82R9885 AJA-D
By: Smithee H.B. No. 3024
A BILL TO BE ENTITLED
AN ACT
relating to the Fair Access to Insurance Requirements (FAIR) Plan
Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 541, Insurance Code, is
amended by adding Section 541.0051 to read as follows:
Sec. 541.0051. EXEMPTION: FAIR PLAN. This chapter does not
apply to the Fair Access to Insurance Requirements (FAIR) Plan
Association or an action brought against the association by a
person who is insured under Chapter 2211.
SECTION 2. Subchapter A, Chapter 542, Insurance Code, is
amended by adding Section 542.0021 to read as follows:
Sec. 542.0021. EXEMPTION: FAIR PLAN. This chapter does not
apply to the Fair Access to Insurance Requirements (FAIR) Plan
Association or a claim made against the association by a person who
is insured under Chapter 2211.
SECTION 3. Subchapter A, Chapter 2211, Insurance Code, is
amended by adding Sections 2211.004 and 2211.005 to read as
follows:
Sec. 2211.004. FAIR POLICYHOLDER AS ARBITRATOR OR JUDGE. A
person who holds a policy issued by the association may not serve as
an arbitrator or judge in an arbitration or judicial or
administrative proceeding in which the association is a party.
Sec. 2211.005. EXEMPLARY DAMAGES; ATTORNEY'S FEES. (a) The
association is not subject to exemplary damages or multiplied
damages under any other law.
(b) The association may be required to pay another party's
attorney's fees only as provided by this chapter.
SECTION 4. Section 2211.0521, Insurance Code, is amended by
adding Subsections (c), (d), (e), and (f) to read as follows:
(c) The association is subject to Chapter 551, Government
Code.
(d) Notice of a meeting of the association's governing
committee must, not later than the seventh day before the date the
meeting is scheduled, be conspicuously posted on the department's
Internet website and on the association's Internet website. This
subsection does not apply to a meeting subject to Section
551.0411(b) or 551.045, Government Code.
(e) Meetings of the association's governing committee must
be made readily accessible to the public by video or audio on the
Internet.
(f) The association's governing committee shall allow a
representative of the department to be present at meetings of the
association's governing committee, physically or otherwise, at the
department's option. This subsection applies to a closed meeting
authorized by Subchapter D, Chapter 551, Government Code.
SECTION 5. Subchapter B, Chapter 2211, Insurance Code, is
amended by adding Sections 2211.0522, 2211.0541, and 2211.0542 to
read as follows:
Sec. 2211.0522. RECORDS OF ASSOCIATION. The association is
subject to Chapter 552, Government Code.
Sec. 2211.0541. AGENT COMMISSIONS. The commissioner shall
ensure that the agent commissions adopted under Section 2211.054
are fair and reasonable with respect to the work performed by the
agents and the prevailing compensation of agents in the private
residential property insurance market.
Sec. 2211.0542. REINSURANCE. The association may recoup
the costs of ceding reinsurance by imposing a pro rata premium
surcharge on policies issued by the association.
SECTION 6. Subchapter D, Chapter 2211, Insurance Code, is
amended by adding Sections 2211.158, 2211.159, 2211.160, 2211.161,
and 2211.162 to read as follows:
Sec. 2211.158. FLOOD INSURANCE. (a) The association may
not issue an insurance policy for initial or renewal coverage
unless evidence is submitted to the association that the property
to be covered under the policy is also covered by a flood insurance
policy issued under the National Flood Insurance Program in an
amount equal to or greater than the amount of coverage under the
policy to be issued by the association. This section does not apply
to property for which flood insurance is not available under the
National Flood Insurance Program.
(b) An insurance agent who submits an application for a
policy under this chapter shall offer flood insurance coverage
required by this section to the prospective insured if that
coverage is available.
Sec. 2211.159. COVERAGE LIMITS IN CERTAIN FLOOD ZONES. A
policy issued by the association to cover property all or part of
which is located in Zone A or Zone V, as defined by the Federal
Emergency Management Agency, must contain coverage limits that are
the same as any applicable coverage limits for flood insurance
coverage provided under the National Flood Insurance Program.
Sec. 2211.160. REQUIRED POLICY PROVISION: EVIDENCE OF
FLOOD INSURANCE. A policy issued by the association must require an
insured to submit to the association evidence of coverage required
by Section 2211.158(a) before the association will be required to
pay the insured's claim under the policy.
Sec. 2211.161. REQUIRED POLICY PROVISIONS: DEADLINE FOR
FILING CLAIM; NOTICE CONCERNING MANDATORY ARBITRATION. (a) A
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
or loss that is the basis of the claim occurs unless an extension is
obtained from the commissioner under this section; and
(2) contain, in boldface type, a conspicuous notice
concerning the mandatory arbitration of coverage and claim disputes
under Subchapter H, including the deadline for requesting
arbitration.
(b) The commissioner for good cause shown may extend the
deadline for filing a claim prescribed by this section for up to 90
days.
Sec. 2211.162. CLAIMS HANDLING. (a) Not later than the 30th
day after the date a policyholder submits a claim, the association
shall provide the policyholder a written appraisal of the damages
that are the subject of the claim.
(b) On or before the 60th day after the date a policyholder
receives an appraisal under Subsection (a), the policyholder may:
(1) contest the appraisal; or
(2) request a supplemental review or payment.
(c) The commissioner for good cause shown may extend a
deadline prescribed by this section.
(d) Not later than the 30th day after the date a
policyholder contests an appraisal or makes a request under
Subsection (b), the association shall respond to the contest or
request.
SECTION 7. Chapter 2211, Insurance Code, is amended by
adding Subchapter H to read as follows:
SUBCHAPTER H. ARBITRATION
Sec. 2211.351. ARBITRATION OF CLAIM DISPUTES REQUIRED. A
dispute between the association and a person insured under this
chapter relating to the payment of, the amount of, or the denial of
a particular claim must be resolved through binding arbitration in
accordance with this subchapter.
Sec. 2211.352. NOTICE OF CLAIM; DEMAND FOR ARBITRATION.
(a) Not later than the 30th day before the date an insured submits
a demand for arbitration under this section, the insured must
provide the association with a notice of claim that states the
amount of damages or additional damages demanded by the insured and
details each specific complaint of the insured.
(b) The insured may request arbitration under this section
by submitting a written demand to the department not later than the
second anniversary of the date on which the damage or loss that is
the basis of the particular claim occurs. The commissioner by rule
shall prescribe the method for filing a demand for arbitration
under this section, which may allow or require submission by mail or
the Internet or by a method of local submission in the county in
which the loss that is the subject of the claim occurred.
(c) An arbitration under this section may not commence until
the notice of claim required by this section has been given and the
prescribed notice period has expired.
(d) The commissioner for good cause shown may extend the
deadline for requesting arbitration under this section for up to 90
days.
Sec. 2211.353. ARBITRATION PROCEDURES. (a) The
commissioner by rule shall establish procedures for conducting an
arbitration under this subchapter. The procedures must:
(1) be consistent with any applicable rules of the
American Arbitration Association in effect on the date on which a
policy under which a claim arbitrated under this subchapter was
issued;
(2) provide for the parameters of mandatory and
permissible discovery; and
(3) establish deadlines for various stages of the
arbitration proceeding.
(b) Rules adopted under this section must contain
provisions to ensure that awards under this subchapter are fair and
to prevent unfair deviations in awards under this subchapter.
(c) A policyholder may be represented by an attorney in an
arbitration conducted under this subchapter.
(d) An arbitrator conducting an arbitration under this
subchapter shall issue scheduling orders for the arbitration in
accordance with commissioner rules.
Sec. 2211.354. QUALIFICATION AND CERTIFICATION OF
ARBITRATOR. (a) The commissioner by rule shall:
(1) require an arbitrator conducting an arbitration
under this subchapter to be certified by the department;
(2) prescribe qualifications for being certified as an
arbitrator under this section; and
(3) establish a procedure through which an arbitrator
may become certified to conduct arbitrations under this subchapter.
(b) A member of the legislature or a person who holds a
policy issued by the association may not be certified or serve as an
arbitrator under this section.
Sec. 2211.355. LIST OF ARBITRATORS. The department shall
make publicly available a list of the arbitrators certified to
conduct arbitrations under this subchapter.
Sec. 2211.356. SELECTION OF ARBITRATOR. (a) The
commissioner shall randomly assign a certified arbitrator to
conduct an arbitration demanded under this subchapter.
(b) Subject to this subsection, on or before the 10th day
after the date the commissioner notifies the insured or the
association of the assigned arbitrator, the insured or the
association may strike the assigned arbitrator. The insured and
the association are each entitled to strike only one assigned
arbitrator under this subsection.
(c) If an assigned arbitrator is struck under this section,
the commissioner shall promptly assign another certified
arbitrator.
Sec. 2211.357. COMPENSATION OF ARBITRATOR. (a) The
commissioner shall adopt rules governing the compensation of a
certified arbitrator for conducting an arbitration under this
subchapter, including the amount of compensation, which party or
parties are liable for the payment of the compensation, and other
necessary billing and payment procedures.
(b) The commissioner shall approve all final requests for
compensation by an arbitrator who conducts an arbitration under
this subchapter.
Sec. 2211.358. SETTLEMENT OFFERS. (a) Not later than the
30th day before the date an arbitration proceeding under this
subchapter is scheduled to commence, the association and the
insured must each submit a settlement offer to the department. The
arbitrator assigned to conduct the arbitration may not be informed
of or consider the content of the settlement offers.
(b) If the arbitrator's award is at least 10 percent greater
than the settlement amount offered by the association under this
section, the insured is entitled to the insured's reasonable and
necessary attorney's fees in connection with the arbitration. The
commissioner by rule shall adopt guidelines for an arbitrator to
consider in awarding attorney's fees under this subsection.
(c) An arbitrator may award interest on the amount otherwise
awarded to pay the insured's claim at a rate of six percent
annually, computed from the 30th day after the date the association
received the required notice of the claim until the date the claim
is paid.
Sec. 2211.359. APPLICABILITY OF CERTAIN OTHER LAW TO
ARBITRATION. Except to the extent of any conflict with this
subchapter, Chapter 171, Civil Practice and Remedies Code, applies
to an arbitration conducted under this subchapter.
Sec. 2211.360. ADDITIONAL RULES. In addition to the rules
otherwise required by this subchapter, the commissioner may adopt
any other rules necessary to implement this subchapter.
SECTION 8. (a) The changes in law made by Sections 541.0051
and 542.0021, Insurance Code, as added by this Act, apply only to
conduct of the Fair Access to Insurance Requirements (FAIR) Plan
Association that occurs on or after the effective date of this Act.
Conduct of the association that occurs 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.
(b) Section 2211.004, Insurance Code, as added by this Act,
applies to an arbitration or judicial or administrative proceeding
commenced on or after the effective date of this Act.
(c) Section 2211.005, Insurance Code, as added by this Act,
applies to a cause of action that is not to recover the amount of a
claim under an insurance policy issued under Chapter 2211,
Insurance Code, that accrues on or after the effective date of this
Act. With respect to a claim under an insurance policy issued under
Chapter 2211, Insurance Code, Section 2211.005, Insurance Code, as
added by this Act, applies only to a claim under a policy delivered,
issued for delivery, or renewed on or after the effective date of
this Act.
(d) Subchapter D, Chapter 2211, Insurance Code, as amended
by this Act, and Subchapter H, Chapter 2211, Insurance Code, as
added by this Act, apply only to an insurance policy delivered,
issued for delivery, or renewed on or after January 1, 2012, and a
claim under that policy. A policy delivered, issued for delivery,
or renewed before January 1, 2012, and a claim under that policy are
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 9. This Act takes effect September 1, 2011.