Texas 2019 - 86th Regular

Texas House Bill HB3076 Compare Versions

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Old	New	Differences
1	1	86R14232 PMO-D
2	2	By: King of Hemphill H.B. No. 3076
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of the Texas Tornado and Wildfire
8	8	Insurance Association; authorizing fees.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle G, Title 10, Insurance Code, is amended
11	11	by adding Chapter 2214 to read as follows:
12	12	CHAPTER 2214. TEXAS TORNADO AND WILDFIRE INSURANCE ASSOCIATION
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 2214.001. PURPOSE. The primary purpose of the Texas
15	15	Tornado and Wildfire Insurance Association is the provision of an
16	16	adequate market for property insurance to provide coverage for
17	17	losses from tornado and wildfire in this state. The legislature
18	18	finds that the provision of adequate tornado and wildfire insurance
19	19	is necessary to the economic welfare of this state, and without that
20	20	insurance, the orderly growth and development of this state would
21	21	be severely impeded. This chapter provides a method by which
22	22	adequate tornado and wildfire insurance may be obtained in this
23	23	state. The association is intended to serve as a residual insurer
24	24	of last resort for tornado and wildfire insurance in this state.
25	25	The association shall:
26	26	(1) function in such a manner as to not be a direct
27	27	competitor in the private market; and
28	28	(2) provide tornado and wildfire insurance coverage to
29	29	those who are unable to obtain that coverage in the private market.
30	30	Sec. 2214.002. SHORT TITLE; COVERAGE AVAILABLE. (a) This
31	31	chapter may be cited as the Texas Tornado and Wildfire Insurance
32	32	Association Act.
33	33	(b) This chapter authorizes the association to issue only
34	34	tornado and wildfire insurance.
35	35	Sec. 2214.003. GENERAL DEFINITIONS. In this chapter,
36	36	unless the context clearly indicates otherwise:
37	37	(1) "Association" means the Texas Tornado and Wildfire
38	38	Insurance Association.
39	39	(2) "Board of directors" means the board of directors
40	40	of the association.
41	41	(3) "Net direct premium" means gross direct written
42	42	premium less return premium on each canceled contract, regardless
43	43	of assumed or ceded reinsurance, that is written on property in this
44	44	state, as defined by the board of directors.
45	45	(4) "Plan of operation" means the plan adopted under
46	46	this chapter for the operation of the association.
47	47	(5) "Tornado and wildfire insurance" means deductible
48	48	insurance against:
49	49	(A) direct loss to insurable property incurred as
50	50	a result of tornado or wildfire, as those terms are defined and
51	51	limited in policies and forms approved by the department; and
52	52	(B) indirect losses resulting from the direct
53	53	loss.
54	54	(6) "Wildfire" means an uncontrolled blaze fueled by
55	55	weather, wind, and dry underbrush, trees, grasses, or other
56	56	flammable material.
57	57	Sec. 2214.004. DEFINITION OF INSURABLE PROPERTY. For
58	58	purposes of this chapter and subject to this section, "insurable
59	59	property" has the meaning assigned by the plan of operation.
60	60	Sec. 2214.005. DESIGNATION AS CATASTROPHE AREA; REVOCATION
61	61	OF DESIGNATION. An area of this state may be designated as a
62	62	catastrophe area in the plan of operation. The commissioner by rule
63	63	may revoke the designation.
64	64	Sec. 2214.006. APPLICABILITY OF CHAPTER TO CERTAIN
65	65	INSURERS. (a) Except as provided by Subsection (b), this chapter
66	66	applies to each insurer authorized to engage in the business of
67	67	property insurance in this state, including a county mutual
68	68	insurance company, a Lloyd's plan, and a reciprocal or
69	69	interinsurance exchange.
70	70	(b) This chapter does not apply to:
71	71	(1) a farm mutual insurance company operating under
72	72	Chapter 911;
73	73	(2) a nonaffiliated county mutual fire insurance
74	74	company described by Section 912.310 that is writing exclusively
75	75	industrial fire insurance policies as described by Section
76	76	912.310(a)(2); or
77	77	(3) a mutual insurance company or a statewide mutual
78	78	assessment company engaged in business under Chapter 12 or 13,
79	79	Title 78, Revised Statutes, respectively, before those chapters'
80	80	repeal by Section 18, Chapter 40, Acts of the 41st Legislature, 1st
81	81	Called Session, 1929, as amended by Section 1, Chapter 60, General
82	82	Laws, Acts of the 41st Legislature, 2nd Called Session, 1929, that
83	83	retains the rights and privileges under the repealed law to the
84	84	extent provided by those sections.
85	85	Sec. 2214.007. DEPARTMENT ORDERS; GENERAL RULEMAKING
86	86	AUTHORITY. (a) The commissioner may issue any orders that the
87	87	commissioner considers necessary to implement this chapter.
88	88	(b) The commissioner may adopt rules in the manner
89	89	prescribed by Subchapter A, Chapter 36, as reasonable and necessary
90	90	to implement this chapter.
91	91	Sec. 2214.008. LIST OF PRIVATE INSURERS; INCENTIVE PLAN.
92	92	(a) The department shall maintain a list of all insurers that
93	93	engage in the business of property and casualty insurance in the
94	94	voluntary market in this state.
95	95	(b) The department shall develop incentive programs to
96	96	encourage authorized insurers to write insurance on a voluntary
97	97	basis and to minimize the use of the association as a means to
98	98	obtain insurance.
99	99	SUBCHAPTER B. ADMINISTRATION OF THE ASSOCIATION
100	100	Sec. 2214.051. COMPOSITION OF ASSOCIATION; REQUIRED
101	101	MEMBERSHIP. (a) The association is composed of all property
102	102	insurers authorized to engage in the business of property insurance
103	103	in this state, other than insurers prevented by law from writing on
104	104	a statewide basis coverages available through the association.
105	105	(b) As a condition of the insurer's authority to engage in
106	106	the business of insurance in this state, each insurer subject to
107	107	Subsection (a) must be a member of the association and must remain a
108	108	member for the duration of the association's existence. An insurer
109	109	that ceases to be a member of the association remains liable on
110	110	insurance contracts entered into during the insurer's membership in
111	111	the association to the same extent and effect as if the insurer's
112	112	membership in the association had not been terminated.
113	113	(c) An insurer that becomes authorized to write and is
114	114	engaged in writing insurance that requires the insurer to be a
115	115	member of the association shall become a member of the association
116	116	on the January 1 following the effective date of that
117	117	authorization. The determination of the insurer's participation in
118	118	the association is made as of the date of the insurer's membership
119	119	in the manner used to determine participation for all other members
120	120	of the association.
121	121	Sec. 2214.052. MEMBER PARTICIPATION IN ASSOCIATION. (a)
122	122	Each member of the association shall participate in insured losses
123	123	and operating expenses of the association, in excess of premium and
124	124	other revenue of the association, in the proportion that the net
125	125	direct premiums of that member during the preceding calendar year
126	126	bears to the aggregate net direct premiums by all members of the
127	127	association, as determined using the information provided under
128	128	Subsection (b).
129	129	(b) The department shall review annual statements, other
130	130	reports, and other statistics that the department considers
131	131	necessary to obtain the information required under Subsection (a)
132	132	and shall provide that information to the association. The
133	133	department is entitled to obtain the annual statements, other
134	134	reports, and other statistics from any member of the association.
135	135	(c) Each member's participation in the association shall be
136	136	determined annually in the manner provided by the plan of
137	137	operation. For purposes of determining participation in the
138	138	association, two or more members that are subject to common
139	139	ownership or that operate in this state under common management or
140	140	control shall be treated as a single member. The determination
141	141	shall also include the net direct premiums of an affiliate that is
142	142	under that common management or control, including an affiliate
143	143	that is not authorized to engage in the business of property
144	144	insurance in this state.
145	145	(d) Notwithstanding Subsection (a), a member, in accordance
146	146	with the plan of operation, is entitled to receive credit for
147	147	similar insurance voluntarily written in areas designated by the
148	148	commissioner. The member's participation in the insured losses and
149	149	operating expenses of the association in excess of premium and
150	150	other revenue of the association shall be reduced in accordance
151	151	with the plan of operation.
152	152	(e) Notwithstanding Subsections (a)-(d), an insurer that
153	153	becomes a member of the association and that has not previously been
154	154	a member of the association is not subject to participation in any
155	155	insured losses and operating expenses of the association in excess
156	156	of premium and other revenue of the association until the second
157	157	anniversary of the date on which the insurer first becomes a member
158	158	of the association.
159	159	Sec. 2214.053. OPERATION OF ASSOCIATION. The association
160	160	shall operate in accordance with the plan of operation.
161	161	Sec. 2214.054. ANNUAL STATEMENT. (a) The association
162	162	shall file annually with the department and the state auditor's
163	163	office a statement covering periods designated by the department
164	164	that summarizes the transactions, conditions, operations, and
165	165	affairs of the association during the preceding year.
166	166	(b) The statement must:
167	167	(1) be filed at times designated by the department;
168	168	(2) contain the information prescribed by the
169	169	department; and
170	170	(3) be in the form prescribed by the department.
171	171	Sec. 2214.055. USE OF ASSOCIATION ASSETS. (a) The
172	172	association's net earnings may only be used in accordance with the
173	173	plan of operation.
174	174	(b) On dissolution of the association, all assets of the
175	175	association, other than assets pledged for the repayment of public
176	176	securities issued under this chapter, revert to this state.
177	177	Sec. 2214.056. EXAMINATION OF ASSOCIATION. (a) The
178	178	association is subject to Sections 401.051, 401.052,
179	179	401.054-401.062, 401.151, 401.152, 401.155, and 401.156 and
180	180	Subchapter A, Chapter 86.
181	181	(b) A final examination report of the association resulting
182	182	from an examination as provided by this section is a public record
183	183	and is available to the public at the offices of the department in
184	184	accordance with Chapter 552, Government Code.
185	185	Sec. 2214.057. AUDIT OF ASSOCIATION. (a) The association
186	186	is subject to audit by the state auditor and shall pay the costs
187	187	incurred by the state auditor in performing an audit under this
188	188	section.
189	189	(b) The association shall pay the costs described by
190	190	Subsection (a) promptly after receipt of a statement from the state
191	191	auditor's office regarding the amount of those costs.
192	192	Sec. 2214.058. CLAIMS PRACTICES AUDIT. The commissioner,
193	193	in the manner and at the time the commissioner determines to be
194	194	necessary, may conduct a random audit of claim files concerning
195	195	claims the bases of which are damage to property insured under this
196	196	chapter.
197	197	SUBCHAPTER C. PAYMENT OF LOSSES
198	198	Sec. 2214.101. PAYMENT OF LOSSES. The association shall
199	199	pay insured losses and operating expenses of the association from
200	200	premium and other revenue of the association in accordance with the
201	201	plan of operation.
202	202	Sec. 2214.102. ASSESSMENTS. (a) Losses not paid under
203	203	Section 2214.101 shall be paid from member insurer assessments.
204	204	(b) A member of the association may not recoup an assessment
205	205	paid under this subsection through a premium surcharge or tax
206	206	credit.
207	207	SUBCHAPTER D. BOARD OF DIRECTORS; POWERS AND DUTIES
208	208	Sec. 2214.151. ACCOUNTABLE TO COMMISSIONER. The board of
209	209	directors is responsible and accountable to the commissioner.
210	210	Sec. 2214.152. COMPOSITION. (a) The board of directors is
211	211	composed of nine members appointed by the commissioner.
212	212	(b) All members must have demonstrated experience in
213	213	insurance, general business, or actuarial principles sufficient to
214	214	make the success of the association probable.
215	215	Sec. 2214.153. TERMS. (a) Members of the board of
216	216	directors serve six-year staggered terms, with the terms of three
217	217	members expiring on February 1 of each odd-numbered year.
218	218	(b) A person may serve on the board of directors for not more
219	219	than three consecutive full terms, not to exceed 18 years.
220	220	(c) A member of the board of directors may be removed by the
221	221	commissioner with cause stated in writing and posted on the
222	222	association's Internet website. The commissioner shall appoint the
223	223	replacement for a director who leaves or is removed from the board
224	224	of directors.
225	225	Sec. 2214.154. OFFICERS. The board of directors shall
226	226	elect from the board's membership an executive committee consisting
227	227	of a presiding officer, assistant presiding officer, and
228	228	secretary-treasurer.
229	229	Sec. 2214.155. MEETINGS. (a) Except for an emergency
230	230	meeting, the association shall call and conduct its meetings in
231	231	accordance with the plan of operation.
232	232	(b) Except for a closed meeting authorized by Subchapter D,
233	233	Chapter 551, Government Code, a meeting of the board of directors or
234	234	of the members of the association is open to the public.
235	235	(c) Notice of a meeting of the board of directors or the
236	236	association must be given as provided by Chapter 551, Government
237	237	Code.
238	238	Sec. 2214.156. OPEN MEETINGS AND OPEN RECORDS. (a) Except
239	239	as specifically provided by this chapter or another law, the board
240	240	of directors and the association are subject to Chapters 551 and
241	241	552, Government Code.
242	242	(b) A settlement agreement to which the association is a
243	243	party is public information and is not exempted from required
244	244	disclosure under Chapter 552, Government Code.
245	245	(c) Subsection (b) may not be construed to limit or
246	246	otherwise restrict the categories of information that are public
247	247	information under Section 552.022, Government Code.
248	248	SUBCHAPTER E. PLAN OF OPERATION
249	249	Sec. 2214.201. ADOPTION OF PLAN OF OPERATION. With the
250	250	advice of the board of directors, the commissioner by rule shall
251	251	adopt the plan of operation to provide tornado and wildfire
252	252	insurance in this state.
253	253	Sec. 2214.202. CONTENTS OF PLAN OF OPERATION. (a) The plan
254	254	of operation must:
255	255	(1) provide for the efficient, economical, fair, and
256	256	nondiscriminatory administration of the association; and
257	257	(2) include other provisions as considered necessary
258	258	by the department to implement the purposes of this chapter.
259	259	(b) The plan of operation may provide for liability limits
260	260	for an insured structure and for the corporeal movable property
261	261	located in the structure.
262	262	Sec. 2214.203. AMENDMENTS TO PLAN OF OPERATION. (a) The
263	263	association may present a recommendation for a change in the plan of
264	264	operation to the department at:
265	265	(1) periodic hearings conducted by the department for
266	266	that purpose; or
267	267	(2) hearings relating to property and casualty
268	268	insurance rates.
269	269	(b) The association must present a proposed change to the
270	270	department in writing in the manner prescribed by the commissioner.
271	271	A proposed change does not take effect unless adopted by the
272	272	commissioner by rule.
273	273	(c) An interested person may, in accordance with Chapter
274	274	2001, Government Code, petition the commissioner to modify the plan
275	275	of operation.
276	276	SUBCHAPTER F. INSURANCE COVERAGE; APPLICATION AND INSPECTION
277	277	Sec. 2214.251. DEFINITION OF INSURABLE INTEREST. In this
278	278	subchapter, "insurable interest" includes any lawful and
279	279	substantial economic interest in the safety or preservation of
280	280	property from loss, destruction, or pecuniary damage.
281	281	Sec. 2214.252. APPLICATION FOR COVERAGE. (a) A person who
282	282	has an insurable interest in insurable property may apply to the
283	283	association for insurance coverage provided under the plan of
284	284	operation and an inspection of the property, subject to any rules
285	285	established by the board of directors and approved by the
286	286	commissioner. The association shall make insurance available in
287	287	accordance with the plan of operation to each applicant in this
288	288	state whose property is insurable property but who, after diligent
289	289	efforts, is unable to obtain property insurance through the
290	290	voluntary market, as evidenced by one declination from an insurer
291	291	authorized to engage in the business of, and writing, property
292	292	insurance providing tornado and wildfire coverage in this state.
293	293	(b) A property and casualty agent must submit an application
294	294	for initial insurance coverage on behalf of the applicant on forms
295	295	prescribed by the association. The association shall develop a
296	296	simplified renewal process that allows for the acceptance of an
297	297	application for renewal coverage, and payment of premiums, from a
298	298	property and casualty agent or a person insured under this chapter.
299	299	An application for initial or renewal coverage must comply with the
300	300	requirements of the plan of operation.
301	301	Sec. 2214.253. ISSUANCE OF COVERAGE; TERM; RENEWAL. (a) If
302	302	the association determines that the property for which an
303	303	application for initial insurance coverage is made is insurable
304	304	property, the association, on payment of the premium, shall direct
305	305	the issuance of an insurance policy as provided by the plan of
306	306	operation.
307	307	(b) A policy issued under this section is for a one-year
308	308	term.
309	309	(c) A policy may be renewed annually on application for
310	310	renewal as long as the property continues to be insurable property.
311	311	(d) The commissioner, after receiving a recommendation from
312	312	the board of directors, shall approve a commission structure for
313	313	payment of an agent who submits an application for coverage to the
314	314	association on behalf of a person who has an insurable interest in
315	315	insurable property. The commission structure adopted by the
316	316	commissioner must be fair and reasonable, taking into consideration
317	317	the amount of work performed by an agent in submitting an
318	318	application to the association and the prevailing commission
319	319	structure in the private insurance market.
320	320	Sec. 2214.254. CANCELLATION OF CERTAIN COVERAGE. (a) An
321	321	agent or insured may request cancellation of the insurance coverage
322	322	by:
323	323	(1) returning the policy, with proof that the insured
324	324	was notified of the return; or
325	325	(2) requesting the association to cancel the insurance
326	326	coverage by a notice mailed to the insured and to any others shown
327	327	in the policy as having an insurable interest in the property.
328	328	(b) On completion of cancellation under Subsection (a), the
329	329	association shall refund the unearned premium, less any minimum
330	330	retained premium set forth in the plan of operation, to the person,
331	331	firm, or corporation to whom the unpaid balance is due.
332	332	(c) If an insured requests cancellation of the insurance
333	333	coverage, the association shall refund the unearned premium, less
334	334	any minimum retained premium set forth in the plan of operation,
335	335	payable to the insured and the holder of an unpaid balance. The
336	336	property and casualty agent who received a commission as the result
337	337	of the issuance of an association policy providing the canceled
338	338	coverage shall refund the agent's commission on any unearned
339	339	premium in the same manner.
340	340	Sec. 2214.255. POLICY PROVISIONS. A tornado and wildfire
341	341	insurance policy issued by the association must comply with the
342	342	requirements of the plan of operation.
343	343	Sec. 2214.256. INSPECTION REQUIREMENT. (a) To be
344	344	considered insurable property eligible for insurance coverage from
345	345	the association, a structure must be inspected or approved by the
346	346	department for compliance with the plan of operation.
347	347	(b) The department shall issue a certificate of compliance
348	348	for each structure that qualifies for coverage. The certificate is
349	349	evidence of insurability of the structure by the association. The
350	350	decision whether to issue a certificate of compliance for a
351	351	structure is wholly within the discretion of the department.
352	352	(c) The department may enter into agreements and contracts
353	353	as necessary to implement this section.
354	354	(d) The department may charge reasonable fees to cover the
355	355	cost of implementing this section.
356	356	SUBCHAPTER G. RATES
357	357	Sec. 2214.301. ASSOCIATION FILINGS. (a) The association
358	358	must file with the department each manual of classifications,
359	359	rules, rates, including condition charges, and each rating plan,
360	360	and each modification of those items that the association proposes
361	361	to use.
362	362	(b) A filing under this section must indicate the character
363	363	and the extent of the coverage contemplated and must be accompanied
364	364	by the policy and endorsement forms proposed to be used. The forms
365	365	may be designed specifically for use by the association without
366	366	regard to other forms filed with, approved by, or prescribed by the
367	367	department for use in this state.
368	368	(c) As soon as reasonably possible after the filing has been
369	369	made, the commissioner in writing shall approve or disapprove the
370	370	filing. A filing is considered approved unless disapproved on or
371	371	before the 30th day after the date of the filing. If the
372	372	commissioner disapproves a filing, the commissioner shall state in
373	373	writing the reasons for the disapproval and the criteria the
374	374	association is required to meet to obtain approval.
375	375	(d) The department shall value the loss and loss adjustment
376	376	expense data to be used for a filing not earlier than March 31 of the
377	377	year before the year in which the filing is to be made.
378	378	Sec. 2214.302. MANUAL RATE FILINGS: ANNUAL FILING. (a) Not
379	379	later than August 15 of each year, the association shall file with
380	380	the department a proposed manual rate for all types and classes of
381	381	risks written by the association.
382	382	(b) Before approving or disapproving a filing under this
383	383	section, the commissioner shall provide all interested persons a
384	384	reasonable opportunity to:
385	385	(1) review the filing;
386	386	(2) obtain copies of the filing on payment of any
387	387	legally required copying cost; and
388	388	(3) submit to the commissioner written comments or
389	389	information related to the filing.
390	390	(c) The commissioner shall approve or disapprove the filing
391	391	in writing not later than October 15 of the year in which the filing
392	392	was made. If the filing is not approved or disapproved on or before
393	393	that date, the filing is considered approved.
394	394	(d) If the commissioner disapproves a filing, the
395	395	commissioner shall state in writing the reasons for the disapproval
396	396	and the criteria the association is required to meet to obtain
397	397	approval.
398	398	Sec. 2214.303. MANUAL RATE FILINGS: AMENDED ANNUAL FILING.
399	399	(a) Not later than the 30th day after the date the association
400	400	receives the commissioner's written disapproval under Section
401	401	2214.302, the association may file with the commissioner an amended
402	402	annual filing that conforms to all criteria stated in that written
403	403	disapproval.
404	404	(b) Not later than the 30th day after the date an amended
405	405	filing made under Subsection (a) is received, the commissioner
406	406	shall approve or disapprove the amended filing. If the filing is
407	407	not disapproved on or before the 30th day after the date of receipt,
408	408	the filing is considered approved. If the commissioner disapproves
409	409	a filing, the commissioner shall state in writing the reasons for
410	410	the disapproval and the criteria the association is required to
411	411	meet to obtain approval.
412	412	(c) Before approving or disapproving an amended annual
413	413	filing under this section, the commissioner shall, in the manner
414	414	provided by Section 2214.302, provide all interested persons a
415	415	reasonable opportunity to:
416	416	(1) review the amended annual filing;
417	417	(2) obtain copies of the amended annual filing on
418	418	payment of any legally required copying cost; and
419	419	(3) submit to the commissioner written comments or
420	420	information related to the amended annual filing.
421	421	Sec. 2214.304. MANUAL RATE FILINGS: ADDITIONAL SUPPORTING
422	422	INFORMATION. (a) In conjunction with the review of a filing under
423	423	Section 2214.302:
424	424	(1) the commissioner may request the association to
425	425	provide additional supporting information relating to the filing;
426	426	and
427	427	(2) any interested person may file a written request
428	428	with the commissioner, during a period specified by the
429	429	commissioner by rule, for additional supporting information
430	430	relating to the filing.
431	431	(b) A request under this section must be reasonable and must
432	432	be directly related to the filing.
433	433	(c) The commissioner shall submit to the association all
434	434	requests for additional supporting information made under this
435	435	section for the commissioner's use and the use of any interested
436	436	person not later than the 21st day after the date of receipt of the
437	437	filing.
438	438	(d) Unless a different period is requested by the
439	439	association and approved by the commissioner, the association shall
440	440	provide the information to the commissioner not later than the
441	441	fifth day after the date the written request for additional
442	442	supporting information is delivered to the association.
443	443	Sec. 2214.305. GENERAL RATE REQUIREMENTS; RATE STANDARDS.
444	444	(a) Rates for coverage under this chapter must be made in
445	445	accordance with the plan of operation.
446	446	(b) Rates must be reasonable, adequate, not unfairly
447	447	discriminatory, and nonconfiscatory as to any class of insurer.
448	448	(c) For the establishment of rates and minimum premiums, the
449	449	risks may be grouped by classification.
450	450	(d) A commission paid to an agent for a tornado and wildfire
451	451	insurance policy issued by the association must comply with the
452	452	commission structure established in the plan of operation and be
453	453	reasonable, adequate, not unfairly discriminatory, and
454	454	nonconfiscatory.
455	455	(e) The association may establish rating territories and
456	456	may vary rates among the territories as provided by the plan of
457	457	operation.
458	458	Sec. 2214.306. RATE CLASSIFICATIONS. All premiums written
459	459	and losses paid under this chapter, as appropriate, must be
460	460	included in applicable classifications for general ratemaking
461	461	purposes.
462	462	SUBCHAPTER H. LIABILITY LIMITS
463	463	Sec. 2214.351. MAXIMUM LIABILITY LIMITS. The maximum
464	464	liability limits under a tornado and wildfire insurance policy
465	465	issued by the association under this chapter are established by the
466	466	plan of operation and may be adjusted by amendment to the plan of
467	467	operation.
468	468	SECTION 2. (a) The governor shall appoint the members of
469	469	the board of directors of the Texas Tornado and Wildfire Insurance
470	470	Association under Chapter 2214, Insurance Code, as added by this
471	471	Act, effective November 1, 2019. The initial directors shall draw
472	472	lots to achieve staggered terms, with three of the directors
473	473	serving two-year terms, three of the directors serving four-year
474	474	terms, and three of the directors serving six-year terms.
475	475	(b) The plan of operation adopted under Chapter 2214,
476	476	Insurance Code, as added by this Act, must provide that the Texas
477	477	Tornado and Wildfire Insurance Association issue insurance
478	478	policies under that chapter not later than January 1, 2020.
479	479	(c) The commissioner of insurance shall adopt rules
480	480	necessary to ensure that the Texas Tornado and Wildfire Insurance
481	481	Association issue insurance policies under Chapter 2214, Insurance
482	482	Code, as added by this Act, not later than January 1, 2020.
483	483	SECTION 3. This Act takes effect immediately if it receives
484	484	a vote of two-thirds of all the members elected to each house, as
485	485	provided by Section 39, Article III, Texas Constitution. If this
486	486	Act does not receive the vote necessary for immediate effect, this
487	487	Act takes effect September 1, 2019.