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Texas House Bill HB1900

Texas 2019 - 86th Regular

Texas House Bill HB1900 Compare Versions

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1-H.B. No. 1900
1+By: Bonnen of Galveston (Senate Sponsor - Taylor) H.B. No. 1900
2+ (In the Senate - Received from the House April 23, 2019;
3+ April 24, 2019, read first time and referred to Committee on
4+ Business & Commerce; May 6, 2019, reported favorably by the
5+ following vote: Yeas 8, Nays 0; May 6, 2019, sent to printer.)
6+Click here to see the committee vote
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38
9+ A BILL TO BE ENTITLED
410 AN ACT
5- relating to certain operations and functions of the Texas Windstorm
6- Insurance Association and studies relating to the Texas Windstorm
7- Insurance Association and the Fair Access to Insurance Requirements
8- Plan; authorizing a penalty; authorizing an assessment.
11+ relating to replacement cost coverage in policies issued by the
12+ Texas Windstorm Insurance Association.
913 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10- SECTION 1. Section 2210.071, Insurance Code, is amended to
11- read as follows:
12- Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (a) If, in a
13- catastrophe year, an occurrence or series of occurrences in a
14- catastrophe area results in insured losses and operating expenses
15- of the association in excess of premium and other revenue of the
16- association, the excess losses and operating expenses shall be paid
17- as provided by this subchapter.
18- (b) The association may not pay insured losses and operating
19- expenses resulting from an occurrence or series of occurrences in a
20- catastrophe year with premium and other revenue earned in a
21- subsequent year.
22- SECTION 2. Section 2210.0715, Insurance Code, is amended to
23- read as follows:
24- Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a)
25- The association shall pay losses resulting from an occurrence or
26- series of occurrences in a catastrophe year in excess of premium and
27- other revenue of the association for that catastrophe year from
28- [available] reserves of the association available before or accrued
29- during that catastrophe year and [available] amounts in the
30- catastrophe reserve trust fund available before or accrued during
31- that catastrophe year.
32- (b) Proceeds of [Class 1] public securities issued or
33- assessments made before or as a result [the date] of any occurrence
34- or series of occurrences in a catastrophe year that results in
35- insured losses may not be included in [available] reserves
36- available for a subsequent catastrophe year for purposes of this
37- section.
38- SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is
39- amended by adding Section 2210.1052 to read as follows:
40- Sec. 2210.1052. EMERGENCY MEETING. If the ultimate loss
41- estimate for an occurrence or series of occurrences made by the
42- chief financial officer or chief actuary of the association
43- indicates member insurers may be subject to an assessment under
44- Subchapter B-1, the board of directors shall call an emergency
45- meeting to notify the member insurers about the assessment.
46- SECTION 4. Sections 2210.207(c) and (d), Insurance Code,
14+ SECTION 1. Sections 2210.207(c) and (d), Insurance Code,
4715 are amended to read as follows:
4816 (c) If, on the effective date of an association policy [at
4917 the time of loss], the total amount of insurance applicable to a
5018 dwelling is equal to 80 percent or more of the full replacement cost
5119 of the dwelling or equal to the maximum amount of insurance
5220 otherwise available through the association, coverage applicable
5321 to the dwelling under the policy is extended to include the full
5422 cost of repair or replacement, without a deduction for
5523 depreciation.
5624 (d) If, on the effective date of an association policy [at
5725 the time of loss], the total amount of insurance applicable to a
5826 dwelling is equal to less than 80 percent of the full replacement
5927 cost of the dwelling and less than the maximum amount of insurance
6028 available through the association, liability for loss under the
6129 policy may not exceed the replacement cost of the part of the
6230 dwelling that is damaged or destroyed, less depreciation.
63- SECTION 5. Section 2210.251(g), Insurance Code, is amended
64- to read as follows:
65- (g) A certificate of compliance issued by the department [or
66- association] under Section 2210.2515 demonstrates compliance with
67- the applicable building code under the plan of operation. The
68- certificate is evidence of insurability of the structure by the
69- association.
70- SECTION 6. Section 2210.2515, Insurance Code, is amended by
71- amending Subsection (c) and adding Subsections (c-1), (i), (j), and
72- (k) to read as follows:
73- (c) A person may apply to the department [association] on a
74- form prescribed by the department for a certificate of compliance
75- for a completed improvement. The department [association] shall
76- issue a certificate of compliance for a completed improvement if a
77- professional engineer licensed by the Texas Board of Professional
78- Engineers:
79- (1) has designed the improvement, has affixed the
80- engineer's seal on the design, and submits to the department
81- [association] on a form prescribed by the department an affirmation
82- that the design complies [of compliance] with the applicable
83- building code under the plan of operation and that the improvement
84- was constructed in accordance with the design; or
85- (2) completes and submits to the department a sealed
86- post-construction evaluation report that:
87- (A) confirms the improvement's compliance with
88- the applicable building code under the plan of operation; and
89- (B) includes documentation supporting the
90- engineer's post-construction evaluation report on a form
91- prescribed by the department on which the engineer has affixed the
92- engineer's seal.
93- (c-1) The department may deny an application for a
94- certificate of compliance under Subsection (c) if the evaluation
95- report or the form prescribed by the department under Subsection
96- (c)(1) is not fully documented as required under Subsection (c).
97- (i) The department is authorized to submit a formal
98- complaint under Chapter 1001, Occupations Code, to the Texas Board
99- of Professional Engineers related to the engineering work of a
100- professional engineer as reflected in the sealed post-construction
101- evaluation report or other materials submitted by an engineer under
102- Subsection (c).
103- (j) If the department finds that a person acting as a
104- qualified inspector under Section 2210.254 has failed to provide
105- complete and accurate information in connection with an inspection
106- for a certificate of compliance under this section, the department
107- may impose a reasonable penalty on the inspector, including by
108- prohibiting the inspector from applying for certificates of
109- compliance under this section. The commissioner may adopt rules as
110- necessary to implement this subsection.
111- (k) The department may rescind a certificate of compliance
112- issued under this section if the department finds that the
113- improvement does not comply with the applicable building code under
114- the plan of operation. The commissioner may adopt rules as
115- necessary to implement this subsection.
116- SECTION 7. Subchapter H, Chapter 2210, Insurance Code, is
117- amended by adding Section 2210.3511 to read as follows:
118- Sec. 2210.3511. PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS.
119- (a) The association shall make the association's rate adequacy
120- analysis publicly available on its Internet website for at least 14
121- days before the date the board of directors votes on the submission
122- of a proposed rate filing based on the analysis to the department.
123- The rate adequacy analysis must include:
124- (1) all user selected hurricane model input
125- assumptions; and
126- (2) output data:
127- (A) with the same content and in the same format
128- that is customarily provided to:
129- (i) the association by hurricane modelers;
130- and
131- (ii) the department by the association; and
132- (B) in a searchable electronic format that allows
133- for efficient analysis and is sufficiently detailed to allow the
134- historical experience in this state to be compared to results
135- produced by the model.
136- (b) The association shall accept public comment with
137- respect to the association's rate adequacy analysis at a public
138- meeting of the board of directors before the board of directors
139- votes on the submission of a proposed rate filing to the department.
140- SECTION 8. Section 2210.453, Insurance Code, is amended by
141- adding Subsections (d) and (e) to read as follows:
142- (d) The cost of the reinsurance purchased or alternative
143- financing mechanisms used under this section in excess of the
144- minimum funding level required by Subsection (b) shall be paid by
145- assessments as provided by this subsection. The association, with
146- the approval of the commissioner, shall notify each member of the
147- association of the amount of the member's assessment under this
148- subsection. The proportion of the cost to each insurer under this
149- subsection shall be determined in the manner used to determine each
150- insurer's participation in the association for the year under
151- Section 2210.052.
152- (e) A member of the association may not recoup an assessment
153- paid under Subsection (d) through a premium surcharge or tax
154- credit.
155- SECTION 9. Subchapter L-1, Chapter 2210, Insurance Code, is
31+ SECTION 2. Subchapter L-1, Chapter 2210, Insurance Code, is
15632 amended by adding Section 2210.5741 to read as follows:
15733 Sec. 2210.5741. REPLACEMENT COST COVERAGE CLAIM
158- PROCESSING. (a) After the association accepts coverage for a claim
159- in full or in part, a claimant whose association policy includes
160- replacement cost coverage for the claim may request the replacement
161- cost payment by submitting to the association documentation of the
162- cost and completion of the repairs related to the claim not later
163- than the 545th day after the date the claimant receives a
164- notification under Section 2210.573(d)(1) or (2).
34+ PROCESSING. (a) After the association accepts coverage for a
35+ claim in full or in part, a claimant whose association policy
36+ includes replacement cost coverage for the claim may request the
37+ replacement cost payment by submitting to the association
38+ documentation of the cost and completion of the repairs related to
39+ the claim not later than the 545th day after the date the claimant
40+ receives a notification under Section 2210.573(d)(1) or (2).
16541 (b) Not later than the 30th day after the date the
16642 association receives documentation under Subsection (a), the
16743 association shall provide the claimant, in writing, notification
16844 of:
16945 (1) the amount of the replacement cost payment the
17046 association will make; and
17147 (2) the deadline to request appraisal under this
17248 section.
17349 (c) The association shall pay the amount described by
17450 Subsection (b)(1) not later than the 10th day after the date
17551 notification is provided under Subsection (b).
17652 (d) If a claimant has not demanded appraisal with respect to
17753 a claim under Section 2210.574 and the claimant disputes the
17854 replacement cost amount the association will pay with respect to
17955 the claim, the claimant may demand appraisal of the replacement
18056 cost amount not later than the 30th day after the date the claimant
18157 receives the notification under Subsection (b). A claimant may
18258 demand appraisal under this section without regard to whether all
18359 repairs related to the claim are complete.
18460 (e) Except with respect to the deadlines applicable to an
18561 appraisal under this section, the appraisal under this section
18662 shall be conducted in the same manner as an appraisal demanded under
18763 Section 2210.574.
18864 (f) If a claimant's association policy includes replacement
18965 cost coverage, the written notification provided to the claimant
19066 under Section 2210.573(d)(1) or (2) must notify the claimant of the
19167 deadlines under this section for:
19268 (1) completing repairs and submitting documentation
19369 under Subsection (a); and
19470 (2) demanding appraisal under this section.
195- SECTION 10. Section 2210.581, Insurance Code, is amended by
71+ SECTION 3. Section 2210.581, Insurance Code, is amended by
19672 amending Subsections (a) and (b) and adding Subsection (d) to read
19773 as follows:
19874 (a) Subject to Subsection (b), the commissioner, on a
19975 showing of good cause, may by rule extend any deadline established
20076 under this subchapter and set the number of days by which the
20177 deadline is extended.
20278 (b) The [With reference to claims filed during a particular
20379 catastrophe year, the] extension of deadlines under Subsection (a)
204- related to claims arising from an occurrence may not exceed 120 days
205- in the aggregate for deadlines applicable only to the association.
206- The limitation on extensions under this subsection does not apply
207- to the extension of a deadline imposed on a claimant, or on both a
208- claimant and the association.
80+ related to claims arising from a particular storm may not exceed 120
81+ days in the aggregate for deadlines applicable only to the
82+ association. The limitation on extensions under this subsection
83+ does not apply to the extension of a deadline imposed on a claimant,
84+ or on both a claimant and the association.
20985 (d) The commissioner shall adopt rules as necessary to
21086 implement this section. Section 2001.0045, Government Code, does
21187 not apply to rules adopted under this section.
212- SECTION 11. Chapter 2210, Insurance Code, is amended by
213- adding Subchapter N-1 to read as follows:
214- SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE
215- OVERSIGHT BOARD
216- Sec. 2210.661. DEFINITION. In this subchapter, "board"
217- means the windstorm insurance legislative funding and funding
218- structure oversight board.
219- Sec. 2210.662. COMPOSITION OF BOARD. The board is composed
220- of eight members as follows:
221- (1) four members of the senate appointed by the
222- lieutenant governor including the chairperson of the Senate
223- Business and Commerce Committee, who shall serve as co-chairperson
224- of the board; and
225- (2) four members of the house of representatives
226- appointed by the speaker of the house of representatives.
227- Sec. 2210.663. POWERS AND DUTIES OF BOARD. (a) The board
228- shall:
229- (1) gather information regarding:
230- (A) how the association's current funding and
231- funding structure operate;
232- (B) how the catastrophic risk pools of other
233- states operate; and
234- (C) other information that the board considers
235- necessary to prepare the report required by Section 2210.664; and
236- (2) hold public meetings to hear testimony from
237- experts, stakeholders, and other interested parties regarding
238- recommendations and proposals for establishing and implementing
239- sustainable funding and a sustainable funding structure for the
240- association.
241- (b) The board may request reports and other information as
242- necessary to implement this subchapter from:
243- (1) the department;
244- (2) the association; and
245- (3) experts, stakeholders, and other interested
246- parties described by Subsection (a)(2).
247- Sec. 2210.664. REPORT. (a) The board shall prepare a
248- report of the board's findings regarding the current funding and
249- funding structure of the association, problems with the funding and
250- funding structure, and recommendations for legislative action
251- related to the funding, funding structure, and sustainability of
252- the association. The report must include:
253- (1) an analysis of the current funding, funding
254- structure, and sustainability of the association, including the
255- association
256- 's reliance on debt and reinsurance; and
257- (2) recommendations for legislative action necessary
258- to:
259- (A) address problems with the current funding and
260- funding structure of the association; and
261- (B) foster the stability and sustainability of
262- the association.
263- (b) Not later than November 15, 2020, the board shall
264- deliver the report prepared under Subsection (a) to:
265- (1) the governor;
266- (2) the lieutenant governor; and
267- (3) the speaker of the house of representatives.
268- Sec. 2210.665. EXPIRATION. This subchapter expires
269- September 1, 2021.
270- SECTION 12. Section 2210.2515(f), Insurance Code, is
271- repealed.
272- SECTION 13. (a) Section 2210.251(g), Insurance Code, as
273- amended by this Act, does not affect the status of a certificate of
274- compliance issued by the Texas Windstorm Insurance Association
275- before June 1, 2020, or after June 1, 2020, in response to an
276- application made before that date for purposes of establishing
277- evidence of insurability.
278- (b) Section 2210.2515, Insurance Code, as amended by this
279- Act, applies only to an application for a certificate of compliance
280- made on or after June 1, 2020. An application for a certificate of
281- compliance made before June 1, 2020, is governed by the law as it
88+ SECTION 4. The changes in law made by this Act apply only to
89+ an insurance policy delivered, issued for delivery, or renewed on
90+ or after January 1, 2020. A policy delivered, issued for delivery,
91+ or renewed before January 1, 2020, is governed by the law as it
28292 existed immediately before the effective date of this Act, and that
28393 law is continued in effect for that purpose.
284- (c) Section 2210.3511, Insurance Code, as added by this Act,
285- applies only to a rate adequacy analysis made in relation to a rate
286- filing made on or after the effective date of this Act.
287- SECTION 14. (a) The windstorm insurance legislative
288- oversight board established under Subchapter N, Chapter 2210,
289- Insurance Code, shall conduct a study to evaluate a merger of the
290- Texas Windstorm Insurance Association established under Chapter
291- 2210, Insurance Code, and the Fair Access to Insurance Requirements
292- Plan established under Chapter 2211, Insurance Code.
293- (b) The evaluation must consider:
294- (1) the affordability and availability of windstorm
295- and hail insurance throughout this state and, in particular, in the
296- seacoast territory as defined by Section 2210.003, Insurance Code;
297- (2) the affordability and availability of residential
298- property insurance throughout this state and, in particular, in
299- underserved areas as defined by Section 2211.001, Insurance Code;
300- (3) the advisability of merging the Texas Windstorm
301- Insurance Association and the Fair Access to Insurance Requirements
302- Plan to provide windstorm and hail and residential property
303- insurance in this state;
304- (4) any efficiencies or inefficiencies from a merger
305- of the Texas Windstorm Insurance Association and the Fair Access to
306- Insurance Requirements Plan;
307- (5) the funding necessary to ensure that windstorm and
308- hail and residential property insurance are available after the
309- merger of the Texas Windstorm Insurance Association and the Fair
310- Access to Insurance Requirements Plan; and
311- (6) any other items the windstorm insurance
312- legislative oversight board determines are relevant to a merger of
313- the Texas Windstorm Insurance Association and the Fair Access to
314- Insurance Requirements Plan.
315- (c) Not later than January 1, 2021, the windstorm insurance
316- legislative oversight board shall submit to the governor, the
317- lieutenant governor, the speaker of the house of representatives,
318- and the Texas Department of Insurance a written report of the study
319- conducted under this section. The report must include the findings
320- and legislative recommendations of the board.
321- (d) This section expires January 1, 2022.
322- SECTION 15. Sections 2210.207 and 2210.581, Insurance Code,
323- as amended by this Act, and Section 2210.5741, Insurance Code, as
324- added by this Act, apply only to an insurance policy delivered,
325- issued for delivery, or renewed on or after January 1, 2020. A
326- policy delivered, issued for delivery, or renewed before January 1,
327- 2020, is governed by the law as it existed immediately before the
328- effective date of this Act, and that law is continued in effect for
329- that purpose.
330- SECTION 16. This Act takes effect immediately if it
331- receives a vote of two-thirds of all the members elected to each
332- house, as provided by Section 39, Article III, Texas Constitution.
333- If this Act does not receive the vote necessary for immediate
334- effect, this Act takes effect September 1, 2019.
335- ______________________________ ______________________________
336- President of the Senate Speaker of the House
337- I certify that H.B. No. 1900 was passed by the House on April
338- 18, 2019, by the following vote: Yeas 147, Nays 0, 2 present, not
339- voting; and that the House concurred in Senate amendments to H.B.
340- No. 1900 on May 23, 2019, by the following vote: Yeas 143, Nays 0,
341- 1 present, not voting.
342- ______________________________
343- Chief Clerk of the House
344- I certify that H.B. No. 1900 was passed by the Senate, with
345- amendments, on May 20, 2019, by the following vote: Yeas 31, Nays
346- 0.
347- ______________________________
348- Secretary of the Senate
349- APPROVED: __________________
350- Date
351- __________________
352- Governor
94+ SECTION 5. This Act takes effect September 1, 2019.
95+ * * * * *