By: Middleton, et al. S.B. No. 1217
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Windstorm Insurance Association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2210.014, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) The association is not subject to any insurance premium
tax or insurance maintenance fee or tax.
SECTION 2. Subchapter A, Chapter 2210, Insurance Code, is
amended by adding Section 2210.016 to read as follows:
Sec. 2210.016. LEGISLATIVE LOBBYING. (a) The association
may not use any money under its control to attempt to influence the
passage or defeat of a legislative measure.
(b) An association employee or member of the board of
directors who violates Subsection (a) is subject to:
(1) immediate termination; and
(2) a fine of $10,000 to be deposited in the
catastrophe reserve trust fund.
(c) This section does not prohibit an association employee
or member of the board of directors from using money under the
association's control to provide public information or to provide
information responsive to a request for public information.
SECTION 3. 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 a second tier coastal county.
SECTION 4. Section 2210.102, Insurance Code, is amended by
amending Subsections (a), (c), (c-1), (d), and (g) and adding
Subsection (d-1) to read as follows:
(a) The board of directors is composed of eleven [nine]
members appointed by the commissioner in accordance with this
section.
(c) Five [Three] members must, as of the date of the
appointment, reside in the first tier coastal counties. Each of
the following regions must, to the extent possible, be represented
by a member residing in the region and appointed under this
subsection:
(1) the region consisting of Cameron, Kenedy, Kleberg,
and Willacy Counties;
(2) the region consisting of Aransas, Calhoun, Nueces,
Refugio, and San Patricio Counties; and
(3) the region consisting of Brazoria, Chambers,
Galveston, Jefferson, and Matagorda Counties and any part of Harris
County designated as a catastrophe area under Section 2210.005.
(c-1) Two [One] of the members appointed under Subsection
(c) must be [a] property and casualty agents [agent] who are [is]
licensed under this code and are [is] not [a] captive agents
[agent].
(d) Three members must reside in an area of this state that
is located outside the first tier coastal counties [more than 100
miles from the Texas coastline].
(d-1) One of the members appointed under Subsection (d) must
be the public counsel of the office of public insurance counsel or
the counsel's designee.
(g) Members appointed to the board of directors under
Subsections (c) and (d), other than a [the] member appointed under
Subsection (c-1), must represent the general public in the regions
described by those subsections. A person may not be appointed to
represent the general public under Subsection (c) or (d) if the
person or the person's spouse:
(1) is employed by or participates in the management
of a business entity or other organization:
(A) operating in the property and casualty
insurance industry in this state;
(B) receiving money from the association, other
than insurance claim payments; or
(C) receiving money from association
policyholders with respect to the policyholders' claims;
(2) owns or controls, directly or indirectly, more
than a 10 percent interest in a business entity or other
organization:
(A) operating in the property and casualty
insurance industry in this state;
(B) receiving money from the association, other
than insurance claim payments; or
(C) receiving money from association
policyholders with respect to the policyholders' claims; or
(3) uses or receives a substantial amount of tangible
goods, services, or money from the association, other than:
(A) insurance claim payments; or
(B) compensation or reimbursement authorized by
law for the board members' membership, attendance, or expenses.
SECTION 5. Section 2210.103(a), Insurance Code, is amended
to read as follows:
(a) Members of the board of directors serve three-year
staggered terms, with the terms of three or four members expiring on
the third Tuesday of March of each year.
SECTION 6. Section 2210.105(d), Insurance Code, is amended
to read as follows:
(d) Except for an emergency meeting, a meeting of the board
of directors shall be held at a location in a first tier coastal
county or a second tier coastal county as determined by the board of
directors.
SECTION 7. Subchapter E, Chapter 2210, Insurance Code, is
amended by adding Section 2210.211 to read as follows:
Sec. 2210.211. LIMITATIONS ON CERTAIN ADJUSTMENTS. (a) The
association may not automatically adjust the amount of coverage to
be purchased by a policyholder.
(b) The association may not adjust premiums, fees, or any
other costs to policyholders for inflation without a vote by the
board of directors.
SECTION 8. Section 2210.352(a), Insurance Code, is amended
to read as follows:
(a) Not later than September [August] 15 of each year, the
association shall file with the department a proposed manual rate
for all types and classes of risks written by the association.
SECTION 9. Subchapter J, Chapter 2210, Insurance Code, is
amended by adding Section 2210.4531 to read as follows:
Sec. 2210.4531. DETERMINATION OF PROBABLE MAXIMUM LOSS.
(a) The association shall file with the department a proposed
probable maximum loss, subject to Section 2210.453.
(b) In determining the probable maximum loss, 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 catastrophe
models that were executed in the preceding storm season;
(3) shall, if the association is unable to contract
for the execution of a catastrophe model described by Subdivision
(2), contract with any disinterested third party necessary to
execute a catastrophe 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 catastrophe models in addition to the models required
under Subdivisions (2) and (3);
(5) shall provide to a disinterested third party
executing a catastrophe model any information necessary to comply
with this subsection;
(6) may not use a combination of catastrophe models to
determine the probable maximum loss; and
(7) may use only the catastrophe model that produces
the lowest probable maximum loss.
(c) The association shall make any information produced in
compliance with Subsection (b) publicly available on the
association's Internet website.
(d) The association may only use a probable maximum loss
that is approved by the commissioner. The commissioner may reject a
probable maximum loss filed with the department by the association
and set a probable maximum loss at any amount determined by the
commissioner.
(e) The amount of loss adjustment expense, as adopted by the
board of directors for a catastrophe year and used for the
association's rate indication for purposes of filing a rate under
this chapter, must be considered above the probable maximum loss.
SECTION 10. Section 2210.102(f), Insurance Code, is
repealed.
SECTION 11. Section 2210.063, Insurance Code, as added by
this Act, applies to the Texas Windstorm Insurance Association
beginning on January 1, 2025.
SECTION 12. (a) The commissioner of insurance shall appoint
two additional members to the board of directors of the Texas
Windstorm Insurance Association as necessary under Sections
2210.102(c) and (c-1), Insurance Code, as amended by this Act, not
later than December 1, 2023.
(b) Notwithstanding Section 2210.103, Insurance Code, as
amended by this Act, the initial term of one of the board members
appointed under Subsection (a) of this section expires on the third
Tuesday of March 2026, and the initial term of one of the board
members appointed under Subsection (a) of this section expires on
the third Tuesday of March 2027.
(c) Notwithstanding Section 2210.102(d-1), Insurance Code,
as added by this Act, a member of the board of directors serving
under Section 2210.102(d), Insurance Code, is not required to be
the public insurance counsel or the public insurance counsel's
designee until the first vacancy under Section 2210.102(d) that
occurs on or after the effective date of this Act.
SECTION 13. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2023.