Texas 2019 - 86th Regular

Texas House Bill HB1510 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	86R7883 JES-D
2	2	By: Paddie H.B. No. 1510
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the operations and functions of the Texas Windstorm
8	8	Insurance Association and the sunset review date for and programs
9	9	administered by the association; authorizing a fee.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 2210.002(b), Insurance Code, is amended
12	12	to read as follows:
13	13	(b) The association is subject to review under Chapter 325,
14	14	Government Code (Texas Sunset Act), but is not abolished under that
15	15	chapter. The association shall be reviewed during the period in
16	16	which state agencies abolished in 2031 [2019] are reviewed. The
17	17	association shall pay the costs incurred by the Sunset Advisory
18	18	Commission in performing the review of the association under this
19	19	subsection. The Sunset Advisory Commission shall determine the
20	20	costs of the review performed under this subsection, and the
21	21	association shall pay the amount of those costs promptly on receipt
22	22	of a statement from the Sunset Advisory Commission regarding those
23	23	costs. This subsection expires September 1, 2031 [2019].
24	24	SECTION 2. Section 2210.008, Insurance Code, is amended by
25	25	adding Subsections (d), (e), and (f) to read as follows:
26	26	(d) The association may propose a rule for adoption by the
27	27	commissioner. Except as provided by this section, the
28	28	association's proposal is governed by Subchapter B, Chapter 2001,
29	29	Government Code. The association is an interested person under
30	30	that subchapter for purposes of a proceeding initiated under this
31	31	section.
32	32	(e) Notwithstanding Section 2001.021(c), Government Code,
33	33	not later than the 30th day after the date the commissioner receives
34	34	a proposed rule from the association, the commissioner shall
35	35	initiate a rulemaking proceeding under Subchapter B, Chapter 2001,
36	36	Government Code.
37	37	(f) The association may request a public hearing under
38	38	Section 2001.029, Government Code, in connection with a rule
39	39	proposed under this section.
40	40	SECTION 3. Section 2210.102, Insurance Code, is amended by
41	41	adding Subsection (g) to read as follows:
42	42	(g) Members appointed to the board of directors under
43	43	Subsections (c) and (d), other than the member appointed under
44	44	Subsection (c-1), must represent the general public in the regions
45	45	described by those subsections. A person may not be appointed to
46	46	represent the general public under Subsection (c) or (d) if the
47	47	person or the person's spouse:
48	48	(1) is employed by or participates in the management
49	49	of a business entity or other organization:
50	50	(A) operating in the property and casualty
51	51	insurance industry in this state;
52	52	(B) receiving money from the association, other
53	53	than insurance claim payments; or
54	54	(C) receiving money from association
55	55	policyholders with respect to the policyholders' claims;
56	56	(2) owns or controls, directly or indirectly, more
57	57	than a 10 percent interest in a business entity or other
58	58	organization:
59	59	(A) operating in the property and casualty
60	60	insurance industry in this state;
61	61	(B) receiving money from the association, other
62	62	than insurance claim payments; or
63	63	(C) receiving money from association
64	64	policyholders with respect to the policyholders' claims; or
65	65	(3) uses or receives a substantial amount of tangible
66	66	goods, services, or money from the association, other than:
67	67	(A) insurance claim payments; or
68	68	(B) compensation or reimbursement authorized by
69	69	law for the board members' membership, attendance, or expenses.
70	70	SECTION 4. Subchapter C, Chapter 2210, Insurance Code, is
71	71	amended by adding Section 2210.1031 to read as follows:
72	72	Sec. 2210.1031. TRAINING. (a) A person who is appointed to
73	73	and qualifies for office as a member of the board of directors may
74	74	not vote, deliberate, or be counted as a member in attendance at a
75	75	meeting of the board of directors until the person completes a
76	76	training program that complies with this section.
77	77	(b) The training program must provide the person with
78	78	information regarding:
79	79	(1) the law governing the operation of the
80	80	association;
81	81	(2) the programs, functions, rules, and budget of the
82	82	association;
83	83	(3) the scope of and limitations on the rulemaking
84	84	authority of the board of directors;
85	85	(4) the results of the most recent formal audit of the
86	86	association;
87	87	(5) the requirements of:
88	88	(A) laws relating to open meetings, public
89	89	information, administrative procedure, and conflict of interest
90	90	disclosure; and
91	91	(B) other laws applicable to members of a state
92	92	policymaking body in performing their duties; and
93	93	(6) any applicable ethics policies adopted by the
94	94	association or the Texas Ethics Commission.
95	95	(c) The general manager of the association shall create a
96	96	training manual that includes the information required by
97	97	Subsection (b). The general manager shall distribute a copy of the
98	98	training manual annually to each member of the board of directors.
99	99	Each member of the board of directors shall sign and submit to the
100	100	general manager a statement acknowledging that the member received
101	101	and has reviewed the training manual.
102	102	SECTION 5. Subchapter C, Chapter 2210, Insurance Code, is
103	103	amended by adding Section 2210.109 to read as follows:
104	104	Sec. 2210.109. DISCLOSURE OF CONFLICTS. (a) A member of
105	105	the board of directors, or a member of a subcommittee of the board
106	106	of directors that relates to underwriting and actuarial matters,
107	107	shall disclose any potential conflict of interest of the member
108	108	known by the member with respect to a matter for discussion or vote
109	109	by the board or subcommittee, as applicable, before the discussion
110	110	or vote. A potential conflict of interest is an interest that may
111	111	reasonably be expected to diminish the member's independent
112	112	judgment with respect to the matter for discussion or vote.
113	113	Potential conflicts of interest required to be disclosed under this
114	114	section include:
115	115	(1) a financial or personal interest in an entity that
116	116	may financially benefit from the outcome of the discussion or vote;
117	117	and
118	118	(2) holding an insurance policy issued by the
119	119	association that may be affected by the discussion or vote.
120	120	(b) A disclosure under this section must be made available
121	121	to the public. A board or subcommittee member satisfies this
122	122	requirement if:
123	123	(1) with respect to an open meeting or meeting
124	124	broadcast live on the association's Internet website, the member
125	125	publicly discloses the conflict of interest in the meeting or
126	126	during the broadcast; or
127	127	(2) with respect to a meeting that is not an open
128	128	meeting or broadcast live on the association's Internet website,
129	129	the member discloses the conflict of interest in the agenda of the
130	130	meeting and makes the agenda publicly available on the
131	131	association's Internet website before the meeting.
132	132	SECTION 6. Section 2210.202, Insurance Code, is amended to
133	133	read as follows:
134	134	Sec. 2210.202. APPLICATION FOR COVERAGE; DECLINATION
135	135	REQUIREMENT. (a) A person who has an insurable interest in
136	136	insurable property may apply to the association for insurance
137	137	coverage provided under the plan of operation and an inspection of
138	138	the property, subject to any rules established by the board of
139	139	directors and approved by the commissioner. The association shall
140	140	make insurance available to each applicant in the catastrophe area
141	141	whose property is insurable property but who, after diligent
142	142	efforts, is unable to obtain property insurance through the
143	143	voluntary market, as evidenced by one declination from an insurer
144	144	authorized to engage in the business of, and writing, property
145	145	insurance providing windstorm and hail coverage in the first tier
146	146	coastal counties. For purposes of this section, "declination" has
147	147	the meaning assigned by the plan of operation and shall include a
148	148	refusal to offer coverage for the perils of windstorm and hail and
149	149	the inability to obtain substantially equivalent insurance
150	150	coverage for the perils of windstorm and hail. Notwithstanding
151	151	Section 2210.203(c), evidence of one declination every three
152	152	calendar years is [also] required before [with an application for]
153	153	renewal of an association policy.
154	154	(b) A property and casualty agent must submit an application
155	155	for initial insurance coverage on behalf of the applicant on forms
156	156	prescribed by the association. [The association shall develop a
157	157	simplified renewal process that allows for the acceptance of an
158	158	application for renewal coverage, and payment of premiums, from a
159	159	property and casualty agent or a person insured under this
160	160	chapter.] An application for initial [or renewal] coverage must
161	161	contain:
162	162	(1) a statement as to whether the applicant has
163	163	submitted or will submit the required premium payment [in full]
164	164	from personal funds or, if not, to whom a balance is or will be due;
165	165	and
166	166	(2) a statement that the agent acting on behalf of the
167	167	applicant possesses proof of the declination described by
168	168	Subsection (a) and proof of flood insurance coverage or
169	169	unavailability of that coverage as described by Section
170	170	2210.203(a-1).
171	171	SECTION 7. Sections 2210.203(a) and (c), Insurance Code,
172	172	are amended to read as follows:
173	173	(a) If the association determines that the property for
174	174	which an application for initial insurance coverage is made is
175	175	insurable property, the association, on payment of the premium in
176	176	full or in part as authorized under Section 2210.2032, shall direct
177	177	the issuance of an insurance policy as provided by the plan of
178	178	operation.
179	179	(c) A policy may be renewed annually [on application for
180	180	renewal] as long as the property continues to be insurable
181	181	property.
182	182	SECTION 8. Subchapter E, Chapter 2210, Insurance Code, is
183	183	amended by adding Sections 2210.2031 and 2210.2032 to read as
184	184	follows:
185	185	Sec. 2210.2031. AUTOMATIC RENEWAL. (a) The association
186	186	shall establish a process for automatic renewal of a policy in
187	187	accordance with this section.
188	188	(b) The process established under Subsection (a) must:
189	189	(1) provide for the association to verify:
190	190	(A) the declination required by Section
191	191	2210.202;
192	192	(B) flood insurance coverage required by Section
193	193	2210.203; and
194	194	(C) any other information related to
195	195	insurability of a property, including changes to the condition or
196	196	value of the property that would affect the availability of
197	197	coverage or premium cost to insure the property; and
198	198	(2) provide an opportunity for the policyholder to
199	199	elect to cancel the policy before the policy automatically renews.
200	200	Sec. 2210.2032. PREMIUM PAYMENT METHODS. (a) The
201	201	association shall accept payment of premium by credit card. The
202	202	association may impose a fee on a policyholder for the use of a
203	203	credit card to pay premium. The fee may not exceed the amount
204	204	necessary to recoup the cost incurred by the association in
205	205	connection with the policyholder's use of a credit card.
206	206	(b) The association shall provide to policyholders the
207	207	option to pay premium in installments. A policyholder that pays
208	208	premium in accordance with an installment payment plan established
209	209	by the association and remains current on the payments satisfies
210	210	the obligation for payment of premium under this chapter.
211	211	SECTION 9. Section 2210.205(a), Insurance Code, is amended
212	212	to read as follows:
213	213	(a) A windstorm and hail insurance policy issued by the
214	214	association must:
215	215	(1) require an insured to file a claim under the policy
216	216	not later than the first anniversary of the date on which the damage
217	217	to property that is the basis of the claim occurs; [and]
218	218	(2) contain, in boldface type, a conspicuous notice
219	219	concerning the resolution of disputes under the policy, including:
220	220	(A) the processes and deadlines for appraisal
221	221	under Section 2210.574 and alternative dispute resolution under
222	222	Section 2210.575;
223	223	(B) the binding effect of appraisal under Section
224	224	2210.574; and
225	225	(C) the necessity of complying with the
226	226	requirements of Subchapter L-1 to seek relief, including judicial
227	227	relief; and
228	228	(3) contain a conspicuous notice concerning the
229	229	availability of supplemental payments under the policy, including:
230	230	(A) a description of the process for requesting a
231	231	supplemental payment; and
232	232	(B) notice of applicable deadlines related to
233	233	supplemental payments.
234	234	SECTION 10. Sections 2210.207(c) and (d), Insurance Code,
235	235	are amended to read as follows:
236	236	(c) If, on the effective date of an association policy [at
237	237	the time of loss], the total amount of insurance applicable to a
238	238	dwelling is equal to 80 percent or more of the full replacement cost
239	239	of the dwelling or equal to the maximum amount of insurance
240	240	otherwise available through the association, coverage applicable
241	241	to the dwelling under the policy is extended to include the full
242	242	cost of repair or replacement, without a deduction for
243	243	depreciation.
244	244	(d) If, on the effective date of an association policy [at
245	245	the time of loss], the total amount of insurance applicable to a
246	246	dwelling is equal to less than 80 percent of the full replacement
247	247	cost of the dwelling and less than the maximum amount of insurance
248	248	available through the association, liability for loss under the
249	249	policy may not exceed the replacement cost of the part of the
250	250	dwelling that is damaged or destroyed, less depreciation.
251	251	SECTION 11. Section 2210.251(g), Insurance Code, is amended
252	252	to read as follows:
253	253	(g) A certificate of compliance issued by the department [or
254	254	association] under Section 2210.2515 demonstrates compliance with
255	255	the applicable building code under the plan of operation. The
256	256	certificate is evidence of insurability of the structure by the
257	257	association.
258	258	SECTION 12. Section 2210.2515, Insurance Code, is amended
259	259	by amending Subsection (c) and adding Subsections (c-1) and (i) to
260	260	read as follows:
261	261	(c) A person may apply to the department [association] on a
262	262	form prescribed by the department for a certificate of compliance
263	263	for a completed improvement. The department [association] shall
264	264	issue a certificate of compliance for a completed improvement if a
265	265	professional engineer licensed by the Texas Board of Professional
266	266	Engineers[:
267	267	[(1) has designed the improvement, has affixed the
268	268	engineer's seal on the design, and submits to the association on a
269	269	form prescribed by the department an affirmation of compliance with
270	270	the applicable building code under the plan of operation; or
271	271	[(2)] completes and submits to the department a sealed
272	272	post-construction evaluation report that:
273	273	(1) confirms compliance with the applicable building
274	274	code under the plan of operation; and
275	275	(2) includes documentation supporting the engineer's
276	276	evaluation on a form prescribed by the department on which the
277	277	engineer has affixed the engineer's seal.
278	278	(c-1) The department may deny an application for a
279	279	certificate of compliance under Subsection (c) if the evaluation
280	280	report is not fully documented as required under Subsection (c).
281	281	(i) The department is authorized to submit a formal
282	282	complaint to the Texas Board of Professional Engineers related to
283	283	the work of a professional engineer as reflected in materials
284	284	submitted under Subsection (c).
285	285	SECTION 13. Subchapter H, Chapter 2210, Insurance Code, is
286	286	amended by adding Section 2210.3511 to read as follows:
287	287	Sec. 2210.3511. PUBLIC ACCESS TO RATE FILINGS. (a) The
288	288	association shall make a proposed rate filing publicly available on
289	289	its Internet website for at least seven days before the date the
290	290	board of directors votes on the submission of the proposed rate
291	291	filing to the department.
292	292	(b) The association shall accept public comment with
293	293	respect to a proposed rate filing at a public meeting of the board
294	294	of directors before the board of directors votes on the submission
295	295	of the proposed rate filing to the department.
296	296	SECTION 14. Section 2210.573, Insurance Code, is amended by
297	297	adding Subsection (f-1) to read as follows:
298	298	(f-1) In a notice described by Subsection (d)(1) or (2), the
299	299	association must include additional information concerning the
300	300	availability of supplemental payments under the policy, including:
301	301	(1) a description of the process for requesting a
302	302	supplemental payment; and
303	303	(2) applicable deadlines related to supplemental
304	304	payments.
305	305	SECTION 15. Subchapter L-1, Chapter 2210, Insurance Code,
306	306	is amended by adding Section 2210.5732 to read as follows:
307	307	Sec. 2210.5732. SUPPLEMENTAL PAYMENTS. (a) The
308	308	association is authorized to provide for supplemental payments
309	309	under a windstorm and hail insurance policy issued by the
310	310	association.
311	311	(b) The commissioner shall adopt rules clarifying the
312	312	deadlines related to supplemental payments. The commissioner shall
313	313	solicit and consider comments from the association, association
314	314	members, and policyholders in adopting rules under this section.
315	315	(c) The rules adopted under this section must ensure that a
316	316	request for supplemental payment will not impair a policyholder's
317	317	right to appraisal under Section 2210.574.
318	318	SECTION 16. Section 2210.705, Insurance Code, is amended to
319	319	read as follows:
320	320	Sec. 2210.705. TRANSFER OF POLICIES. The commissioner
321	321	shall by rule establish the procedure for the transfer of reinsured
322	322	policies. The rules may not contain deadlines that require a
323	323	property and casualty insurer or agent or a policyholder to take
324	324	action or make a decision on or after June 1 or before December 1 in
325	325	any year. The rule must provide that a reinsurance agreement
326	326	include:
327	327	(1) [an offer commencement date of December 1;
328	328	[(2)] the opportunity for the policyholder to opt out
329	329	of the reinsurance agreement not more than 60 days after the
330	330	policyholder receives notice of the reinsurance agreement [on or
331	331	before May 31];
332	332	(2) [(3)] a transfer of the earned premium on a
333	333	reinsured policy to a trust account to be held until the expiration
334	334	of the opt-out period described by Subdivision (1) [(2)] when the
335	335	earned premium for the final reinsured policy will be transferred
336	336	to the reinsurer;
337	337	(3) [(4)] a period of not less than 60 days for the
338	338	agent of record to accept an appointment or other written agreement
339	339	with the reinsurer; and
340	340	(4) [(5)] any other requirements as the commissioner
341	341	determines necessary for the protection of policyholders and the
342	342	policyholders' agents.
343	343	SECTION 17. Section 2210.107(b), Insurance Code, is
344	344	repealed.
345	345	SECTION 18. (a) Not later than January 1, 2020:
346	346	(1) the commissioner of insurance shall adopt or amend
347	347	rules as required by Section 2210.5732, Insurance Code, as added by
348	348	this Act, and Section 2210.705, Insurance Code, as amended by this
349	349	Act; and
350	350	(2) the Texas Windstorm Insurance Association shall
351	351	provide for a training program for members of the association's
352	352	board of directors as required by Section 2210.1031, Insurance
353	353	Code, as added by this Act.
354	354	(b) A member of the board of directors may not vote,
355	355	deliberate, or be counted as a member in attendance at a meeting of
356	356	the board held on or after January 1, 2020, until the member
357	357	completes the training required by Section 2210.1031, Insurance
358	358	Code, as added by this Act.
359	359	SECTION 19. (a) Except as provided by Section 18 of this
360	360	Act, Sections 2210.102(g) and 2210.1031, Insurance Code, as added
361	361	by this Act, do not affect the entitlement of a member serving on
362	362	the board of directors of the Texas Windstorm Insurance Association
363	363	immediately before the effective date of this Act to continue to
364	364	serve on the board for the remainder of the term to which the member
365	365	was appointed.
366	366	(b) The Texas Windstorm Insurance Association is not
367	367	required to comply with Sections 2210.2031 and 2210.2032, Insurance
368	368	Code, as added by this Act, before January 1, 2020.
369	369	(c) Sections 2210.205 and 2210.207, Insurance Code, as
370	370	amended by this Act, apply only to an insurance policy that is
371	371	delivered, issued for delivery, or renewed on or after January 1,
372	372	2020. A policy delivered, issued for delivery, or renewed before
373	373	January 1, 2020, is governed by the law as it existed immediately
374	374	before the effective date of this Act, and that law is continued in
375	375	effect for that purpose.
376	376	(d) Section 2210.251(g), Insurance Code, as amended by this
377	377	Act, does not affect the status of a certificate of compliance
378	378	issued by the Texas Windstorm Insurance Association before
379	379	September 1, 2019, or after September 1, 2019, in response to an
380	380	application made before that date for purposes of establishing
381	381	evidence of insurability.
382	382	(e) Section 2210.2515, Insurance Code, as amended by this
383	383	Act, applies only to an application for a certificate of compliance
384	384	made on or after September 1, 2019. An application for a
385	385	certificate of compliance made before September 1, 2019, is
386	386	governed by the law as it existed immediately before the effective
387	387	date of this Act, and that law is continued in effect for that
388	388	purpose.
389	389	(f) Section 2210.3511, Insurance Code, as added by this Act,
390	390	applies only to a rate filing made on or after the effective date of
391	391	this Act.
392	392	(g) Section 2210.573(f-1), Insurance Code, as added by this
393	393	Act, applies only to a notice with respect to a claim submitted
394	394	under an association policy on or after the effective date of this
395	395	Act.
396	396	SECTION 20. This Act takes effect September 1, 2019.