H.B. No. 998
AN ACT
relating to the provision of property owners' association insurance
by the FAIR Plan Association in certain areas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2211.001, Insurance Code, is amended by
adding Subdivision (6-a) to read as follows:
(6-a) "Property owners' association insurance" means
property and liability insurance covering:
(A) common areas and facilities of a homeowners'
association; or
(B) common elements of a condominium owners'
association.
SECTION 2. Section 2211.051, Insurance Code, is amended to
read as follows:
Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. (a) The
commissioner may establish a Fair Access to Insurance Requirements
Plan to deliver residential property insurance to residents of this
state in underserved areas if the commissioner determines, after a
public hearing, that:
(1) in all or any part of the state, residential
property insurance is not reasonably available in the voluntary
market to a substantial number of insurable risks; or
(2) at least 25 percent of the applicants to the
residential property market assistance program who are qualified
under that program's plan of operation have not been placed with an
insurer in the preceding six months.
(b) The commissioner may include in the plan established
under Subsection (a) the delivery of property owners' association
insurance in underserved areas as provided by Section 2211.1515 if
the commissioner determines, after notice and a hearing, that in
all or any part of the area designated under Section 2211.1515(a),
property owners' association insurance is not reasonably available
in the voluntary market to a substantial number of insurable risks.
SECTION 3. Section 2211.054, Insurance Code, is amended to
read as follows:
Sec. 2211.054. CONTENTS OF PLAN OF OPERATION. The plan of
operation must:
(1) provide for a nonprofit association to issue
residential property insurance and, if applicable, property
owners' association insurance under this chapter and distribute the
losses and expenses in writing that insurance in this state;
(2) provide that all insurers that write residential
property insurance shall participate in the association in
accordance with Sections 2211.101(b) and (c);
(3) provide that a participating insurer is entitled
to receive credit in accordance with Section 2211.101(d);
(4) provide for the immediate binding of eligible
risks;
(5) provide for the use of premium installment payment
plans, adequate marketing, and service facilities;
(6) provide for the establishment of reasonable
service standards;
(7) provide procedures for efficient, economical,
fair, and nondiscriminatory administration of the association;
(8) provide procedures for determining the net level
of participation required for each insurer in the association;
(9) provide for the use of deductibles and other
underwriting devices;
(10) provide for assessment of all members in amounts
sufficient to operate the association;
(11) establish maximum limits of liability to be
placed through the program;
(12) establish commissions to be paid to the insurance
agents submitting applications;
(13) provide that the association issue policies in
the association's own name;
(14) provide reasonable underwriting standards for
determining insurability of a risk;
(15) provide procedures for the association to assume
and cede reinsurance; and
(16) provide any other procedure or operational matter
the governing committee or the commissioner considers necessary.
SECTION 4. Subchapter D, Chapter 2211, Insurance Code, is
amended by adding Section 2211.1515 to read as follows:
Sec. 2211.1515. MANDATORY PROPERTY OWNERS' ASSOCIATION
POLICIES IN CERTAIN AREAS. (a) This section applies only to the
area designated by the commissioner by rule. In determining the
boundaries of the area, the commissioner shall:
(1) to the extent practicable, ensure the area is not
more than 10 miles beyond the Texas Windstorm Insurance Association
catastrophe area designated under Section 2210.005; and
(2) follow geographical features.
(b) If the commissioner makes the determination described
by Section 2211.051(b), the association shall make property owners'
association insurance available to each applicant in an underserved
area of the area designated under Subsection (a) whose property is
insurable in accordance with reasonable underwriting standards but
who, after diligent efforts, is unable to obtain property owners'
association insurance through the voluntary market, as evidenced by
two declinations from insurers authorized to engage in the business
of, and writing, property owners' association insurance in this
state.
(c) If the area designated under Subsection (a) changes
after the association issues a policy under Subsection (b), the
policy is valid until renewal regardless of whether the insured
property is located in the area designated under Subsection (a)
after the change.
SECTION 5. Section 2211.153, Insurance Code, is amended to
read as follows:
Sec. 2211.153. INSPECTION BUREAU. The association, with
the approval of the commissioner, shall designate one or more
organizations as the inspection bureau. The inspection bureau
shall:
(1) make inspections to determine the condition of a
property for which residential property insurance or property
owners' association insurance is sought; and
(2) perform other duties authorized by the association
or the commissioner.
SECTION 6. Section 2211.154(a), Insurance Code, is amended
to read as follows:
(a) A person who has an insurable interest in real or
tangible personal property at a fixed location in an underserved
area and who, after diligent effort, is unable to obtain
residential property insurance, or a homeowners' or condominium
owners' association located in an underserved area as provided by
Section 2211.1515 that, after diligent effort, is unable to obtain
property owners' association insurance, as evidenced by two current
declinations from insurers authorized to engage in the business of
residential property insurance or property owners' association
insurance, as applicable, in this state and actually writing
residential property insurance or property owners' association
insurance in this state, is entitled on application to the
association to an inspection and evaluation of the property by
representatives of the inspection bureau.
SECTION 7. Section 2211.155, Insurance Code, is amended to
read as follows:
Sec. 2211.155. INSPECTION RESULTS; REINSPECTION. (a) If,
after an inspection, the inspection bureau determines that
[residential] property meets the underwriting standards
established in the plan of operation, the applicant must be
informed in writing of that determination and the association shall
issue a policy or binder. If the [residential] property does not
meet the underwriting standards, the applicant must be informed in
writing of the reason for the failure of the [residential] property
to meet the standards.
(b) If, at any time, an applicant whose [residential]
property did not meet the underwriting standards makes improvements
to the property or the property's condition that the applicant
believes are sufficient to make the property meet the standards, an
inspection bureau representative shall reinspect the property on
request. In any case, the applicant is eligible for one
reinspection on or before the 60th day after the date of the initial
inspection.
(c) If, on reinspection, the [residential] property meets
the underwriting standards, the applicant must be informed in
writing of that fact and the association shall issue a policy or
binder.
SECTION 8. Section 2211.201, Insurance Code, is amended to
read as follows:
Sec. 2211.201. PURPOSE. The legislature finds that
issuing public securities to provide a method to raise funds to
provide residential property insurance and property owners'
association insurance in this state through the association is to
benefit the public and to further a public purpose.
SECTION 9. Notwithstanding the changes in law made by this
Act to Chapter 2211, Insurance Code, the Fair Access to Insurance
Requirements Plan is not required to provide property owners'
association insurance under that chapter until September 1, 2024.
SECTION 10. This Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 998 was passed by the House on April
14, 2023, by the following vote: Yeas 139, Nays 4, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 998 was passed by the Senate on May 4,
2023, by the following vote: Yeas 29, Nays 2.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor