Texas 2023 - 88th Regular

Texas House Bill HB998 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	H.B. No. 998
2	2
3	3
4	4	AN ACT
5	5	relating to the provision of property owners' association insurance
6	6	by the FAIR Plan Association in certain areas.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 2211.001, Insurance Code, is amended by
9	9	adding Subdivision (6-a) to read as follows:
10	10	(6-a) "Property owners' association insurance" means
11	11	property and liability insurance covering:
12	12	(A) common areas and facilities of a homeowners'
13	13	association; or
14	14	(B) common elements of a condominium owners'
15	15	association.
16	16	SECTION 2. Section 2211.051, Insurance Code, is amended to
17	17	read as follows:
18	18	Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. (a) The
19	19	commissioner may establish a Fair Access to Insurance Requirements
20	20	Plan to deliver residential property insurance to residents of this
21	21	state in underserved areas if the commissioner determines, after a
22	22	public hearing, that:
23	23	(1) in all or any part of the state, residential
24	24	property insurance is not reasonably available in the voluntary
25	25	market to a substantial number of insurable risks; or
26	26	(2) at least 25 percent of the applicants to the
27	27	residential property market assistance program who are qualified
28	28	under that program's plan of operation have not been placed with an
29	29	insurer in the preceding six months.
30	30	(b) The commissioner may include in the plan established
31	31	under Subsection (a) the delivery of property owners' association
32	32	insurance in underserved areas as provided by Section 2211.1515 if
33	33	the commissioner determines, after notice and a hearing, that in
34	34	all or any part of the area designated under Section 2211.1515(a),
35	35	property owners' association insurance is not reasonably available
36	36	in the voluntary market to a substantial number of insurable risks.
37	37	SECTION 3. Section 2211.054, Insurance Code, is amended to
38	38	read as follows:
39	39	Sec. 2211.054. CONTENTS OF PLAN OF OPERATION. The plan of
40	40	operation must:
41	41	(1) provide for a nonprofit association to issue
42	42	residential property insurance and, if applicable, property
43	43	owners' association insurance under this chapter and distribute the
44	44	losses and expenses in writing that insurance in this state;
45	45	(2) provide that all insurers that write residential
46	46	property insurance shall participate in the association in
47	47	accordance with Sections 2211.101(b) and (c);
48	48	(3) provide that a participating insurer is entitled
49	49	to receive credit in accordance with Section 2211.101(d);
50	50	(4) provide for the immediate binding of eligible
51	51	risks;
52	52	(5) provide for the use of premium installment payment
53	53	plans, adequate marketing, and service facilities;
54	54	(6) provide for the establishment of reasonable
55	55	service standards;
56	56	(7) provide procedures for efficient, economical,
57	57	fair, and nondiscriminatory administration of the association;
58	58	(8) provide procedures for determining the net level
59	59	of participation required for each insurer in the association;
60	60	(9) provide for the use of deductibles and other
61	61	underwriting devices;
62	62	(10) provide for assessment of all members in amounts
63	63	sufficient to operate the association;
64	64	(11) establish maximum limits of liability to be
65	65	placed through the program;
66	66	(12) establish commissions to be paid to the insurance
67	67	agents submitting applications;
68	68	(13) provide that the association issue policies in
69	69	the association's own name;
70	70	(14) provide reasonable underwriting standards for
71	71	determining insurability of a risk;
72	72	(15) provide procedures for the association to assume
73	73	and cede reinsurance; and
74	74	(16) provide any other procedure or operational matter
75	75	the governing committee or the commissioner considers necessary.
76	76	SECTION 4. Subchapter D, Chapter 2211, Insurance Code, is
77	77	amended by adding Section 2211.1515 to read as follows:
78	78	Sec. 2211.1515. MANDATORY PROPERTY OWNERS' ASSOCIATION
79	79	POLICIES IN CERTAIN AREAS. (a) This section applies only to the
80	80	area designated by the commissioner by rule. In determining the
81	81	boundaries of the area, the commissioner shall:
82	82	(1) to the extent practicable, ensure the area is not
83	83	more than 10 miles beyond the Texas Windstorm Insurance Association
84	84	catastrophe area designated under Section 2210.005; and
85	85	(2) follow geographical features.
86	86	(b) If the commissioner makes the determination described
87	87	by Section 2211.051(b), the association shall make property owners'
88	88	association insurance available to each applicant in an underserved
89	89	area of the area designated under Subsection (a) whose property is
90	90	insurable in accordance with reasonable underwriting standards but
91	91	who, after diligent efforts, is unable to obtain property owners'
92	92	association insurance through the voluntary market, as evidenced by
93	93	two declinations from insurers authorized to engage in the business
94	94	of, and writing, property owners' association insurance in this
95	95	state.
96	96	(c) If the area designated under Subsection (a) changes
97	97	after the association issues a policy under Subsection (b), the
98	98	policy is valid until renewal regardless of whether the insured
99	99	property is located in the area designated under Subsection (a)
100	100	after the change.
101	101	SECTION 5. Section 2211.153, Insurance Code, is amended to
102	102	read as follows:
103	103	Sec. 2211.153. INSPECTION BUREAU. The association, with
104	104	the approval of the commissioner, shall designate one or more
105	105	organizations as the inspection bureau. The inspection bureau
106	106	shall:
107	107	(1) make inspections to determine the condition of a
108	108	property for which residential property insurance or property
109	109	owners' association insurance is sought; and
110	110	(2) perform other duties authorized by the association
111	111	or the commissioner.
112	112	SECTION 6. Section 2211.154(a), Insurance Code, is amended
113	113	to read as follows:
114	114	(a) A person who has an insurable interest in real or
115	115	tangible personal property at a fixed location in an underserved
116	116	area and who, after diligent effort, is unable to obtain
117	117	residential property insurance, or a homeowners' or condominium
118	118	owners' association located in an underserved area as provided by
119	119	Section 2211.1515 that, after diligent effort, is unable to obtain
120	120	property owners' association insurance, as evidenced by two current
121	121	declinations from insurers authorized to engage in the business of
122	122	residential property insurance or property owners' association
123	123	insurance, as applicable, in this state and actually writing
124	124	residential property insurance or property owners' association
125	125	insurance in this state, is entitled on application to the
126	126	association to an inspection and evaluation of the property by
127	127	representatives of the inspection bureau.
128	128	SECTION 7. Section 2211.155, Insurance Code, is amended to
129	129	read as follows:
130	130	Sec. 2211.155. INSPECTION RESULTS; REINSPECTION. (a) If,
131	131	after an inspection, the inspection bureau determines that
132	132	[residential] property meets the underwriting standards
133	133	established in the plan of operation, the applicant must be
134	134	informed in writing of that determination and the association shall
135	135	issue a policy or binder. If the [residential] property does not
136	136	meet the underwriting standards, the applicant must be informed in
137	137	writing of the reason for the failure of the [residential] property
138	138	to meet the standards.
139	139	(b) If, at any time, an applicant whose [residential]
140	140	property did not meet the underwriting standards makes improvements
141	141	to the property or the property's condition that the applicant
142	142	believes are sufficient to make the property meet the standards, an
143	143	inspection bureau representative shall reinspect the property on
144	144	request. In any case, the applicant is eligible for one
145	145	reinspection on or before the 60th day after the date of the initial
146	146	inspection.
147	147	(c) If, on reinspection, the [residential] property meets
148	148	the underwriting standards, the applicant must be informed in
149	149	writing of that fact and the association shall issue a policy or
150	150	binder.
151	151	SECTION 8. Section 2211.201, Insurance Code, is amended to
152	152	read as follows:
153	153	Sec. 2211.201. PURPOSE. The legislature finds that
154	154	issuing public securities to provide a method to raise funds to
155	155	provide residential property insurance and property owners'
156	156	association insurance in this state through the association is to
157	157	benefit the public and to further a public purpose.
158	158	SECTION 9. Notwithstanding the changes in law made by this
159	159	Act to Chapter 2211, Insurance Code, the Fair Access to Insurance
160	160	Requirements Plan is not required to provide property owners'
161	161	association insurance under that chapter until September 1, 2024.
162	162	SECTION 10. This Act takes effect September 1, 2023.
163	163	______________________________ ______________________________
164	164	President of the Senate Speaker of the House
165	165	I certify that H.B. No. 998 was passed by the House on April
166	166	14, 2023, by the following vote: Yeas 139, Nays 4, 2 present, not
167	167	voting.
168	168	______________________________
169	169	Chief Clerk of the House
170	170	I certify that H.B. No. 998 was passed by the Senate on May 4,
171	171	2023, by the following vote: Yeas 29, Nays 2.
172	172	______________________________
173	173	Secretary of the Senate
174	174	APPROVED: _____________________
175	175	Date
176	176	_____________________
177	177	Governor