TX
Texas Senate Bill SB2443

Texas 2019 - 86th Regular

Texas Senate Bill SB2443 Compare Versions

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11 By: Taylor S.B. No. 2443
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44 A BILL TO BE ENTITLED
55 AN ACT
66 relating to the abolition of the Fair Access to Insurance
77 Requirements Plan and transfer of the plan's assets, financial
88 obligations, duties, and powers to the Texas Windstorm Insurance
99 Association.
1010 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1111 ARTICLE 1. RESIDENTIAL PROPERTY INSURANCE
1212 SECTION 1.01. Section 2210.001, Insurance Code, is amended
1313 to read as follows:
1414 Sec. 2210.001. PURPOSE. The primary purpose of the Texas
1515 Windstorm Insurance Association is the provision of an adequate
1616 market for windstorm and hail insurance in the seacoast territory
1717 of this state and residential property insurance in this state. The
1818 legislature finds that the provision of adequate windstorm and hail
1919 insurance and residential property insurance is necessary to the
2020 economic welfare of this state, and without that insurance, the
2121 orderly growth and development of this state would be severely
2222 impeded. This chapter provides a method by which adequate
2323 windstorm and hail insurance may be obtained in certain designated
2424 portions of the seacoast territory of this state and residential
2525 property insurance may be obtained throughout this state. The
2626 association is intended to serve as a residual insurer of last
2727 resort for windstorm and hail insurance in the seacoast territory
2828 and residential property insurance in this state. The association
2929 shall:
3030 (1) function in such a manner as to not be a direct
3131 competitor in the private market; and
3232 (2) provide windstorm and hail insurance and
3333 residential property insurance coverage to those who are unable to
3434 obtain that coverage in the private market.
3535 SECTION 1.02. Section 2210.003, Insurance Code, is amended
3636 by amending Subdivision (6) and adding Subdivision (9-a) to read as
3737 follows:
3838 (6) "Insurance" means:
3939 (A) Texas windstorm and hail insurance; and
4040 (B) residential property insurance.
4141 (9-a) "Residential property insurance" means the
4242 coverage provided by a homeowners insurance policy, residential
4343 fire and allied lines insurance policy, or farm and ranch owners
4444 insurance policy against loss incurred to real or tangible personal
4545 property.
4646 SECTION 1.03 Sections 2210.004(a) and (g), Insurance Code,
4747 are amended to read as follows:
4848 (a) Except as provided by Subsection (h), for purposes of
4949 this chapter and subject to this section, "insurable property" for
5050 purposes of windstorm and hail insurance means immovable property
5151 at a fixed location in a catastrophe area or corporeal movable
5252 property located in that immovable property, as designated in the
5353 plan of operation, that is determined by the association according
5454 to the criteria specified in the plan of operation to be in an
5555 insurable condition against windstorm and hail, as determined by
5656 normal underwriting standards. The term includes property
5757 described by Section 2210.209.
5858 (g) For purposes of windstorm and hail insurance issued
5959 under this chapter, a residential structure is insurable property
6060 if:
6161 (1) the residential structure is not:
6262 (A) a condominium, apartment, duplex, or other
6363 multifamily residence; or
6464 (B) a hotel or resort facility;
6565 (2) the residential structure is located within an
6666 area designated as a unit under the Coastal Barrier Resources Act
6767 (Pub. L. No. 97-348); and
6868 (3) a building permit or plat for the residential
6969 structure was filed with the municipality, the county, or the
7070 United States Army Corps of Engineers before June 11, 2003.
7171 SECTION 1.04. Section 2210.053(b), Insurance Code, is
7272 amended to read as follows:
7373 (b) The department may develop programs to improve the
7474 efficient operation of the association, including a program for
7575 approving policy forms under Section 2301.010 and a program
7676 designed to create incentives for insurers to write:
7777 (1) windstorm and hail insurance voluntarily to cover
7878 property located in a catastrophe area, especially property located
7979 on the barrier islands of this state; and
8080 (2) residential property insurance in this state.
8181 SECTION 1.05. Section 2210.151, Insurance Code, is amended
8282 to read as follows:
8383 Sec. 2210.151. ADOPTION OF PLAN OF OPERATION. With the
8484 advice of the board of directors, the commissioner by rule shall
8585 adopt the plan of operation to provide Texas windstorm and hail
8686 insurance in a catastrophe area. The plan must include provisions
8787 to implement Subchapter E-1 in accordance with Section 2210.2253.
8888 SECTION 1.06. Chapter 2210, Insurance Code, is amended by
8989 adding Subchapter E-1 to read as follows:
9090 SUBCHAPTER E-1. RESIDENTIAL PROPERTY INSURANCE COVERAGE
9191 Sec. 2210.2251. APPLICABILITY OF SUBCHAPTER. (a) This
9292 subchapter applies only to residential property insurance in this
9393 state.
9494 (b) To the extent of any conflict with another provision of
9595 this chapter in relation to residential property insurance, this
9696 subchapter controls.
9797 Sec. 2210.2252. ESTABLISHMENT OF RESIDENTIAL PROPERTY
9898 INSURANCE PLAN. The commissioner may establish a residential
9999 property insurance plan operated by the association to issue and
100100 deliver residential property insurance to residents of this state
101101 in underserved areas if the commissioner determines, after a public
102102 hearing, that in all or any part of the state, residential property
103103 insurance is not reasonably available in the voluntary market to a
104104 substantial number of insurable risks.
105105 Sec. 2210.2253. PROVISIONS OF PLAN OF OPERATION RELATED TO
106106 RESIDENTIAL PROPERTY INSURANCE POLICIES. The plan of operation
107107 with respect to this subchapter must:
108108 (1) provide for the issuance of residential property
109109 insurance under this Chapter and distribute the losses and expenses
110110 in writing that insurance in this state;
111111 (2) provide that all insurers that write residential
112112 property insurance shall participate in the association in the
113113 accordance with Section 2210.2256(b);
114114 (3) provide that a participating insurer is entitled
115115 to receive credit in accordance with Section 2210.2256(c);
116116 (4) provide for the immediate binding of eligible
117117 risks;
118118 (5) provide for the use of premium installment payment
119119 plans, adequate marketing, and service facilities;
120120 (6) provide for the establishment of reasonable
121121 service standards;
122122 (7) provide procedures for efficient, economical,
123123 fair, and nondiscriminatory administration of the association;
124124 (8) provide procedures for determining the net level
125125 of participation required for each insurer in the association;
126126 (9) provide for the use of deductibles and other
127127 underwriting devices;and
128128 (10) provide any other procedure or operational matter
129129 the governing committee or the commissioner considers necessary.
130130 Sec. 2210.2254. ASSOCIATION DUTIES WITH RESPECT TO
131131 RESIDENTIAL PROPERTY INSURANCE POLICIES. (a) The association
132132 may, for residential property insurance policies only:
133133 (1) issue insurance policies and endorsements to those
134134 policies in the association's own name or a trade name adopted for
135135 that purpose.
136136 Sec. 2210.2255. FILING AND APPROVAL OF RATES. (a) The
137137 association shall file with the commissioner for approval the
138138 proposed rates and supplemental rate information to be used in
139139 connection with the issuance of insurance policies or endorsements
140140 under this Chapter.
141141 Sec. 2210.2256. COVERAGE PROVIDED TO INSUREDS IN
142142 UNDERSERVED AREA. (a) In accordance with the plan of operation
143143 and Sections 2210.051 and 2210.052, the association shall develop
144144 and administer a program under this Chapter for membership in the
145145 association of and participation by each insurer that writes
146146 residential property insurance in this state.
147147 (b) An insurer's participation in the association's
148148 assessments under this Chapter must be determined in accordance
149149 with the residential property statistical plan adopted by the
150150 commissioner.
151151 (c) A participating insurer is entitled to receive credit
152152 for similar insurance voluntarily written in an underserved area.
153153 The participation of an insurer entitled to receive credit under
154154 this subsection must be reduced in accordance with the plan of
155155 operation.
156156 Sec. 2210.2257. MANDATORY COVERAGE PROVIDED TO CERTAIN
157157 INSUREDS. The association shall make residential property
158158 insurance available to each applicant in an underserved area whose
159159 property is insurable in accordance with reasonable underwriting
160160 standards but who, after diligent efforts, is unable to obtain
161161 residential property insurance through the voluntary market, as
162162 evidenced by two declinations from insurers authorized to engage in
163163 the business of, and writing, residential property insurance in
164164 this state.
165165 SECTION 1.07. Section 2210.571(1), Insurance Code, is
166166 amended to read as follows:
167167 (1) "Association policy" means a windstorm and hail
168168 insurance policy or a residential property
169169 insurance policy issued by the association.
170170 Sec. 2210.2258. DESIGNATION OF AREA AS UNDERSERVED. The
171171 commissioner by rule shall designate the areas determined to be
172172 underserved. In determining which areas to designate as
173173 underserved, the commissioner shall consider the factors specified
174174 in Section 2004.002.
175175 Sec. 2210.2259. PROPERTY INSPECTION. (a) A person who has
176176 an insurable interest in real or tangible personal property at a
177177 fixed location in an underserved area and who, after diligent
178178 effort, is unable to obtain residential property insurance, as
179179 evidenced by two current declinations from insurers authorized to
180180 engage in the business of residential property insurance in this
181181 state and actually writing residential property insurance in this
182182 state, is entitled on application to the association to an
183183 inspection and evaluation of the property by representatives of the
184184 association.
185185 (b) A general property and casualty agent or personal lines
186186 property and casualty agent may make an application on behalf of the
187187 applicant. The applicant or agent must submit the application on a
188188 form prescribed by the association.
189189 (1) (c) Promptly after the application is received,
190190 the association shall make an inspection and
191191 prepare an inspection report. The inspection
192192 report must be made available to the applicant on
193193 request. The association shall prescribe the
194194 manner and scope of the inspection and inspection
195195 report for residential property in accordance
196196 with the plan of operation.
197197 SECTION 1.08. Section 2210.601, Insurance Code, is amended
198198 to read as follows:
199199 Sec. 2210.601. PURPOSE. The legislature finds that
200200 authorizing the issuance of public securities to provide a method
201201 to raise funds to provide windstorm and hail insurance and
202202 residential property insurance through the association in certain
203203 designated portions of the state is for the benefit of the public
204204 and in furtherance of a public purpose.
205205 ARTICLE 2. CONFORMING AMENDMENTS
206206 SECTION 2.01. Section 38.002(a)(1), Insurance Code, is
207207 amended to read as follows:
208208 (1) "Insurer" means an insurance company, reciprocal
209209 or interinsurance exchange, mutual insurance company, capital
210210 stock company, county mutual insurance company, Lloyd's plan, or
211211 other legal entity engaged in the business of personal automobile
212212 insurance or residential property insurance in this state. The
213213 term includes:
214214 (A) an affiliate as described by Section 823.003(a) if
215215 that affiliate is authorized to write and is writing personal
216216 automobile insurance or residential property insurance in this
217217 state;
218218 (B) the Texas Windstorm Insurance Association
219219 created and operated under Chapter 2210; and
220220 (C) [the FAIR Plan Association under Chapter
221221 2211; and]
222222 [(D)] the Texas Automobile Insurance Plan
223223 Association under Chapter 2151.
224224 SECTION 2.02. Section 542A.001(4), Insurance Code, is
225225 amended to read as follows:
226226 (4) "Insurer" means a corporation, association,
227227 partnership, or individual, other than the Texas Windstorm
228228 Insurance Association, engaged as a principal in the business of
229229 insurance and authorized or eligible to write property insurance in
230230 this state, including:
231231 (A) an insurance company;
232232 (B) a reciprocal or interinsurance exchange;
233233 (C) a mutual insurance company;
234234 (D) a capital stock insurance company;
235235 (E) a county mutual insurance company;
236236 (F) a farm mutual insurance company;
237237 (G) a Lloyd's plan; or
238238 (H) an eligible surplus lines insurer[; or
239239 [(I) the FAIR Plan Association, unless a claim
240240 related dispute resolution procedure is available to policyholders
241241 under Chapter 2211].
242242 SECTION 2.03. Section 544.301(1), Insurance Code, is
243243 amended to read as follows:
244244 (1) "Insurer" means an insurance company, reciprocal
245245 or interinsurance exchange, mutual insurance company, capital
246246 stock company, county mutual insurance company, farm mutual
247247 insurance company, Lloyd's plan, or other legal entity authorized
248248 to write residential property insurance in this state. The term
249249 includes an affiliate, as described by Section 823.003(a), if that
250250 affiliate is authorized to write and is writing residential
251251 property insurance in this state. The term does not include:
252252 (A) an eligible surplus lines insurer regulated
253253 under Chapter 981; or
254254 (B) the Texas Windstorm Insurance Association
255255 under Chapter 2210[; or
256256 [(C) the FAIR Plan Association under Chapter 2211].
257257 SECTION 2.04. Section 544.352(2), Insurance Code, is
258258 amended to read as follows:
259259 (2) "Insurer" means an insurance company,
260260 reciprocal or interinsurance exchange, mutual insurance company,
261261 capital stock company, county mutual insurance company, farm mutual
262262 insurance company, association, Lloyd's plan, or other entity
263263 authorized to write residential property insurance in this state.
264264 The term includes an affiliate, as described by Section 823.003(a),
265265 if that affiliate is authorized to write and is writing residential
266266 property insurance in this state. The term does not include[:]
267267 [(A)] the Texas Windstorm Insurance Association
268268 created and operated under Chapter 2210[; or
269269 [(B) the FAIR Plan created and operated under
270270 Chapter 2211].
271271 SECTION 2.05. Section 560.001, Insurance Code, is amended
272272 to read as follows:
273273 Sec. 560.001. DEFINITION OF INSURER. In this chapter,
274274 "insurer" means an insurance company, reciprocal or interinsurance
275275 exchange, mutual insurance company, farm mutual insurance company,
276276 capital stock insurance company, county mutual insurance company,
277277 Lloyd's plan, surplus lines insurer, or other legal entity engaged
278278 in the business of insurance in this state. The term includes:
279279 (1) an affiliate described by Section 823.003(a);
280280 (2) the Texas Windstorm Insurance Association
281281 established under Chapter 2210; and
282282 (3) [the FAIR Plan Association established under
283283 Chapter 2211; and
284284 [(4)] the Texas Automobile Insurance Plan Association
285285 established under Chapter 2151.
286286 SECTION 2.06. Section 1811.001(6), Insurance Code, is
287287 amended to read as follows:
288288 (6) "Insurer" means a company or insurance carrier
289289 that is engaged in the business of making property or casualty
290290 insurance contracts. The term includes:
291291 (A) a stock fire or casualty insurance company;
292292 (B) a mutual fire or casualty insurance company;
293293 (C) a Mexican casualty insurance company;
294294 (D) a Lloyd's plan;
295295 (E) a reciprocal or interinsurance exchange;
296296 (F) a county mutual insurance company;
297297 (G) a farm mutual insurance company;
298298 (H) a risk retention group;
299299 (I) the Medical Liability Insurance Joint
300300 Underwriting Association under Chapter 2203;
301301 (J) the Texas Windstorm Insurance Association
302302 under Chapter 2210;
303303 (K) [the FAIR Plan Association under Chapter
304304 2211;]
305305 [(L)] an eligible surplus lines insurer; and
306306 (L) [(M)] any other insurer authorized to write
307307 property or casualty insurance in this state.
308308 SECTION 2.07. Section 2254.001(1), Insurance Code, is
309309 amended to read as follows:
310310 (1) "Insurer" means an insurance company, reciprocal
311311 or inter insurance exchange, mutual insurance company, capital
312312 stock company, county mutual insurance company, Lloyd's plan, or
313313 other legal entity authorized to write residential property
314314 insurance or personal automobile insurance in this state. The term
315315 includes an affiliate, as described by this code, that is
316316 authorized to write residential property insurance. The terms does
317317 not include[:]
318318 [(A)] the Texas Windstorm Insurance Association
319319 under Chapter 2210[; or]
320320 [(B) the FAIR Plan Association under Chapter
321321 2211].
322322 ARTICLE 3. REPEALER
323323 SECTION 3.01. Effective January 1, 2020, Chapter 2211,
324324 Insurance Code, is repealed.
325325 ARTICLE 4. TRANSITIONS
326326 SECTION 4.01. On January 1, 2020, the operations and
327327 administration of business of the Fair Access to Insurance
328328 Requirements Plan, including claims handling, are transferred to
329329 the Texas Windstorm Insurance Association. A policy delivered,
330330 issued for delivery, or renewed by the plan before January 1, 2020,
331331 remains in force until the expiration of the policy period or until
332332 the policy is otherwise terminated and all premium and other
333333 amounts due under the policy are payable to the association instead
334334 of the plan but are otherwise payable under the terms of the
335335 policies. Money collected by the association under this section
336336 must be used for the payment of claims and other expenses and the
337337 satisfaction of bond obligations to the same extent as if it had
338338 been collected by the Fair Access to Insurance Requirements Plan
339339 under Chapter 2211, Insurance Code, as it existed before repeal by
340340 this Act. In operating and administering the business of the plan,
341341 the association shall, to the greatest extent possible, preserve
342342 the rights of policyholders under policies in effect before January
343343 1, 2020, under:
344344 (1) the terms of the policies; and
345345 (2) Chapter 2211, Insurance Code, and the plan of
346346 operation of the plan as they existed before the effective date of
347347 this Act.
348348 SECTION 4.02. All money, property, contracts, leases,
349349 rights, accounts payable and receivable, debts, and obligations of
350350 the Fair Access to Insurance Requirements Plan are transferred to
351351 the Texas Windstorm Insurance Association.
352352 SECTION 4.03. (a) All money collected or held for the
353353 satisfaction of bond obligations, if any, incurred under Chapter
354354 2211, Insurance Code, as that chapter existed immediately before
355355 the effective date of this Act, including money held in the Texas
356356 Treasury Safekeeping Trust Company, shall be used to satisfy the
357357 bond obligations for which the money is held or collected and
358358 related expenses.
359359 (b) Subchapter E, Chapter 2211, Insurance Code, as it
360360 existed before the effective date of this Act, is applicable to bond
361361 obligations incurred under Chapter 2211, Insurance Code, before the
362362 effective date of this Act, except that the Texas Windstorm
363363 Insurance Association shall act in lieu of the Fair Access to
364364 Insurance Requirements Plan under that subchapter and any amount
365365 required to be collected under that subchapter from a policyholder
366366 of the Fair Access to Insurance Requirements Plan shall be
367367 collected from a residential property insurance policyholder of the
368368 Texas Windstorm Insurance Association. Subchapter E, Chapter 2211,
369369 Insurance Code, as it existed before the effective date of this Act,
370370 is continued in effect for that purpose.
371371 SECTION 4.04. The transfer of the assets and obligations of
372372 the Fair Access to Insurance Requirements Plan may not diminish or
373373 impair the rights of a holder of an outstanding bond or other
374374 obligation of the plan.
375375 SECTION 4.05. All complaint, investigation, legal, or other
376376 proceedings involving the Fair Access to Insurance Requirements
377377 Plan pending on January 1, 2020, are transferred to the Texas
378378 Windstorm Insurance Association, and, as necessary, the
379379 association shall be substituted for the plan as a party to a
380380 proceeding.
381381 SECTION 4.06. (a) The governing committee of the Fair
382382 Access to Insurance Requirements Plan established under Section
383383 2211.052, Insurance Code, as that section existed before repeal by
384384 this Act, is abolished effective January 1, 2020.
385385 (b) The term of a person who is serving as a member of the
386386 governing committee of the Fair Access to Insurance Requirements
387387 Plan immediately before the abolition of that committee under
388388 Subsection (a) of this section expires on January 1, 2020.
389389 (c) The provisions of the plan of operation adopted under
390390 Subchapter E-1, Chapter 2210, Insurance Code, as added by this Act,
391391 must provide that the Texas Windstorm Insurance Association issue
392392 residential property insurance policies under that chapter not
393393 later than January 1, 2020.
394394 (d) The commissioner of insurance shall adopt rules
395395 necessary to ensure that the Texas Windstorm Insurance Association
396396 issue residential property insurance policies under Subchapter
397397 E-1, Chapter 2210, Insurance Code, as added by this Act, not later
398398 than January 1, 2020.
399399 SECTION 4.07. A reference in law to the Texas FAIR plan
400400 association or the Fair Access to Insurance Requirements Plan means
401401 the Texas Windstorm Insurance Association.
402402 SECTION 4.08. This Act takes effect September 1, 2019.