87R20512 SMT-D
By: Middleton, Hunter, Lozano, Dominguez H.B. No. 769
Substitute the following for H.B. No. 769:
By: Oliverson C.S.H.B. No. 769
A BILL TO BE ENTITLED
AN ACT
relating to the administration of the Texas Windstorm Insurance
Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 2210, Insurance Code, is
amended by adding Section 2210.063 to read as follows:
Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The
headquarters of the association must be located in a first tier
coastal county or second tier coastal county.
SECTION 2. Subchapter H, Chapter 2210, Insurance Code, is
amended by adding Section 2210.3512 to read as follows:
Sec. 2210.3512. REQUIREMENT FOR VOTE ON RATE FILING. The
board of directors may not vote on a proposed rate filing if there
is a vacancy on the board.
SECTION 3. Section 2210.452(c), Insurance Code, is amended
to read as follows:
(c) At the end of each calendar year or policy year, the
association shall use the net gain from operations of the
association, including all premium and other revenue of the
association in excess of incurred losses, operating expenses,
public security obligations, and public security administrative
expenses, to make payments to the trust fund or pay public security
obligations, giving priority to the obligations with the highest
interest rates[, procure reinsurance, or use alternative risk
financing mechanisms, or to make payments to the trust fund and
procure reinsurance or use alternative risk financing mechanisms].
SECTION 4. Section 2210.453, Insurance Code, is amended by
adding Subsections (b-1), (b-2), and (f) to read as follows:
(b-1) In determining the probable maximum loss under
Subsection (b), the association:
(1) may not consider the cost of providing loss
adjustments;
(2) shall, to the extent possible, contract with any
disinterested third parties necessary to execute any hurricane risk
simulation models that were executed in the preceding storm season;
(3) shall, if the association is unable to contract
for the execution of a hurricane risk simulation model described by
Subdivision (2), contract with any disinterested third party
necessary to execute a hurricane risk simulation model that is
substantially similar to the model for which the association is
unable to contract under Subdivision (2);
(4) may contract with any disinterested third parties
to execute hurricane risk simulation models in addition to the
models required by Subdivisions (2) and (3);
(5) shall provide to a third party executing a
hurricane risk simulation model any information necessary to comply
with this subsection;
(6) may not use a combination of hurricane risk
simulation models to determine the probable maximum loss; and
(7) may use only the hurricane risk simulation model
that produces the lowest probable maximum loss.
(b-2) Any information produced in compliance with
Subsection (b-1) shall be made publicly available on the Internet
website of the association.
(f) The association may not purchase reinsurance under this
section from an insurer or broker involved in the execution of the
hurricane risk simulation model on which the association relies in
determining the probable maximum loss applicable for the period
covered by the reinsurance.
SECTION 5. Section 2210.611, Insurance Code, is amended to
read as follows:
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT
EARNINGS. Revenue collected in any calendar year from a premium
surcharge under Sections 2210.612, 2210.613, and 2210.6131 that
exceeds the amount of the public security obligations and public
security administrative expenses payable in that calendar year and
interest earned on the funds may, in the discretion of the
association, be:
(1) used to pay public security obligations payable in
the subsequent calendar year, offsetting the amount of the premium
surcharge that would otherwise be required to be levied for the year
under this subchapter; or
(2) used to redeem or purchase outstanding public
securities[; or
[(3) deposited in the catastrophe reserve trust fund].
SECTION 6. Section 2210.664(b), Insurance Code, is amended
to read as follows:
(b) Not later than November 15, 2022 [2020], the board shall
deliver a [the] report prepared under Subsection (a) to:
(1) the governor;
(2) the lieutenant governor; and
(3) the speaker of the house of representatives.
SECTION 7. Section 2210.665, Insurance Code, is amended to
read as follows:
Sec. 2210.665. EXPIRATION. This subchapter expires
September 1, 2023 [2021].
SECTION 8. Sections 14(c) and (d), Chapter 790 (H.B. 1900),
Acts of the 86th Legislature, Regular Session, 2019, are amended to
read as follows:
(c) Not later than January 1, 2023 [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 a [the] study conducted under this section. The report
must include the findings and legislative recommendations of the
board.
(d) This section expires January 1, 2024 [2022].
SECTION 9. Section 2210.063, Insurance Code, as added by
this Act, applies to the Texas Windstorm Insurance Association
beginning January 1, 2023.
SECTION 10. The Texas Department of Insurance shall amend
the Texas Windstorm Insurance 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 11. This Act takes effect September 1, 2021.