86R13587 JES-D
By: Lucio III H.B. No. 4534
A BILL TO BE ENTITLED
AN ACT
relating to the funding structure of the Texas Windstorm Insurance
Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2210.0741(a), Insurance Code, is amended
to read as follows:
(a) Losses not paid under Sections 2210.0715, 2210.072,
2210.0725, 2210.073, and 2210.074 and, if applicable, 2210.0743
shall be paid as provided by this section from the proceeds from
Class 3 public securities authorized to be issued in accordance
with Subchapter M on or after the date of any occurrence or series
of occurrences that results in insured losses. Public securities
issued under this section must be paid within a period not to exceed
10 years, and may be paid sooner if the board of directors elects to
do so and the commissioner approves.
SECTION 2. Section 2210.0742(a), Insurance Code, is amended
to read as follows:
(a) Losses in a catastrophe year not paid under Sections
2210.0715, 2210.072, 2210.0725, 2210.073, 2210.074, and 2210.0741
and, if applicable, 2210.0743 shall be paid as provided by this
section from Class 3 member assessments not to exceed $250 million
for that catastrophe year.
SECTION 3. Subchapter B-1, Chapter 2210, Insurance Code, is
amended by adding Section 2210.0743 to read as follows:
Sec. 2210.0743. PAYMENT IN CERTAIN CIRCUMSTANCES. If the
balance of the catastrophe reserve trust fund is less than $500
million:
(1) Class 3 public securities may not be issued until
reinsurance proceeds under Section 2210.453(d) are exhausted;
(2) the association may not assess members for Class 3
assessments until reinsurance proceeds under Section 2210.453(d)
are exhausted; and
(3) losses not paid under Sections 2210.0715,
2210.072, 2210.0725, 2210.073, and 2210.074 must be paid by
reinsurance or an alternative risk financing mechanism under
Section 2210.453(d).
SECTION 4. Section 2210.453, Insurance Code, is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) Except as provided by Subsection (d), the [The]
attachment point for reinsurance purchased under this section may
not be less than the aggregate amount of all funding available to
the association under Subchapter B-1.
(d) If the balance of the catastrophe reserve trust fund is
less than $500 million, the association shall maintain reinsurance
or an alternate risk financing mechanism for the period covered by
the plan that:
(1) has an attachment point not less than the
aggregate amount of all the funding available to the association
under Sections 2210.0715, 2210.072, 2210.0725, 2210.073, and
2210.074; and
(2) maintains total available loss funding not less
than the probable maximum loss for the association for a
catastrophe year with a probability of one in 100.
SECTION 5. The Texas Windstorm Insurance Association shall
amend the association's plan of operation to conform to the changes
in law made by this Act not later than the 60th day after the
effective date of this Act.
SECTION 6. This Act takes effect September 1, 2019.