Texas 2023 - 88th Regular

Texas House Bill HB2880 Compare Versions

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1	1	By: Lozano H.B. No. 2880
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the administration of the Texas Windstorm Insurance
7	7	Association.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Subchapter A, Chapter 2210, Insurance Code, is
10	10	amended by adding Section 2210.016 to read as follows:
11	11	Sec. 2210.016. LEGISLATIVE LOBBYING. (a) The association
12	12	may not use any money under its control to attempt to influence the
13	13	passage or defeat of a legislative measure.
14	14	(b) An employee or board member that violates Subsection (a)
15	15	is subject to immediate termination and a fine of $10,000 to be
16	16	deposited in the catastrophe reserve trust fund.
17	17	(c) This section does not prohibit a member of the board of
18	18	directors or an employee from using money under its control to
19	19	provide public information or to provide information responsive to
20	20	a request.
21	21	SECTION 2. Subchapter B, Chapter 2210, Insurance Code, is
22	22	amended by adding Section 2210.063 to read as follows:
23	23	Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The
24	24	headquarters of the association shall be located in a first tier
25	25	coastal county or second tier coastal county.
26	26	SECTION 3. Subchapter B, Chapter 2210, Insurance Code, is
27	27	amended by adding Section 2210.064 to read as follows:
28	28	Sec. 2210.064. ASSOCIATION GENERAL MANAGER. (a) The
29	29	general manager of the association is responsible and accountable
30	30	to the commissioner and the board of directors.
31	31	(b) The general manager is appointed by the commissioner in
32	32	accordance with this section.
33	33	(c) The commissioner may remove an existing general manager
34	34	and appoint a new general manager at any time.
35	35	(d) The general manager must have demonstrated knowledge of
36	36	windstorm insurance, general business, or actuarial principles
37	37	sufficient to make the success of the association probable.
38	38	(e) A person may not serve as general manager of the
39	39	association if the person or the person's spouse:
40	40	(1) is employed by or participates in the management
41	41	of a business entity or other organization:
42	42	(A) operating in the property and casualty
43	43	insurance industry in this state;
44	44	(B) receiving money from the association, other
45	45	than insurance claim payments; or
46	46	(C) receiving money from association
47	47	policyholders with respect to the policyholders' claims;
48	48	(2) owns or controls, directly or indirectly, more
49	49	than a 10 percent interest in a business entity or other
50	50	organization:
51	51	(A) operating in the property and casualty
52	52	insurance industry in this state;
53	53	(B) receiving money from the association, other
54	54	than insurance claim payments; or
55	55	(C) receiving money from association
56	56	policyholders with respect to the policyholders' claims;
57	57	(3) uses or receives a substantial amount of tangible
58	58	goods, services, or money from the association, other than:
59	59	(A) insurance claim payments; or
60	60	(B) compensation or reimbursement authorized by
61	61	law for the general manager's membership, attendance, or expenses.
62	62	SECTION 4. Section 2210.0725(a), Insurance Code, is amended
63	63	to read as follows:
64	64	Sec. 2210.0725. PAYMENT FROM CLASS 1 ASSESSMENTS. (a)
65	65	Losses in a catastrophe year not paid under Sections 2210.0715 and
66	66	2210.072 shall be paid as provided by this section from Class 1
67	67	member assessments not to exceed $500 million plus an adjustment
68	68	equal to the Consumer Price Index for that catastrophe year.
69	69	SECTION 5. Section 2210.074(a), Insurance Code, is amended
70	70	to read as follows:
71	71	Sec. 2210.074. PAYMENT THROUGH CLASS 2 ASSESSMENTS. (a)
72	72	Losses in a catastrophe year not paid under Sections 2210.0715,
73	73	2210.072, 2210.0725, and 2210.073 shall be paid as provided by this
74	74	section from Class 2 member assessments not to exceed $250 million
75	75	plus an adjustment equal to the Consumer Price Index for that
76	76	catastrophe year.
77	77	SECTION 6. Section 2210.0742(a), Insurance Code, is amended
78	78	to read as follows:
79	79	Sec. 2210.0742. PAYMENT FROM CLASS 3 ASSESSMENTS. (a)
80	80	Losses in a catastrophe year not paid under Sections 2210.0715,
81	81	2210.072, 2210.0725, 2210.073, 2210.074, and 2210.0741 shall be
82	82	paid as provided by this section from Class 3 member assessments not
83	83	to exceed $250 million plus an adjustment equal to the Consumer
84	84	Price Index for that catastrophe year.
85	85	SECTION 7. Subchapter B-1, Chapter 2210, Insurance Code, is
86	86	amended by adding Section 2210.076 to read as follows:
87	87	Sec. 2210.076. PAYMENT FROM ASSESSMENTS IN EXCESS OF
88	88	REINSURANCE. (a) Losses in a catastrophe year not paid under
89	89	Sections 2210.0715, 2210.072, 2210.0725, 2210.073, 2210.074,
90	90	2210.0741, 2210.0742, 2210.4522, and 2210.453 shall be paid as
91	91	provided by this section from member assessments.
92	92	(b) The association, with the approval of the commissioner,
93	93	shall notify each member of the amount of the member's assessment
94	94	under this section. The proportion of the losses allocable to each
95	95	insurer under this section shall be determined in the manner used to
96	96	determine each insurer's participation in the association for the
97	97	year under Section 2210.052.
98	98	(c) A member of the association may not recoup an assessment
99	99	paid under this section through a premium surcharge or tax credit.
100	100	SECTION 8. Section 2210.102, Insurance Code, is amended to
101	101	read as follows:
102	102	Sec. 2210.102. COMPOSITION. (a) The board of directors is
103	103	composed of nine members appointed by the commissioner in
104	104	accordance with this section.
105	105	(b) Three members must be property and casualty agents who
106	106	are licensed under this code, are not captive agents, and
107	107	reside [representatives of the insurance industry who actively
108	108	write and renew windstorm and hail insurance] in the first tier
109	109	coastal counties.
110	110	(c) Three members must, as of the date of the appointment,
111	111	reside in the first tier coastal counties. Each of the following
112	112	regions must be represented by a member residing in the region and
113	113	appointed under this subsection:
114	114	(1) the region consisting of Cameron, Kenedy, Kleberg,
115	115	and Willacy Counties;
116	116	(2) the region consisting of Aransas, Calhoun, Nueces,
117	117	Refugio, and San Patricio Counties; and
118	118	(3) the region consisting of Brazoria, Chambers,
119	119	Galveston, Jefferson, and Matagorda Counties and any part of Harris
120	120	County designated as a catastrophe area under Section 2210.005.
121	121	[(c-1)One of the members appointed under Subsection (c)
122	122	must be a property and casualty agent who is licensed under this
123	123	code and is not a captive agent.]
124	124	(d) Three members must reside in an area of this state that
125	125	is located outside the first tier coastal counties[more than 100
126	126	miles from the Texas coastline].
127	127	(d-1) One of the members appointed under Subsection (d) must
128	128	be the public counsel of the Office of Public Insurance Counsel or
129	129	their designated appointee.
130	130	(e) All members must have demonstrated experience in
131	131	insurance, general business, or actuarial principles and the
132	132	member's area of expertise, if any, sufficient to make the success
133	133	of the association probable.
134	134	(f) No member may be an active employee of an insurer who is
135	135	a member of the association. [Insurers who are members of the
136	136	association shall nominate, from among those members, persons to
137	137	fill any vacancy in the three board of director seats reserved for
138	138	representatives of the insurance industry. The board of directors
139	139	shall solicit nominations from the members and submit the
140	140	nominations to the commissioner. The nominee slate submitted to
141	141	the commissioner under this subsection must include at least three
142	142	more names than the number of vacancies. The commissioner may
143	143	appoint replacement insurance industry representatives from the
144	144	nominee slate.]
145	145	(g) Members appointed to the board of directors under
146	146	Subsections (c) and (d)[, other than the member appointed under
147	147	Subsection (c-1),] must represent the general public in the regions
148	148	described by those subsections. A person may not be appointed to
149	149	represent the general public under Subsection (c) or (d) if the
150	150	person or the person's spouse:
151	151	(1) is employed by or participates in the management
152	152	of a business entity or other organization:
153	153	(A) operating in the property and casualty
154	154	insurance industry in this state;
155	155	(B) receiving money from the association, other
156	156	than insurance claim payments; or
157	157	(C) receiving money from association
158	158	policyholders with respect to the policyholders' claims;
159	159	(2) owns or controls, directly or indirectly, more
160	160	than a 10 percent interest in a business entity or other
161	161	organization:
162	162	(A) operating in the property and casualty
163	163	insurance industry in this state;
164	164	(B) receiving money from the association, other
165	165	than insurance claim payments; or
166	166	(C) receiving money from association
167	167	policyholders with respect to the policyholders' claims; or
168	168	(3) uses or receives a substantial amount of tangible
169	169	goods, services, or money from the association, other than:
170	170	(A) insurance claim payments; or
171	171	(B) compensation or reimbursement authorized by
172	172	law for the board members' membership, attendance, or expenses.
173	173	SECTION 9. Section 2210.103, Insurance Code, is amended to
174	174	read as follows:
175	175	Sec. 2210.103. TERMS. (a) Members of the board of
176	176	directors serve three-year staggered terms, with the terms of three
177	177	members expiring on the third Tuesday of March of each year.
178	178	(b) A person may serve on the board of directors for not more
179	179	than three consecutive full terms, not to exceed nine years.
180	180	(c) A member of the board of directors may be removed by the
181	181	commissioner with cause stated in writing and posted on the
182	182	association's website. The commissioner shall appoint a
183	183	replacement in accordance with Section 2210.102 for a member who
184	184	leaves or is removed from the board of directors.
185	185	(d) A member of the board of directors shall be removed by
186	186	the commissioner if the board member fails to make a reasonable
187	187	effort to attend the board meeting to set the annual rate,
188	188	described by Section 2210.352.
189	189	SECTION 10. Section 2210.105, Insurance Code, is amended by
190	190	amending (d) and adding (b-2) to read as follows:
191	191	(d) Except for an emergency meeting, a meeting of the board
192	192	of directors shall be held at a location in a first tier coastal
193	193	county or second tier coastal county [as determined by the board of
194	194	directors].
195	195	(b-2) A legislator or a legislator's designated
196	196	representative may attend a meeting of the board of directors or the
197	197	members of the association, including a closed meeting authorized
198	198	by Subchapter D, Chapter 551, Government Code.
199	199	SECTION 11. Subchapter G, Insurance Code, is amended by
200	200	adding Section 2210.211 to read as follows:
201	201	Sec. 2210.211. CERTAIN ADJUSTMENTS PROHIBITED. (a) The
202	202	association may not automatically adjust the amount of coverage to
203	203	be purchased by a policyholder.
204	204	(b) The association may not require the use of any one
205	205	replacement cost calculator.
206	206	(c) The association may not adjust premiums, fees, or any
207	207	other costs to policyholders for inflation without a vote by the
208	208	board of directors.
209	209	SECTION 12. Section 2210.352, Insurance Code, is amended to
210	210	read as follows:
211	211	Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a) Not
212	212	later than September [August] 15 of each year, the association
213	213	shall file with the department a proposed manual rate for all types
214	214	and classes of risks written by the association.
215	215	SECTION 13. Section 2210.453(b), Insurance Code, is amended
216	216	to read as follows:
217	217	(b) The association shall maintain total available loss
218	218	funding in an amount not less than the probable maximum loss for the
219	219	association for a catastrophe year with a probability of one in 50
220	220	[100]. If necessary, the required funding level shall be achieved
221	221	through the purchase of reinsurance or the use of alternative
222	222	financing mechanisms, or both, to operate in addition to or in
223	223	concert with the trust fund, public securities, financial
224	224	instruments, and assessments authorized by this chapter.
225	225	SECTION 14. Section 2210.453, Insurance Code, is amended by
226	226	adding Subsections (b-1) and (b-2) to read as follows:
227	227	(b-1) In determining the probable maximum loss under
228	228	Subsection (b), the association:
229	229	(1) may not consider the cost of providing loss
230	230	adjustments;
231	231	(2) shall, to the extent possible, contract with any
232	232	disinterested third parties necessary to execute any catastrophe
233	233	models that were executed in the preceding storm season;
234	234	(3) shall, if the association is unable to contract
235	235	for the execution of a catastrophe model described by Subdivision
236	236	(2), contract with any disinterested third party necessary to
237	237	execute a catastrophe model that is substantially similar to the
238	238	model for which the association is unable to contract under
239	239	Subdivision (2);
240	240	(4) may contract with any disinterested third parties
241	241	to execute catastrophe models in addition to the models required by
242	242	Subdivisions (2) and (3);
243	243	(5) shall provide to a third party executing a
244	244	catastrophe model any information necessary to comply with this
245	245	subsection;
246	246	(6) may not use a combination of catastrophe models to
247	247	determine the probable maximum loss; and
248	248	(7) may use only the catastrophe model that produces
249	249	the lowest probable maximum loss.
250	250	(b-2) Any information produced in compliance with
251	251	Subsection (b-1) shall be made publicly available on the Internet
252	252	website of the association.
253	253	(b-3) The amount of loss adjustment expense, as adopted by
254	254	the board of directors for a catastrophe year and used for the
255	255	association's rate indication for purposes of filing a rate under
256	256	this Chapter, must be considered above the probable maximum loss.
257	257	SECTION 15. Section 2210.618, Insurance Code, is amended to
258	258	read as follows:
259	259	Sec. 2210.618. EXEMPTION FROM TAXATION. (a) A public
260	260	security issued under this subchapter, any transaction relating to
261	261	the public security, and profits made from the sale of the public
262	262	security are exempt from taxation by this state or by a municipality
263	263	or other political subdivision of this state.
264	264	(b) The association is not subject to any insurance premium
265	265	tax or insurance maintenance tax or fee.
266	266	SECTION 16. Section 2210.063, Insurance Code, as added by
267	267	this Act, applies to the Texas Windstorm Insurance Association
268	268	beginning on January 1, 2025.
269	269	SECTION 17. This Act takes effect immediately if it
270	270	receives a vote of two-thirds of all the members elected to each
271	271	house, as provided by Section 39, Article III, Texas Constitution.
272	272	If this Act does not receive the vote necessary for immediate
273	273	effect, this Act takes effect September 1, 2023.