H.B. No. 1900
AN ACT
relating to certain operations and functions of the Texas Windstorm
Insurance Association and studies relating to the Texas Windstorm
Insurance Association and the Fair Access to Insurance Requirements
Plan; authorizing a penalty; authorizing an assessment.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2210.071, Insurance Code, is amended to
read as follows:
Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (a) If, in a
catastrophe year, an occurrence or series of occurrences in a
catastrophe area results in insured losses and operating expenses
of the association in excess of premium and other revenue of the
association, the excess losses and operating expenses shall be paid
as provided by this subchapter.
(b) The association may not pay insured losses and operating
expenses resulting from an occurrence or series of occurrences in a
catastrophe year with premium and other revenue earned in a
subsequent year.
SECTION 2. Section 2210.0715, Insurance Code, is amended to
read as follows:
Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a)
The association shall pay losses resulting from an occurrence or
series of occurrences in a catastrophe year in excess of premium and
other revenue of the association for that catastrophe year from
[available] reserves of the association available before or accrued
during that catastrophe year and [available] amounts in the
catastrophe reserve trust fund available before or accrued during
that catastrophe year.
(b) Proceeds of [Class 1] public securities issued or
assessments made before or as a result [the date] of any occurrence
or series of occurrences in a catastrophe year that results in
insured losses may not be included in [available] reserves
available for a subsequent catastrophe year for purposes of this
section.
SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.1052 to read as follows:
Sec. 2210.1052. EMERGENCY MEETING. If the ultimate loss
estimate for an occurrence or series of occurrences made by the
chief financial officer or chief actuary of the association
indicates member insurers may be subject to an assessment under
Subchapter B-1, the board of directors shall call an emergency
meeting to notify the member insurers about the assessment.
SECTION 4. Sections 2210.207(c) and (d), Insurance Code,
are amended to read as follows:
(c) If, on the effective date of an association policy [at
the time of loss], the total amount of insurance applicable to a
dwelling is equal to 80 percent or more of the full replacement cost
of the dwelling or equal to the maximum amount of insurance
otherwise available through the association, coverage applicable
to the dwelling under the policy is extended to include the full
cost of repair or replacement, without a deduction for
depreciation.
(d) If, on the effective date of an association policy [at
the time of loss], the total amount of insurance applicable to a
dwelling is equal to less than 80 percent of the full replacement
cost of the dwelling and less than the maximum amount of insurance
available through the association, liability for loss under the
policy may not exceed the replacement cost of the part of the
dwelling that is damaged or destroyed, less depreciation.
SECTION 5. Section 2210.251(g), Insurance Code, is amended
to read as follows:
(g) A certificate of compliance issued by the department [or
association] under Section 2210.2515 demonstrates compliance with
the applicable building code under the plan of operation. The
certificate is evidence of insurability of the structure by the
association.
SECTION 6. Section 2210.2515, Insurance Code, is amended by
amending Subsection (c) and adding Subsections (c-1), (i), (j), and
(k) to read as follows:
(c) A person may apply to the department [association] on a
form prescribed by the department for a certificate of compliance
for a completed improvement. The department [association] shall
issue a certificate of compliance for a completed improvement if a
professional engineer licensed by the Texas Board of Professional
Engineers:
(1) has designed the improvement, has affixed the
engineer's seal on the design, and submits to the department
[association] on a form prescribed by the department an affirmation
that the design complies [of compliance] with the applicable
building code under the plan of operation and that the improvement
was constructed in accordance with the design; or
(2) completes and submits to the department a sealed
post-construction evaluation report that:
(A) confirms the improvement's compliance with
the applicable building code under the plan of operation; and
(B) includes documentation supporting the
engineer's post-construction evaluation report on a form
prescribed by the department on which the engineer has affixed the
engineer's seal.
(c-1) The department may deny an application for a
certificate of compliance under Subsection (c) if the evaluation
report or the form prescribed by the department under Subsection
(c)(1) is not fully documented as required under Subsection (c).
(i) The department is authorized to submit a formal
complaint under Chapter 1001, Occupations Code, to the Texas Board
of Professional Engineers related to the engineering work of a
professional engineer as reflected in the sealed post-construction
evaluation report or other materials submitted by an engineer under
Subsection (c).
(j) If the department finds that a person acting as a
qualified inspector under Section 2210.254 has failed to provide
complete and accurate information in connection with an inspection
for a certificate of compliance under this section, the department
may impose a reasonable penalty on the inspector, including by
prohibiting the inspector from applying for certificates of
compliance under this section. The commissioner may adopt rules as
necessary to implement this subsection.
(k) The department may rescind a certificate of compliance
issued under this section if the department finds that the
improvement does not comply with the applicable building code under
the plan of operation. The commissioner may adopt rules as
necessary to implement this subsection.
SECTION 7. Subchapter H, Chapter 2210, Insurance Code, is
amended by adding Section 2210.3511 to read as follows:
Sec. 2210.3511. PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS.
(a) The association shall make the association's rate adequacy
analysis publicly available on its Internet website for at least 14
days before the date the board of directors votes on the submission
of a proposed rate filing based on the analysis to the department.
The rate adequacy analysis must include:
(1) all user selected hurricane model input
assumptions; and
(2) output data:
(A) with the same content and in the same format
that is customarily provided to:
(i) the association by hurricane modelers;
and
(ii) the department by the association; and
(B) in a searchable electronic format that allows
for efficient analysis and is sufficiently detailed to allow the
historical experience in this state to be compared to results
produced by the model.
(b) The association shall accept public comment with
respect to the association's rate adequacy analysis at a public
meeting of the board of directors before the board of directors
votes on the submission of a proposed rate filing to the department.
SECTION 8. Section 2210.453, Insurance Code, is amended by
adding Subsections (d) and (e) to read as follows:
(d) The cost of the reinsurance purchased or alternative
financing mechanisms used under this section in excess of the
minimum funding level required by Subsection (b) shall be paid by
assessments as provided by this subsection. The association, with
the approval of the commissioner, shall notify each member of the
association of the amount of the member's assessment under this
subsection. The proportion of the cost to each insurer under this
subsection shall be determined in the manner used to determine each
insurer's participation in the association for the year under
Section 2210.052.
(e) A member of the association may not recoup an assessment
paid under Subsection (d) through a premium surcharge or tax
credit.
SECTION 9. Subchapter L-1, Chapter 2210, Insurance Code, is
amended by adding Section 2210.5741 to read as follows:
Sec. 2210.5741. REPLACEMENT COST COVERAGE CLAIM
PROCESSING. (a) After the association accepts coverage for a claim
in full or in part, a claimant whose association policy includes
replacement cost coverage for the claim may request the replacement
cost payment by submitting to the association documentation of the
cost and completion of the repairs related to the claim not later
than the 545th day after the date the claimant receives a
notification under Section 2210.573(d)(1) or (2).
(b) Not later than the 30th day after the date the
association receives documentation under Subsection (a), the
association shall provide the claimant, in writing, notification
of:
(1) the amount of the replacement cost payment the
association will make; and
(2) the deadline to request appraisal under this
section.
(c) The association shall pay the amount described by
Subsection (b)(1) not later than the 10th day after the date
notification is provided under Subsection (b).
(d) If a claimant has not demanded appraisal with respect to
a claim under Section 2210.574 and the claimant disputes the
replacement cost amount the association will pay with respect to
the claim, the claimant may demand appraisal of the replacement
cost amount not later than the 30th day after the date the claimant
receives the notification under Subsection (b). A claimant may
demand appraisal under this section without regard to whether all
repairs related to the claim are complete.
(e) Except with respect to the deadlines applicable to an
appraisal under this section, the appraisal under this section
shall be conducted in the same manner as an appraisal demanded under
Section 2210.574.
(f) If a claimant's association policy includes replacement
cost coverage, the written notification provided to the claimant
under Section 2210.573(d)(1) or (2) must notify the claimant of the
deadlines under this section for:
(1) completing repairs and submitting documentation
under Subsection (a); and
(2) demanding appraisal under this section.
SECTION 10. Section 2210.581, Insurance Code, is amended by
amending Subsections (a) and (b) and adding Subsection (d) to read
as follows:
(a) Subject to Subsection (b), the commissioner, on a
showing of good cause, may by rule extend any deadline established
under this subchapter and set the number of days by which the
deadline is extended.
(b) The [With reference to claims filed during a particular
catastrophe year, the] extension of deadlines under Subsection (a)
related to claims arising from an occurrence may not exceed 120 days
in the aggregate for deadlines applicable only to the association.
The limitation on extensions under this subsection does not apply
to the extension of a deadline imposed on a claimant, or on both a
claimant and the association.
(d) The commissioner shall adopt rules as necessary to
implement this section. Section 2001.0045, Government Code, does
not apply to rules adopted under this section.
SECTION 11. Chapter 2210, Insurance Code, is amended by
adding Subchapter N-1 to read as follows:
SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE
OVERSIGHT BOARD
Sec. 2210.661. DEFINITION. In this subchapter, "board"
means the windstorm insurance legislative funding and funding
structure oversight board.
Sec. 2210.662. COMPOSITION OF BOARD. The board is composed
of eight members as follows:
(1) four members of the senate appointed by the
lieutenant governor including the chairperson of the Senate
Business and Commerce Committee, who shall serve as co-chairperson
of the board; and
(2) four members of the house of representatives
appointed by the speaker of the house of representatives.
Sec. 2210.663. POWERS AND DUTIES OF BOARD. (a) The board
shall:
(1) gather information regarding:
(A) how the association's current funding and
funding structure operate;
(B) how the catastrophic risk pools of other
states operate; and
(C) other information that the board considers
necessary to prepare the report required by Section 2210.664; and
(2) hold public meetings to hear testimony from
experts, stakeholders, and other interested parties regarding
recommendations and proposals for establishing and implementing
sustainable funding and a sustainable funding structure for the
association.
(b) The board may request reports and other information as
necessary to implement this subchapter from:
(1) the department;
(2) the association; and
(3) experts, stakeholders, and other interested
parties described by Subsection (a)(2).
Sec. 2210.664. REPORT. (a) The board shall prepare a
report of the board's findings regarding the current funding and
funding structure of the association, problems with the funding and
funding structure, and recommendations for legislative action
related to the funding, funding structure, and sustainability of
the association. The report must include:
(1) an analysis of the current funding, funding
structure, and sustainability of the association, including the
association
's reliance on debt and reinsurance; and
(2) recommendations for legislative action necessary
to:
(A) address problems with the current funding and
funding structure of the association; and
(B) foster the stability and sustainability of
the association.
(b) Not later than November 15, 2020, the board shall
deliver the report prepared under Subsection (a) to:
(1) the governor;
(2) the lieutenant governor; and
(3) the speaker of the house of representatives.
Sec. 2210.665. EXPIRATION. This subchapter expires
September 1, 2021.
SECTION 12. Section 2210.2515(f), Insurance Code, is
repealed.
SECTION 13. (a) Section 2210.251(g), Insurance Code, as
amended by this Act, does not affect the status of a certificate of
compliance issued by the Texas Windstorm Insurance Association
before June 1, 2020, or after June 1, 2020, in response to an
application made before that date for purposes of establishing
evidence of insurability.
(b) Section 2210.2515, Insurance Code, as amended by this
Act, applies only to an application for a certificate of compliance
made on or after June 1, 2020. An application for a certificate of
compliance made before June 1, 2020, is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
(c) Section 2210.3511, Insurance Code, as added by this Act,
applies only to a rate adequacy analysis made in relation to a rate
filing made on or after the effective date of this Act.
SECTION 14. (a) The windstorm insurance legislative
oversight board established under Subchapter N, Chapter 2210,
Insurance Code, shall conduct a study to evaluate a merger of the
Texas Windstorm Insurance Association established under Chapter
2210, Insurance Code, and the Fair Access to Insurance Requirements
Plan established under Chapter 2211, Insurance Code.
(b) The evaluation must consider:
(1) the affordability and availability of windstorm
and hail insurance throughout this state and, in particular, in the
seacoast territory as defined by Section 2210.003, Insurance Code;
(2) the affordability and availability of residential
property insurance throughout this state and, in particular, in
underserved areas as defined by Section 2211.001, Insurance Code;
(3) the advisability of merging the Texas Windstorm
Insurance Association and the Fair Access to Insurance Requirements
Plan to provide windstorm and hail and residential property
insurance in this state;
(4) any efficiencies or inefficiencies from a merger
of the Texas Windstorm Insurance Association and the Fair Access to
Insurance Requirements Plan;
(5) the funding necessary to ensure that windstorm and
hail and residential property insurance are available after the
merger of the Texas Windstorm Insurance Association and the Fair
Access to Insurance Requirements Plan; and
(6) any other items the windstorm insurance
legislative oversight board determines are relevant to a merger of
the Texas Windstorm Insurance Association and the Fair Access to
Insurance Requirements Plan.
(c) Not later than January 1, 2021, the windstorm insurance
legislative oversight board shall submit to the governor, the
lieutenant governor, the speaker of the house of representatives,
and the Texas Department of Insurance a written report of the study
conducted under this section. The report must include the findings
and legislative recommendations of the board.
(d) This section expires January 1, 2022.
SECTION 15. Sections 2210.207 and 2210.581, Insurance Code,
as amended by this Act, and Section 2210.5741, Insurance Code, as
added by this Act, apply only to an insurance policy delivered,
issued for delivery, or renewed on or after January 1, 2020. A
policy delivered, issued for delivery, or renewed before January 1,
2020, is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 16. 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, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1900 was passed by the House on April
18, 2019, by the following vote: Yeas 147, Nays 0, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 1900 on May 23, 2019, by the following vote: Yeas 143, Nays 0,
1 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 1900 was passed by the Senate, with
amendments, on May 20, 2019, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor