Texas 2019 - 86th Regular

Texas Senate Bill SB615 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 615
	1	+	86R30201 JES-D
	2	+	By: Buckingham, et al. S.B. No. 615
	3	+	(Bonnen of Galveston)
	4	+	Substitute the following for S.B. No. 615: No.
2	5
3	6
	7	+	A BILL TO BE ENTITLED
4	8		AN ACT
5	9		relating to the operations and functions of the Texas Windstorm
6	10		Insurance Association and the sunset review date for and programs
7	11		administered by the association; authorizing a fee.
8	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	13		SECTION 1. Section 2210.002(b), Insurance Code, is amended
10	14		to read as follows:
11	15		(b) The association is subject to review under Chapter 325,
12	16		Government Code (Texas Sunset Act), but is not abolished under that
13	17		chapter. The association shall be reviewed during the period in
14	18		which state agencies abolished in 2031 [2019] are reviewed. The
15	19		association shall pay the costs incurred by the Sunset Advisory
16	20		Commission in performing the review of the association under this
17	21		subsection. The Sunset Advisory Commission shall determine the
18	22		costs of the review performed under this subsection, and the
19	23		association shall pay the amount of those costs promptly on receipt
20	24		of a statement from the Sunset Advisory Commission regarding those
21	25		costs. This subsection expires September 1, 2031 [2019].
22	26		SECTION 2. Section 2210.008, Insurance Code, is amended by
23	27		adding Subsections (d), (e), and (f) to read as follows:
24	28		(d) The association may propose a rule for adoption by the
25	29		commissioner. Except as provided by this section, the
26	30		association's proposal is governed by Subchapter B, Chapter 2001,
27	31		Government Code. The association is an interested person under
28	32		that subchapter for purposes of a proceeding initiated under this
29	33		section.
30	34		(e) Notwithstanding Section 2001.021(c), Government Code,
31	35		not later than the 30th day after the date the commissioner receives
32	36		a proposed rule from the association, the commissioner shall
33	37		initiate a rulemaking proceeding under Subchapter B, Chapter 2001,
34	38		Government Code.
35	39		(f) The association may request a public hearing under
36	40		Section 2001.029, Government Code, in connection with a rule
37	41		proposed under this section.
38	42		SECTION 3. Section 2210.102, Insurance Code, is amended by
39	43		adding Subsection (g) to read as follows:
40	44		(g) Members appointed to the board of directors under
41	45		Subsections (c) and (d), other than the member appointed under
42	46		Subsection (c-1), must represent the general public in the regions
43	47		described by those subsections. A person may not be appointed to
44	48		represent the general public under Subsection (c) or (d) if the
45	49		person or the person's spouse:
46	50		(1) is employed by or participates in the management
47	51		of a business entity or other organization:
48	52		(A) operating in the property and casualty
49	53		insurance industry in this state;
50	54		(B) receiving money from the association, other
51	55		than insurance claim payments; or
52	56		(C) receiving money from association
53	57		policyholders with respect to the policyholders' claims;
54	58		(2) owns or controls, directly or indirectly, more
55	59		than a 10 percent interest in a business entity or other
56	60		organization:
57	61		(A) operating in the property and casualty
58	62		insurance industry in this state;
59	63		(B) receiving money from the association, other
60	64		than insurance claim payments; or
61	65		(C) receiving money from association
62	66		policyholders with respect to the policyholders' claims; or
63	67		(3) uses or receives a substantial amount of tangible
64	68		goods, services, or money from the association, other than:
65	69		(A) insurance claim payments; or
66	70		(B) compensation or reimbursement authorized by
67	71		law for the board members' membership, attendance, or expenses.
68	72		SECTION 4. Subchapter C, Chapter 2210, Insurance Code, is
69	73		amended by adding Section 2210.1031 to read as follows:
70	74		Sec. 2210.1031. TRAINING. (a) A person who is appointed
71	75		to and qualifies for office as a member of the board of directors
72	76		may not vote, deliberate, or be counted as a member in attendance at
73	77		a meeting of the board of directors until the person completes a
74	78		training program that complies with this section.
75	79		(b) The training program must provide the person with
76	80		information regarding:
77	81		(1) the law governing the operation of the
78	82		association;
79	83		(2) the programs, functions, rules, and budget of the
80	84		association;
81	85		(3) the scope of and limitations on the rulemaking
82	86		authority of the board of directors;
83	87		(4) the results of the most recent formal audit of the
84	88		association;
85	89		(5) the requirements of:
86	90		(A) laws relating to open meetings, public
87	91		information, administrative procedure, and conflict of interest
88	92		disclosure; and
89	93		(B) other laws applicable to the board of
90	94		directors in performing the board's duties; and
91	95		(6) any applicable ethics policies adopted by the
92	96		association or the Texas Ethics Commission.
93	97		(c) The general manager of the association shall create a
94	98		training manual that includes the information required by
95	99		Subsection (b). The general manager shall distribute a copy of the
96	100		training manual annually to each member of the board of directors.
97	101		Each member of the board of directors shall sign and submit to the
98	102		general manager a statement acknowledging that the member received
99	103		and has reviewed the training manual.
100	104		SECTION 5. Subchapter C, Chapter 2210, Insurance Code, is
101	105		amended by adding Section 2210.109 to read as follows:
102	106		Sec. 2210.109. DISCLOSURE OF CONFLICTS. (a) A member of
103	107		the board of directors, or a member of a subcommittee of the board
104	108		of directors that relates to underwriting and actuarial matters,
105	109		shall disclose any potential conflict of interest of the member
106	110		known by the member with respect to a matter for discussion or vote
107	111		by the board or subcommittee, as applicable, before the discussion
108	112		or vote. A potential conflict of interest is an interest that may
109	113		reasonably be expected to diminish the member's independent
110	114		judgment with respect to the matter for discussion or vote.
111	115		Potential conflicts of interest required to be disclosed under this
112	116		section include:
113	117		(1) a financial or personal interest in an entity that
114	118		may financially benefit from the outcome of the discussion or vote;
115	119		and
116	120		(2) holding an insurance policy issued by the
117	121		association that may be affected by the discussion or vote.
118	122		(b) A disclosure under this section must be made available
119	123		to the public. A board or subcommittee member satisfies this
120	124		requirement if:
121	125		(1) with respect to an open meeting or meeting
122	126		broadcast live on the association's Internet website, the member
123	127		publicly discloses the conflict of interest in the meeting or
124	128		during the broadcast; or
125	129		(2) with respect to a meeting that is not an open
126	130		meeting or broadcast live on the association's Internet website,
127	131		the member discloses the conflict of interest in the agenda of the
128	132		meeting and makes the agenda publicly available on the
129	133		association's Internet website before the meeting.
130	134		SECTION 6. Section 2210.202, Insurance Code, is amended to
131	135		read as follows:
132	136		Sec. 2210.202. APPLICATION FOR COVERAGE; DECLINATION
133	137		REQUIREMENT. (a) A person who has an insurable interest in
134	138		insurable property may apply to the association for insurance
135	139		coverage provided under the plan of operation and an inspection of
136	140		the property, subject to any rules established by the board of
137	141		directors and approved by the commissioner. The association shall
138	142		make insurance available to each applicant in the catastrophe area
139	143		whose property is insurable property but who, after diligent
140	144		efforts, is unable to obtain property insurance through the
141	145		voluntary market, as evidenced by one declination from an insurer
142	146		authorized to engage in the business of, and writing, property
143	147		insurance providing windstorm and hail coverage in the first tier
144	148		coastal counties. For purposes of this section, "declination" has
145	149		the meaning assigned by the plan of operation and shall include a
146	150		refusal to offer coverage for the perils of windstorm and hail and
147	151		the inability to obtain substantially equivalent insurance
148	152		coverage for the perils of windstorm and hail. Notwithstanding
149	153		Section 2210.203(c), evidence of one declination every three
150	154		calendar years is [also] required before [with an application for]
151	155		renewal of an association policy.
152	156		(b) A property and casualty agent must submit an application
153	157		for initial insurance coverage on behalf of the applicant on forms
154	158		prescribed by the association. [The association shall develop a
155	159		simplified renewal process that allows for the acceptance of an
156	160		application for renewal coverage, and payment of premiums, from a
157	161		property and casualty agent or a person insured under this
158	162		chapter.] An application for initial [or renewal] coverage must
159	163		contain:
160	164		(1) a statement as to whether the applicant has
161	165		submitted or will submit the required premium payment [in full]
162	166		from personal funds or, if not, to whom a balance is or will be due;
163	167		and
164	168		(2) a statement that the agent acting on behalf of the
165	169		applicant possesses proof of the declination described by
166	170		Subsection (a) and proof of flood insurance coverage or
167	171		unavailability of that coverage as described by Section
168	172		2210.203(a-1).
169	173		SECTION 7. Sections 2210.203(a) and (c), Insurance Code,
170	174		are amended to read as follows:
171	175		(a) If the association determines that the property for
172	176		which an application for initial insurance coverage is made is
173	177		insurable property, the association, on payment of the premium in
174	178		full or in part as authorized under Section 2210.2032, shall direct
175	179		the issuance of an insurance policy as provided by the plan of
176	180		operation.
177	181		(c) A policy may be renewed annually [on application for
178	182		renewal] as long as the property continues to be insurable
179	183		property.
180	184		SECTION 8. Subchapter E, Chapter 2210, Insurance Code, is
181	185		amended by adding Sections 2210.2031 and 2210.2032 to read as
182	186		follows:
183	187		Sec. 2210.2031. AUTOMATIC RENEWAL. (a) The association
184	188		shall establish a process for automatic renewal of a policy in
185	189		accordance with this section.
186	190		(b) The process established under Subsection (a) must:
187	191		(1) provide for the association to verify:
188	192		(A) the declination required by Section
189	193		2210.202;
190	194		(B) flood insurance coverage required by Section
191	195		2210.203; and
192	196		(C) any other information related to
193	197		insurability of a property, including changes to the condition or
194	198		value of the property that would affect the availability of
195	199		coverage or premium cost to insure the property; and
196	200		(2) provide an opportunity for the policyholder to
197	201		elect to cancel the policy before the policy automatically renews.
198	202		Sec. 2210.2032. PREMIUM PAYMENT METHODS. (a) The
199	203		association shall accept payment of premium by credit card. The
200	204		association may impose a fee on a policyholder for the use of a
201	205		credit card to pay premium. The fee may not exceed the amount
202	206		necessary to recoup the cost incurred by the association in
203	207		connection with the policyholder's use of a credit card.
204	208		(b) The association shall provide to policyholders the
205	209		option to pay premium in installments. A policyholder that pays
206	210		premium in accordance with an installment payment plan established
207	211		by the association and remains current on the payments satisfies
208	212		the obligation for payment of premium under this chapter.
209	213		SECTION 9. Section 2210.205(a), Insurance Code, is amended
210	214		to read as follows:
211	215		(a) A windstorm and hail insurance policy issued by the
212	216		association must:
213	217		(1) require an insured to file a claim under the policy
214	218		not later than the first anniversary of the date on which the damage
215	219		to property that is the basis of the claim occurs; [and]
216	220		(2) contain, in boldface type, a conspicuous notice
217	221		concerning the resolution of disputes under the policy, including:
218	222		(A) the processes and deadlines for appraisal
219	223		under Section 2210.574 and alternative dispute resolution under
220	224		Section 2210.575;
221	225		(B) the binding effect of appraisal under Section
222	226		2210.574; and
223	227		(C) the necessity of complying with the
224	228		requirements of Subchapter L-1 to seek relief, including judicial
225	229		relief; and
226	230		(3) contain a conspicuous notice concerning the
227	231		availability of supplemental payments under the policy, including:
228	232		(A) a description of the process for requesting a
229	233		supplemental payment; and
230	234		(B) notice of applicable deadlines related to
231	235		supplemental payments.
232	236		SECTION 10. Sections 2210.207(c) and (d), Insurance Code,
233	237		are amended to read as follows:
234	238		(c) If, on the effective date of an association policy [at
235	239		the time of loss], the total amount of insurance applicable to a
236	240		dwelling is equal to 80 percent or more of the full replacement cost
237	241		of the dwelling or equal to the maximum amount of insurance
238	242		otherwise available through the association, coverage applicable
239	243		to the dwelling under the policy is extended to include the full
240	244		cost of repair or replacement, without a deduction for
241	245		depreciation.
242	246		(d) If, on the effective date of an association policy [at
243	247		the time of loss], the total amount of insurance applicable to a
244	248		dwelling is equal to less than 80 percent of the full replacement
245	249		cost of the dwelling and less than the maximum amount of insurance
246	250		available through the association, liability for loss under the
247	251		policy may not exceed the replacement cost of the part of the
248	252		dwelling that is damaged or destroyed, less depreciation.
249	253		SECTION 11. Section 2210.251(g), Insurance Code, is amended
250	254		to read as follows:
251	255		(g) A certificate of compliance issued by the department [or
252	256		association] under Section 2210.2515 demonstrates compliance with
253	257		the applicable building code under the plan of operation. The
254	258		certificate is evidence of insurability of the structure by the
255	259		association.
256	260		SECTION 12. Section 2210.2515, Insurance Code, is amended
257	261		by amending Subsection (c) and adding Subsections (c-1), (c-2), and
258	262		(i) to read as follows:
259	263		(c) A person may apply to the department [association] on a
260	264		form prescribed by the department for a certificate of compliance
261	265		for a completed improvement. The department [association] shall
262	266		issue a certificate of compliance for a completed improvement if a
263	267		professional engineer licensed by the Texas Board of Professional
264	268		Engineers:
265	269		(1) has designed the improvement, has affixed the
266	270		engineer's seal on the design, and submits to the department
267	271		[association] on a form prescribed by the department an affirmation
268	272		that the design complies [of compliance] with the applicable
269	273		building code under the plan of operation and that the improvement
270	274		was constructed in accordance with the design; or
271	275		(2) completes and submits to the department a sealed
272	276		post-construction evaluation report that:
273	277		(A) confirms the improvement's compliance with
274	278		the applicable building code under the plan of operation; and
275	279		(B) includes documentation supporting the
276	280		engineer's post-construction evaluation report on a form
277	281		prescribed by the department on which the engineer has affixed the
278	282		engineer's seal.
279	283		(c-1) The department may deny an application for a
280	284		certificate of compliance under Subsection (c) if the evaluation
281	285		report is not fully documented as required under Subsection (c).
282	286		(c-2) A form prescribed by the department under Subsection
283	287		(c) may not require a professional engineer to assume liability for
284	288		the construction of an improvement.
285	289		(i) The department is authorized to submit a formal
286	290		complaint under Chapter 1001, Occupations Code, to the Texas Board
287	291		of Professional Engineers related to the engineering work of a
288	292		professional engineer as reflected in materials submitted by an
289	293		engineer under Subsection (c).
290	294		SECTION 13. Subchapter H, Chapter 2210, Insurance Code, is
291	295		amended by adding Section 2210.3511 to read as follows:
292	296		Sec. 2210.3511. PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS.
293	297		(a) The association shall make the association's rate adequacy
294	298		analysis publicly available on its Internet website for at least 14
295	299		days before the date the board of directors votes on the submission
296	300		of a proposed rate filing based on the analysis to the department.
297	301		The rate adequacy analysis must include:
298	302		(1) all user selected hurricane model input
299	303		assumptions; and
300	304		(2) output data:
301	305		(A) with the same content and in the same format
302	306		that is customarily provided to:
303	307		(i) the association by hurricane modelers;
304	308		and
305	309		(ii) the department by the association; and
306	310		(B) in a searchable electronic format that allows
307	311		for efficient analysis and is sufficiently detailed to allow the
308	312		historical experience in this state to be compared to results
309	313		produced by the model.
310	314		(b) The association shall accept public comment with
311	315		respect to the association's rate adequacy analysis at a public
312	316		meeting of the board of directors before the board of directors
313	317		votes on the submission of a proposed rate filing to the department.
314	318		SECTION 14. Section 2210.573, Insurance Code, is amended by
315	319		adding Subsection (f-1) to read as follows:
316	320		(f-1) In a notice described by Subsection (d)(1) or (2), the
317	321		association must include additional information concerning the
318	322		availability of supplemental payments under the policy, including:
319	323		(1) a description of the process for requesting a
320	324		supplemental payment; and
321	325		(2) applicable deadlines related to supplemental
322	326		payments.
323	327		SECTION 15. Subchapter L-1, Chapter 2210, Insurance Code,
324	328		is amended by adding Section 2210.5732 to read as follows:
325	329		Sec. 2210.5732. SUPPLEMENTAL PAYMENTS. (a) The
326	330		association is authorized to provide for supplemental payments
327	331		under a windstorm and hail insurance policy issued by the
328	332		association.
329	333		(b) The commissioner shall adopt rules clarifying the
330	334		deadlines related to supplemental payments. The commissioner shall
331	335		solicit and consider comments from the association, association
332	336		members, and policyholders in adopting rules under this section.
333	337		(c) The rules adopted under this section must ensure that a
334	338		request for supplemental payment will not impair a policyholder's
335	339		right to appraisal under Section 2210.574.
336	340		SECTION 16. Section 2210.705, Insurance Code, is amended to
337	341		read as follows:
338	342		Sec. 2210.705. TRANSFER OF POLICIES. The commissioner
339	343		shall by rule establish the procedure for the transfer of reinsured
340	344		policies. The rules may not contain deadlines that require a
341	345		property and casualty insurer or agent or a policyholder to take
342	346		action or make a decision on or after June 1 or before December 1 in
343	347		any year. The rule must provide that a reinsurance agreement
344	348		include:
345	349		(1) [an offer commencement date of December 1;
346	350		[(2)] the opportunity for the policyholder to opt out
347	351		of the reinsurance agreement not more than 60 days after the
348	352		policyholder receives notice of the reinsurance agreement [on or
349	353		before May 31];
350	354		(2) [(3)] a transfer of the earned premium on a
351	355		reinsured policy to a trust account to be held until the expiration
352	356		of the opt-out period described by Subdivision (1) [(2)] when the
353	357		earned premium for the final reinsured policy will be transferred
354	358		to the reinsurer;
355	359		(3) [(4)] a period of not less than 60 days for the
356	360		agent of record to accept an appointment or other written agreement
357	361		with the reinsurer; and
358	362		(4) [(5)] any other requirements as the commissioner
359	363		determines necessary for the protection of policyholders and the
360	364		policyholders' agents.
361	365		SECTION 17. Section 2210.107(b), Insurance Code, is
362	366		repealed.
363	367		SECTION 18. (a) Not later than January 1, 2020, the Texas
364	368		Windstorm Insurance Association shall provide for a training
365	369		program for members of the association's board of directors as
366	370		required by Section 2210.1031, Insurance Code, as added by this
367	371		Act.
368	372		(b) A member of the board of directors may not vote,
369	373		deliberate, or be counted as a member in attendance at a meeting of
370	374		the board held on or after January 1, 2020, until the member
371	375		completes the training required by Section 2210.1031, Insurance
372	376		Code, as added by this Act.
373	377		(c) Not later than March 31, 2020, the commissioner of
374	378		insurance shall adopt or amend rules as required by Section
375	379		2210.705, Insurance Code, as amended by this Act.
376	380		(d) Not later than June 1, 2020, the commissioner of
377	381		insurance shall adopt or amend rules as required by Section
378	382		2210.5732, Insurance Code, as added by this Act.
379	383		SECTION 19. (a) Except as provided by Section 18 of this
380	384		Act, Sections 2210.102(g) and 2210.1031, Insurance Code, as added
381	385		by this Act, do not affect the entitlement of a member serving on
382	386		the board of directors of the Texas Windstorm Insurance Association
383	387		immediately before the effective date of this Act to continue to
384	388		serve on the board for the remainder of the term to which the member
385	389		was appointed.
386	390		(b) The Texas Windstorm Insurance Association is not
387	391		required to comply with Section 2210.2031, Insurance Code, as added
388	392		by this Act, before January 1, 2020.
389	393		(c) The Texas Windstorm Insurance Association is not
390	394		required to comply with Section 2210.2032, Insurance Code, as added
391	395		by this Act, before January 1, 2021.
392	396		(d) Section 2210.205(a), Insurance Code, as amended by this
393	397		Act, applies only to an association policy that is delivered,
394	398		issued for delivery, or renewed on or after July 1, 2020. An
395	399		association policy delivered, issued for delivery, or renewed
396	400		before July 1, 2020, is governed by the law as it existed
397	401		immediately before the effective date of this Act, and that law is
398	402		continued in effect for that purpose.
399	403		(e) Section 2210.207, Insurance Code, as amended by this
400	404		Act, applies only to an insurance policy that is delivered, issued
401	405		for delivery, or renewed on or after January 1, 2020. A policy
402	406		delivered, issued for delivery, or renewed before January 1, 2020,
403	407		is governed by the law as it existed immediately before the
404	408		effective date of this Act, and that law is continued in effect for
405	409		that purpose.
406	410		(f) Section 2210.251(g), Insurance Code, as amended by this
407	411		Act, does not affect the status of a certificate of compliance
408	412		issued by the Texas Windstorm Insurance Association before June 1,
409	413		2020, or after June 1, 2020, in response to an application made
410	414		before that date for purposes of establishing evidence of
411	415		insurability.
412	416		(g) Section 2210.2515, Insurance Code, as amended by this
413	417		Act, applies only to an application for a certificate of compliance
414	418		made on or after June 1, 2020. An application for a certificate of
415	419		compliance made before June 1, 2020, is governed by the law as it
416	420		existed immediately before the effective date of this Act, and that
417	421		law is continued in effect for that purpose.
418	422		(h) Section 2210.3511, Insurance Code, as added by this Act,
419	423		applies only to a rate adequacy analysis made in relation to a rate
420	424		filing made on or after the effective date of this Act.
421	425		(i) Section 2210.573(f-1), Insurance Code, as added by this
422	426		Act, applies only to a notice with respect to a claim submitted
423	427		under an association policy that is delivered, issued for delivery,
424	428		or renewed on or after July 1, 2020. A notice with respect to a
425	429		claim submitted under an association policy delivered, issued for
426	430		delivery, or renewed before July 1, 2020, is governed by the law as
427	431		it existed immediately before the effective date of this Act, and
428	432		that law is continued in effect for that purpose.
429	433		SECTION 20. This Act takes effect September 1, 2019.
430		-	______________________________ ______________________________
431		-	President of the Senate Speaker of the House
432		-	I hereby certify that S.B. No. 615 passed the Senate on
433		-	April 4, 2019, by the following vote: Yeas 30, Nays 1; and that
434		-	the Senate concurred in House amendment on May 21, 2019, by the
435		-	following vote: Yeas 31, Nays 0.
436		-	______________________________
437		-	Secretary of the Senate
438		-	I hereby certify that S.B. No. 615 passed the House, with
439		-	amendment, on May 17, 2019, by the following vote: Yeas 140,
440		-	Nays 2, three present not voting.
441		-	______________________________
442		-	Chief Clerk of the House
443		-	Approved:
444		-	______________________________
445		-	Date
446		-	______________________________
447		-	Governor