalty if the violation also constitutes a
violation of another statute or rule.
Sec. 2210.013. CERTAIN EMPLOYMENT AND CONTRACTS
PROHIBITED. A member of the board of directors or an employee of
the association may not appoint or employ, or contract with, the
following individuals for the provision of goods or services in
connection with the operation or business of the association, if
the individual to be appointed or employed, or with whom a contract
is to be entered into, is to be directly or indirectly compensated
from funds of the association:
(1) an individual related to the member or employee
within a degree of relationship described by Section 573.002,
Government Code; or
(2) an individual related to any member of the board of
directors or employee of the association within a degree of
relationship described by Section 573.002, Government Code.
SECTION 5. Section 2210.072(b), Insurance Code, is amended
to read as follows:
(b) Public securities described by Subsection (a) shall be
issued as necessary in a principal amount not to exceed $1 billion
per occurrence or series of occurrences in a calendar year that
results in insured losses.
SECTION 6. Section 2210.073(b), Insurance Code, is amended
to read as follows:
(b) Public securities described by Subsection (a) may be
issued as necessary in a principal amount not to exceed $1 billion
per occurrence or series of occurrences in a calendar year that
results in insured losses. If the losses are paid with public
securities described by this section, the public securities shall
be repaid in the manner prescribed by Subchapter M.
SECTION 7. Section 2210.074(b), Insurance Code, is amended
to read as follows:
(b) Public securities described by Subsection (a) may be
issued as necessary in a principal amount not to exceed $500 million
per occurrence or series of occurrences in a calendar year that
results in insured losses. If the losses are paid with public
securities described by this section, the public securities shall
be repaid in the manner prescribed by Subchapter M through member
assessments as provided by this section. The association shall
notify each member of the association of the amount of the member's
assessment under this section. The proportion of the losses
allocable to each insurer under this section shall be determined in
the manner used to determine each insurer's participation in the
association for the year under Section 2210.052. A member of the
association may not recoup an assessment paid under this subsection
through a premium surcharge or tax credit.
SECTION 8. Section 2210.104, Insurance Code, is amended to
read as follows:
Sec. 2210.104. OFFICERS AND MANAGERIAL EMPLOYEES; SALARIES
AND BONUSES. (a) The board of directors shall elect from the
board's membership an executive committee consisting of a presiding
officer, assistant presiding officer, and secretary-treasurer.
(b) The association shall post on the association's
Internet website the salary of each association employee who serves
in a managerial capacity and any bonuses paid to those association
employees.
SECTION 9. Section 2210.105, Insurance Code, is amended by
amending Subsections (a) and (b) and adding Subsections (b-1), (e),
and (f) to read as follows:
(a) Except for an emergency meeting, the association shall:
(1) notify the department not later than the 11th day
before the date of a meeting of the board of directors or of the
members of the association; and
(2) not later than the seventh day before the date of a
meeting of the board of directors, post notice of the meeting on the
association's Internet website and the department's Internet
website.
(b) Except for a closed meeting authorized by Subchapter D,
Chapter 551, Government Code, a meeting of the board of directors or
of the members of the association is open to[:
[(1) the commissioner or the commissioner's designated
representative; and
[(2)] the public.
(b-1) A meeting of the board of directors or the members of
the association, including a closed meeting authorized by
Subchapter D, Chapter 551, Government Code, is open to the
commissioner or the commissioner's designated representative.
(e) The association shall:
(1) broadcast live on the association's Internet
website all meetings of the board of directors, other than closed
meetings; and
(2) maintain on the association's Internet website an
archive of meetings of the board of directors.
(f) A recording of a meeting must be maintained in the
archive required under Subsection (e) through and including the
second anniversary of the meeting.
SECTION 10. Section 2210.107, Insurance Code, is amended to
read as follows:
Sec. 2210.107. PRIMARY BOARD OBJECTIVES; REPORT. (a) The
primary objectives of the board of directors are to ensure that the
board and the association:
(1) operate [operates] in accordance with this
chapter, the plan of operation, and commissioner rules;
(2) comply [complies] with sound insurance
principles; [and]
(3) meet [meets] all standards imposed under this
chapter;
(4) establish a code of conduct and performance
standards for association employees and persons with which the
association contracts; and
(5) establish, and adhere to terms of, an annual
evaluation of association management necessary to achieve the
statutory purpose, board objectives, and any performance or
enterprise risk management objectives established by the board.
(b) Not later than June 1 of each year, the association
shall submit to the commissioner, the legislative oversight board
established under Subchapter N, the governor, the lieutenant
governor, and the speaker of the house of representatives a report
evaluating the extent to which the board met the objectives
described by Subsection (a) in the 12-month period immediately
preceding the date of the report.
SECTION 11. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.108 to read as follows:
Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. (a) Except
as specifically provided by this chapter or another law, the
association is subject to Chapters 551 and 552, Government Code.
(b) A settlement agreement to which the association is a
party:
(1) is public information and is not exempted from
required disclosure under Chapter 552, Government Code; and
(2) if applicable, must contain the name of any
attorney or adjuster involved with the claim that is the basis of
the settlement.
SECTION 12. Section 2210.152, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) The plan of operation shall require the association to
use the claim settlement guidelines published by the commissioner
under Section 2210.577(f) in evaluating the extent to which a loss
to insurable property is incurred as a result of wind, waves, tidal
surges, rising waters not caused by waves or surges, or wind-driven
rain associated with a storm.
SECTION 13. Section 2210.202, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) The commissioner shall adopt rules to simplify and
streamline the process through which:
(1) a person who has an insurable interest in
insurable property may apply with the association for insurance
coverage; and
(2) a person insured under this chapter may apply with
the association for renewal of the person's insurance coverage.
SECTION 14. Section 2210.204(e), Insurance Code, is amended
to read as follows:
(e) For cancellation of insurance coverage under this
section, the minimum retained premium in the plan of operation must
be for a period of not less than 90 [180] days, except for events
specified in the plan of operation that reflect a significant
change in the exposure or the policyholder concerning the insured
property, including:
(1) the purchase of similar coverage in the voluntary
market;
(2) sale of the property to an unrelated party;
(3) death of the policyholder; or
(4) total loss of the property.
SECTION 15. Subchapter E, Chapter 2210, Insurance Code, is
amended by adding Sections 2210.205 and 2210.210 to read as
follows:
Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR
FILING CLAIM; NOTICE CONCERNING ARBITRATION. (a) A windstorm and
hail insurance policy issued by the association must:
(1) require an insured to file a claim under the policy
not later than the first anniversary of the date on which the damage
to property that is the basis of the claim occurs; and
(2) contain, in boldface type, a conspicuous notice
concerning the resolution of disputes under the policy, including:
(A) the processes and deadlines for appraisal
under Section 2210.575 and independent coverage review under
Section 2210.576; and
(B) the necessity of complying with the
requirements of Subchapter L-1 to seek administrative or judicial
relief.
(b) The commissioner, on a showing of good cause by a person
insured under this chapter, may extend the one-year period
described by Subsection (a)(1) for a period not to exceed 180 days.
Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED.
The association may not issue coverage for the following
structures, regardless of whether the structure is otherwise
insurable property under this chapter:
(1) a wind turbine;
(2) a structure used primarily as a casino or other
gambling establishment; or
(3) a structure used as a sexually oriented business,
as defined by Section 243.002, Local Government Code.
SECTION 16. Section 2210.254, Insurance Code, is amended by
adding Subsection (e) to read as follows:
(e) The department may establish an annual renewal period
for persons appointed as qualified inspectors.
SECTION 17. Subchapter F, Chapter 2210, Insurance Code, is
amended by adding Section 2210.2551 to read as follows:
Sec. 2210.2551. EXCLUSIVE ENFORCEMENT AUTHORITY; RULES.
(a) The department has exclusive authority over all matters
relating to the appointment and oversight of qualified inspectors
for purposes of this chapter.
(b) The commissioner by rule shall establish criteria to
ensure that a person seeking appointment as a qualified inspector
under this subchapter, including an engineer seeking appointment
under Section 2210.255, possesses the knowledge, understanding,
and professional competence to perform windstorm inspections under
this chapter and to comply with other requirements of this chapter.
SECTION 18. The heading to Section 2210.256, Insurance
Code, is amended to read as follows:
Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING
APPOINTED INSPECTORS AND CERTAIN OTHER PERSONS.
SECTION 19. Section 2210.256, Insurance Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) In addition to any other action authorized under this
section, the commissioner ex parte may enter an emergency cease and
desist order under Chapter 83 against a qualified inspector, or a
person acting as a qualified inspector, if:
(1) the commissioner believes that:
(A) the qualified inspector has:
(i) through submitting or failing to submit
to the department sealed plans, designs, calculations, or other
substantiating information, failed to demonstrate that a structure
or a portion of a structure subject to inspection meets the
requirements of this chapter and department rules; or
(ii) refused to comply with requirements
imposed under this chapter or department rules; or
(B) the person acting as a qualified inspector is
acting without appointment as a qualified inspector under Section
2210.254 or 2210.255; and
(2) the commissioner determines that the conduct
described by Subdivision (1) is fraudulent or hazardous or creates
an immediate danger to the public.
SECTION 20. Section 2210.259, Insurance Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) A noncompliant residential structure insured by the
association as of September 1, 2009, under Section 2210.251(f) that
had been approved for insurability under the approval process
regulations in effect on September 1, 2009, is subject to an annual
premium surcharge in an amount determined under Subsection (c)
[equal to 15 percent of the premium for insurance coverage obtained
through the association]. The surcharge under this subsection
applies to each policy issued or renewed by the association on or
after the effective date of Sections 5 through 49, H.B. No. 4409,
Acts of the 81st Legislature, Regular Session, 2009, and is due on
the issuance or renewal of the policy.
(c) The commissioner, after receiving a recommendation from
the board concerning the amount of the annual premium surcharge
required under Subsection (a), by rule shall establish the amount
of the annual premium surcharge. The amount of the surcharge must
be actuarially justifiable and may not be less than 15 percent of
the premium for insurance coverage obtained through the
association. Before the commissioner by rule establishes the
amount of the annual premium surcharge, the commissioner shall
report to the legislative oversight board established under
Subchapter N concerning the methodology the commissioner used to
determine the amount of the annual premium surcharge.
SECTION 21. Section 2210.355, Insurance Code, is amended by
amending Subsection (i) and adding Subsections (j), (k), and (l) to
read as follows:
(i) The association shall [may] establish rating
territories and shall [may] vary rates among the territories in
accordance with Subsections (j) and (k) [as provided by this
subsection. A rating territory that subdivides a county may be used
only if the rate for any subdivision in the county is not more than:
[(A) five percent higher than the rate used by
the association in 2009 in any other subdivision in the county;
[(B) six percent higher than the rate used by the
association in 2010 in any other subdivision in the county;
[(C) seven percent higher than the rate used by
the association in 2011 in any other subdivision in the county; and
[(D) eight percent higher than the rate used by
the association in 2012 in any other subdivision in the county].
(j) Notwithstanding Section 2210.351, the association may
use rate relativities for rating territories that subdivide a
county without prior commissioner approval if the resulting rate
for any subdivision in the county:
(1) is not more than 15 percent greater than the
resulting rate used in any other subdivision in that county for
identical coverage for insureds having risk characteristics that
are identical except for rating territory; and
(2) is not unfairly discriminatory.
(k) The association may use rate relativities for rating
territories that subdivide a county only with prior commissioner
approval if the resulting rate for any subdivision in the county is
not described by Subsection (j)(1).
(l) A rate relativity described by Subsection (k) must be
based on sound actuarial principles supported by data filed with
the department, including reasonable output from recognized
catastrophe models, and must produce rates that comply with the
statutory and regulatory requirements of this chapter.
SECTION 22. Section 2210.453, Insurance Code, is amended by
adding Subsection (c) to read as follows:
(c) If the association does not purchase reinsurance as
authorized by this section, the board, not later than June 1 of each
year, shall submit to the commissioner, the legislative oversight
board established under Subchapter N, the governor, the lieutenant
governor, and the speaker of the house of representatives a report
containing an actuarial plan for paying losses in the event of a
catastrophe with estimated damages of $2.5 billion or more.
SECTION 23. Subchapter J, Chapter 2210, Insurance Code, is
amended by adding Section 2210.455 to read as follows:
Sec. 2210.455. CATASTROPHE PLAN. (a) Not later than June 1
of each year, the board shall submit to the commissioner, the
legislative oversight board established under Subchapter N, the
governor, the lieutenant governor, and the speaker of the house of
representatives a catastrophe plan covering the period beginning on
the date the plan is submitted and ending on the following May 31.
(b) The catastrophe plan must describe the manner in which
the association will, during the period covered by the plan,
evaluate losses and process claims after the following windstorms
affecting an area of maximum exposure to the association:
(1) a windstorm with a four percent chance of
occurring during the period covered by the plan;
(2) a windstorm with a two percent chance of occurring
during the period covered by the plan; and
(3) a windstorm with a one percent chance of occurring
during the period covered by the plan.
(c) The catastrophe plan must include a description of how
losses under association policies will be paid, and how claims
under association policies will be administered and adjusted,
during the period covered by the plan.
SECTION 24. Sections 2210.551(a) and (b), Insurance Code,
are amended to read as follows:
(a) This section:
(1) does not apply to a person insured under this
chapter who is required to resolve a dispute concerning a
causation, coverage, or damage dispute under Subchapter L-1; and
(2) applies only to:
(A) [(1)] a person not described by Subdivision
(1) who is insured under this chapter or an authorized
representative of the person; or
(B) [(2)] an affected insurer.
(b) A person or entity described by Subsection (a)(2) [(a)]
who is aggrieved by an act, ruling, or decision of the association
may appeal to the commissioner not later than the 30th day after the
date of that act, ruling, or decision.
SECTION 25. The heading to Section 2210.552, Insurance
Code, is amended to read as follows:
Sec. 2210.552. [CLAIM] DISPUTES OTHER THAN CAUSATION,
COVERAGE, AND DAMAGE DISPUTES; VENUE.
SECTION 26. Section 2210.552, Insurance Code, is amended by
amending Subsection (a) and adding Subsection (e) to read as
follows:
(a) Except as provided by Sections 2210.007 and 2210.106 and
Subchapter L-1, a person insured under this chapter who is
aggrieved by an act, ruling, or decision of the association
[relating to the payment of, the amount of, or the denial of a
claim] may:
(1) bring an action against the association[,
including an action under Chapter 541]; or
(2) appeal the act, ruling, or decision under Section
2210.551.
(e) A person who brings an action against the association
under this section:
(1) may recover only the amount of actual damages,
plus court costs and reasonable and necessary attorney's fees; and
(2) may not recover consequential, punitive, or
exemplary damages, including damages under Section 541.152(b) of
this code or Section 17.50, Business & Commerce Code.
SECTION 27. Subchapter L, Chapter 2210, Insurance Code, is
amended by adding Section 2210.553 to read as follows:
Sec. 2210.553. LIMITATIONS PERIOD. (a) Notwithstanding
any other law, including Section 541.162, a person insured under
this chapter who brings an action against the association in the
manner described by Section 2210.552(a)(1) must bring the action
not later than the second anniversary of the date of the act,
ruling, or decision of the association by which the insured is
aggrieved.
(b) This section is a statute of repose and controls over
any other applicable limitations period.
SECTION 28. Chapter 2210, Insurance Code, is amended by
adding Subchapter L-1 to read as follows:
SUBCHAPTER L-1. CLAIMS: SETTLEMENT AND DISPUTE RESOLUTION
Sec. 2210.571. DEFINITIONS. In this subchapter:
(1) "Association policy" means a windstorm and hail
insurance policy issued by the association.
(2) "Causation dispute" means a dispute involving the
extent to which damage to property insured under an association
policy was caused by an event or peril covered under the policy.
(3) "Claim" means a request for payment under an
association policy following damage to property insured, or alleged
to be insured, under the policy.
(4) "Claimant" means a person who makes a claim.
(5) "Coverage dispute" means a dispute that involves
whether, or the extent to which, an association policy covers
damages to property alleged to be insured under the policy. The
term does not include a causation dispute.
(6) "Damage dispute" means a dispute that involves the
extent of damage to property, or the cost of repairing or replacing
property, insured under an association policy. The term does not
include a causation dispute or coverage dispute.
Sec. 2210.572. EXCLUSIVE REMEDIES AND LIMITATION ON AWARD.
(a) This subchapter provides the exclusive remedies for a
causation, coverage, or damage dispute with the association.
(b) Except as provided by Section 2210.578, a claimant may
not be paid or recover any amount under this subchapter in excess of
the policy limits of the association policy under which the claim
that is the basis of a causation, coverage, or damage dispute is
made.
Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a)
Subject to Section 2210.205(b), an insured must file a claim under
an association policy not later than the first anniversary of the
date on which the damage to property that is the basis of the claim
occurs.
(b) Except as provided by Subsection (d), not later than the
90th day after the date the association receives a claim, the
association shall:
(1) notify the claimant in writing of the amount of
money, if any, the association will pay the claimant for the claim;
and
(2) provide the claimant with:
(A) a detailed description of the assumptions or
estimates used by the association in determining the amount of the
claim to be paid, including the estimated labor and materials
required and the estimated prices for the labor and materials; or
(B) if the association determines that, in whole
or in part, the property damaged is not insured under the
association policy, or that the property insured under the
association policy was damaged by an event or peril not covered by
the association policy, a detailed description of the factual and
legal basis on which the association determined that a coverage or
causation dispute exists concerning all or part of the claim.
(c) If the association does not notify the claimant in
accordance with Subsection (b), the claim is presumed to be covered
by the association policy.
(d) The association may extend the 90-day period described
by Subsection (b) for a period not to exceed 90 days, if, before the
end of the 90-day period described by Subsection (b), the
association determines that special circumstances require an
extension of the 90-day period described by Subsection (b) and
notifies the claimant in writing of that determination and those
circumstances.
(e) If a claimant fails to submit information necessary for
the association to determine whether to pay a claim or any portion
of a claim or to deny payment of a claim or any portion of a claim,
the association may request in writing the necessary information
from the claimant. If the association makes a written request for
information, the applicable period described by Subsection (b) or
(d) is tolled from the date the association requests the
information until the date the association receives from the
claimant information responsive to the request.
(f) In addition to the notice and information otherwise
required under this section, the association shall notify a
claimant of the time limits under Section 2210.574 to request
review of the association's determination under Subsection (e).
Sec. 2210.574. REQUEST FOR REVIEW OF ASSOCIATION
DETERMINATION. (a) A claimant aggrieved by a determination of the
association under Section 2210.573 may, not later than the 30th day
after the date the claimant receives the association's
determination, request in writing a review of the determination. A
claimant may submit written comments, documents, records, and other
information to the association with or following the request for
review.
(b) The association shall, on request and free of charge,
provide a claimant requesting review of an association
determination under Subsection (a) reasonable access to all
information relevant to the determination of the association that
is being reviewed. The claimant may copy the information at the
claimant's own cost or may request the association to provide a copy
of all or part of the information to the claimant. The association
may charge a claimant the actual cost incurred by the association in
providing a copy of information under this section, excluding any
amount for labor involved in making any information or copy of
information available to a claimant.
(c) Not later than the 60th day after the date the
association receives a request for review under Subsection (a), the
association shall notify the claimant in writing of the outcome of
the association's review. The association and the claimant may
agree to extend the 60-day period described by this subsection.
(d) The association's notice to the claimant of the outcome
of the association's review must be in writing, contain the reasons
for the outcome, and notify the claimant of the time limits to
request, as applicable, appraisal under Section 2210.575 or review
by an independent review panel under Section 2210.576.
Sec. 2210.575. APPRAISAL IN DAMAGE DISPUTES. (a) If, after
review of an association determination under Section 2210.574, a
damage dispute exists with reference to a claim filed under an
association policy, but a coverage or causation dispute does not
exist with reference to that claim, the claimant may request
appraisal of the extent of damage to the property, or the cost of
repairing or replacing the property, insured under the policy.
(b) A claimant must make a written request for appraisal not
later than the 30th day after the date the claimant receives actual
or constructive notice of the outcome of the association's review
of a determination under Section 2210.574 that is the basis of the
damage dispute. If a claimant, on a showing of good cause and not
later than the 60th day after the expiration of the 30-day period
described by this subsection, requests in writing that the 30-day
period to request appraisal be extended, the commissioner may grant
an additional 30-day period in which the claimant may request
appraisal.
(c) If a claimant requests appraisal under Subsection (b),
the claimant and the association shall resolve the damage dispute
through appraisal, in accordance with the terms of the association
policy. The results of the appraisal:
(1) are binding on the claimant and the association
and are subject to appeal and judicial review only in the manner
provided by Section 2210.578; and
(2) become final and appealable on the 15th day after
the date the appealing party receives actual or constructive notice
of the results.
(d) A request for appraisal, and participation in the
appraisal process, under this section is a condition precedent to
contesting a determination made by the association concerning the
extent of damage to property, or the cost of repairing or replacing
property, insured under an association policy. A claimant who does
not request appraisal within the applicable period described by
Subsection (b) waives the claimant's right to contest a
determination of the association concerning the extent of damage to
property, or the cost of repairing or replacing property, insured
under an association policy.
(e) The commissioner by rule shall establish policies and
procedures for an appraisal requested and conducted under this
section.
Sec. 2210.576. REVIEW BY INDEPENDENT REVIEW PANEL. (a) If,
after review of an association determination under Section
2210.574, a coverage or causation dispute exists with reference to
a claim filed under an association policy, the claimant may seek
resolution of all disputes concerning the claim, including a damage
dispute, through review by an independent review panel.
(b) A claimant must make a written request, mailed or served
on the association or the commissioner, for review by an
independent review panel not later than the 30th day after the date
the claimant receives actual or constructive notice of the outcome
of the association's review of a determination under Section
2210.574 that is the basis of the causation, coverage, or damage
dispute. If a claimant mails or serves a request for review by an
independent review panel, the association shall immediately
forward the request for review to the commissioner.
(c) If a claimant, on a showing of good cause and not later
than the 60th day after the expiration of the 30-day period
described by Subsection (b), requests in writing that the 30-day
period to request review by an independent review panel be
extended, the commissioner may grant an additional 30-day period in
which the claimant may request independent review under this
section.
(d) The commissioner shall appoint an independent review
panel to resolve a dispute in the manner described by this section.
A panel appointed under this section must consist of three members,
selected by the commissioner from a roster of qualified panel
members maintained and published by the commissioner. If a
selected panel member cannot serve or declines to serve for any
reason, the commissioner shall select a new panel member not later
than the 10th day after the date the panel member notifies the
commissioner of the member's inability or unwillingness to serve.
The commissioner shall appoint one member of the panel to serve as
the presiding officer of the panel.
(e) An independent review panel appointed under Subsection
(b) shall make a determination concerning, as applicable, the
causation, coverage, or damage dispute submitted to the panel for
review and notify the claimant and the association in writing of the
panel's determination as soon as practicable, but not later than
the 120th day after the date the independent review panel is
appointed. If the independent review panel does not make a
determination concerning a dispute before the 120th day, the
commissioner may grant a reasonable extension for the panel to make
a determination or dissolve the panel and appoint a new panel to
conduct the review.
(f) An independent review panel shall determine whether the
review of a dispute involves a technical issue requiring guidance
or information from the technical panel appointed under Section
2210.577. If the review of a dispute involves a technical issue, the
independent review panel shall request from the technical panel
guidance and any information relevant to the dispute.
(g) The 120-day period described by Subsection (e) is tolled
from the date the independent review panel requests guidance or
information from the technical panel through the date on which the
independent review panel receives the requested guidance or
information.
(h) The determination of an independent review panel:
(1) is binding on the claimant and the association and
is subject to appeal and judicial review only in the manner provided
by Section 2210.578; and
(2) becomes final and appealable on the 15th day after
the date the appealing party receives actual or constructive notice
of the determination.
(i) The commissioner by rule shall establish:
(1) the qualifications for members of the independent
review panel;
(2) procedures and deadlines to be used in independent
review;
(3) procedures and requirements relating to the
exchange of documents during the independent review process,
including the content of those documents; and
(4) procedures or requirements necessary for any other
matter regarding the handling of requests for review.
(j) The rules adopted by the commissioner under Subsection
(i) must ensure that the independent review process is fair to the
claimant and enables the claimant to participate in the independent
review process without engaging legal counsel.
Sec. 2210.577. TECHNICAL PANEL. (a) The commissioner
shall appoint a technical panel of experts to advise the
association concerning the extent to which damage to property
insured under an association policy was incurred as a result of
wind, waves, tidal surges, rising waters not caused by waves or
surges, and wind-driven rain associated with a storm. The panel
shall consist of a number of experts to be decided by the
commissioner. The commissioner shall appoint one member of the
panel to serve as the presiding officer of the panel.
(b) Members of the panel must have professional expertise
in, and be knowledgeable concerning, the geography and meteorology
of the Texas seacoast territory, as well as the scientific basis for
determining the extent to which damage to property is caused by
wind, waves, tidal surges, rising waters not caused by waves or
surges, and wind-driven rain associated with a storm.
(c) The panel shall meet at the request of the commissioner
or the call of the presiding officer of the panel.
(d) The panel shall investigate, collect, and evaluate the
information necessary to provide recommendations under Subsection
(e) and to provide guidance or other information requested by an
independent review panel under Section 2210.576.
(e) At the request of the commissioner, the technical panel
shall recommend to the commissioner methods for determining the
extent to which damage to property insured under an association
policy resulted from wind, waves, tidal surges, rising waters not
caused by waves or surges, and wind-driven rain associated with a
storm for geographic areas or regions designated by the
commissioner.
(f) After consideration of the recommendations made by the
panel under Subsection (e), the commissioner shall publish
guidelines that the association will use to settle claims.
Sec. 2210.578. JUDICIAL REVIEW. (a) A claimant who has
exhausted all administrative remedies under this subchapter and who
is aggrieved by an appraisal under Section 2210.575 or the
determination of an independent review panel under Section 2210.576
is entitled to judicial review. A claimant may not seek judicial
review before exhausting all administrative remedies under this
subchapter.
(b) A claimant may seek judicial review of an appraisal
under Section 2210.575 or the determination of an independent
review panel under Section 2210.576 in the manner provided for the
appeal of contested cases under Subchapter G, Chapter 2001,
Government Code. The standard for judicial review under this
section is the substantial evidence rule.
(c) In a proceeding for judicial review under this section,
the court may award only the amount described by Section
2210.572(b), plus court costs and reasonable and necessary
attorney's fees.
Sec. 2210.579. CONSTRUCTION WITH OTHER LAW. To the extent
of any conflict between a provision of this subchapter and any other
law, the provision of this subchapter prevails.
SECTION 29. Section 2210.551(e), Insurance Code, is
repealed.
SECTION 30. This Act applies only to a Texas windstorm and
hail insurance policy, and a dispute arising under a Texas
windstorm and hail insurance policy, delivered, issued for
delivery, or renewed by the Texas Windstorm Insurance Association
on or after the 30th day after the effective date of this Act. A
Texas windstorm and hail insurance policy, and a dispute arising
under a Texas windstorm and hail insurance policy, delivered,
issued for delivery, or renewed by the Texas Windstorm Insurance
Association before the 30th day after the effective date of this
Act, are governed by the law in effect on the date the policy was
delivered, issued for delivery, or renewed, and the former law is
continued in effect for that purpose.
SECTION 31. The Texas Windstorm Insurance Association shall
amend the association's plan of operation to conform to the changes
in law made by this Act not later than January 1, 2012.
SECTION 32. Sections 541.152 and 2210.552, Insurance Code,
as amended by this Act, 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 the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 33. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2011.