84R9618 SCL-D
By: Sheets H.B. No. 3204
A BILL TO BE ENTITLED
AN ACT
relating to a depopulation program for the Texas Windstorm
Insurance Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2210, Insurance Code, is amended by
adding Subchapter O to read as follows:
SUBCHAPTER O. DEPOPULATION PROGRAM
Sec. 2210.701. DEPOPULATION PROGRAM. (a) The association
shall administer, subject to commissioner approval, a depopulation
program that encourages the transfer of association policies to
insurers through the voluntary market or assumption reinsurance.
(b) An insurer engaged in the business of property and
casualty insurance in this state may elect to participate in the
depopulation program.
(c) An eligible surplus lines insurer may elect to
participate in the depopulation program if the surplus lines
insurer has at least a minimum A7 rating from A. M. Best or a
comparable rating determined by the commissioner. The commissioner
by rule shall establish the manner in which an eligible surplus
lines insurer may participate in the depopulation program. The
rules must address the transmission of information to participating
surplus lines insurers or surplus lines agents under Section
2210.702(a) or 2210.703(a) and the manner in which compliance with
Section 981.004(a)(1) must be established.
Sec. 2210.702. VOLUNTARY MARKET DEPOPULATION. (a) The
association shall notify each insurer who elects to participate in
the depopulation program of the expiration of an association
policy.
(b) In the notice provided under Subsection (a), the
association shall provide necessary information for the insurer to
determine whether to issue a policy in the voluntary market to the
association policyholder.
(c) If an insurer elects to issue a policy to an association
policyholder under this section, the insurer is legally and
contractually responsible for the issued policy regardless of
whether the association continues to provide some services on the
policy. Except as specifically provided in an agreement between
the association and the insurer, the insurer shall administer the
policy and process, adjust, and pay claims in accordance with the
policy.
(d) If an insurer offers a policy to a policyholder under
this section that contains generally comparable coverage and
premiums to the association policy as determined by commissioner
rule, the association may not renew or issue a new association
policy to the policyholder. The commissioner by rule shall
establish, as a percentage, a reasonable difference in premium cost
that qualifies as comparable premiums for purposes of this
subsection.
Sec. 2210.703. ASSUMPTION REINSURANCE DEPOPULATION. (a)
The association shall make available to insurers who elect to
participate in the depopulation program association policy
information necessary for the insurers to determine whether to
reinsure a policy ceded to the insurer by the association.
(b) If an insurer elects to reinsure a policy under this
section, the reinsurance must be provided as assumption reinsurance
and the insurer is legally and contractually responsible for the
association policy ceded to the insurer on the effective date of the
reinsurance agreement regardless of whether the association
continues to provide some services on the policy. Except as
specifically provided in an agreement between the association and
the insurer, the insurer shall administer the policy and process,
adjust, and pay claims in accordance with the policy.
Sec. 2210.704. CONFIDENTIALITY OF INFORMATION. An insurer
may use information concerning a specific policy or insured
provided by the association under Sections 2210.702(a) and
2210.703(a) only for the purposes of this subchapter and may not use
or disclose the information for any other purpose.
SECTION 2. As soon as practicable after the effective date
of this Act, the board of directors of the Texas Windstorm Insurance
Association shall propose amendments to the plan of operation of
the association and the commissioner of insurance shall adopt rules
to implement Subchapter O, Chapter 2210, Insurance Code, as added
by this Act.
SECTION 3. This Act takes effect September 1, 2015.