Texas 2023 - 88th Regular

Texas Senate Bill SB741 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R990 SCL-D
2	2	By: Middleton S.B. No. 741
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the provision of property owners' association insurance
8	8	by the FAIR Plan Association in certain areas.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 2211.001, Insurance Code, is amended by
11	11	adding Subdivision (6-a) to read as follows:
12	12	(6-a) "Property owners' association insurance" means
13	13	property and liability insurance covering common areas and
14	14	facilities of a homeowners' or condominium owners' association.
15	15	SECTION 2. Section 2211.051, Insurance Code, is amended to
16	16	read as follows:
17	17	Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. (a) The
18	18	commissioner may establish a Fair Access to Insurance Requirements
19	19	Plan to deliver residential property insurance to residents of this
20	20	state in underserved areas if the commissioner determines, after a
21	21	public hearing, that:
22	22	(1) in all or any part of the state, residential
23	23	property insurance is not reasonably available in the voluntary
24	24	market to a substantial number of insurable risks; or
25	25	(2) at least 25 percent of the applicants to the
26	26	residential property market assistance program who are qualified
27	27	under that program's plan of operation have not been placed with an
28	28	insurer in the preceding six months.
29	29	(b) The commissioner may include in the plan established
30	30	under Subsection (a) the delivery of property owners' association
31	31	insurance in underserved areas as provided by Section 2211.1515 if
32	32	the commissioner determines, after notice and a hearing, that in
33	33	all or any part of the area described by Section 2211.1515(a),
34	34	property owners' association insurance is not reasonably available
35	35	in the voluntary market to a substantial number of insurable risks.
36	36	SECTION 3. Section 2211.054, Insurance Code, is amended to
37	37	read as follows:
38	38	Sec. 2211.054. CONTENTS OF PLAN OF OPERATION. The plan of
39	39	operation must:
40	40	(1) provide for a nonprofit association to issue
41	41	residential property insurance and, if applicable, property
42	42	owners' association insurance under this chapter and distribute the
43	43	losses and expenses in writing that insurance in this state;
44	44	(2) provide that all insurers that write residential
45	45	property insurance shall participate in the association in
46	46	accordance with Sections 2211.101(b) and (c);
47	47	(3) provide that a participating insurer is entitled
48	48	to receive credit in accordance with Section 2211.101(d);
49	49	(4) provide for the immediate binding of eligible
50	50	risks;
51	51	(5) provide for the use of premium installment payment
52	52	plans, adequate marketing, and service facilities;
53	53	(6) provide for the establishment of reasonable
54	54	service standards;
55	55	(7) provide procedures for efficient, economical,
56	56	fair, and nondiscriminatory administration of the association;
57	57	(8) provide procedures for determining the net level
58	58	of participation required for each insurer in the association;
59	59	(9) provide for the use of deductibles and other
60	60	underwriting devices;
61	61	(10) provide for assessment of all members in amounts
62	62	sufficient to operate the association;
63	63	(11) establish maximum limits of liability to be
64	64	placed through the program;
65	65	(12) establish commissions to be paid to the insurance
66	66	agents submitting applications;
67	67	(13) provide that the association issue policies in
68	68	the association's own name;
69	69	(14) provide reasonable underwriting standards for
70	70	determining insurability of a risk;
71	71	(15) provide procedures for the association to assume
72	72	and cede reinsurance; and
73	73	(16) provide any other procedure or operational matter
74	74	the governing committee or the commissioner considers necessary.
75	75	SECTION 4. Subchapter D, Chapter 2211, Insurance Code, is
76	76	amended by adding Section 2211.1515 to read as follows:
77	77	Sec. 2211.1515. MANDATORY PROPERTY OWNERS' ASSOCIATION
78	78	POLICIES IN CERTAIN AREAS. (a) This section applies only to the
79	79	area located not more than 10 miles beyond the Texas Windstorm
80	80	Insurance Association catastrophe area designated under Section
81	81	2210.005.
82	82	(b) If the commissioner makes the determination described
83	83	by Section 2211.051(b), the association shall make property owners'
84	84	association insurance available to each applicant in an underserved
85	85	area of the area described by Subsection (a) whose property is
86	86	insurable in accordance with reasonable underwriting standards but
87	87	who, after diligent efforts, is unable to obtain property owners'
88	88	association insurance through the voluntary market, as evidenced by
89	89	two declinations from insurers authorized to engage in the business
90	90	of, and writing, property owners' association insurance in this
91	91	state.
92	92	(c) If the catastrophe area changes after the association
93	93	issues a policy under Subsection (b), the policy is valid until
94	94	renewal regardless of whether the insured property is located in
95	95	the area described by Subsection (a) after the catastrophe area
96	96	change.
97	97	SECTION 5. Section 2211.153, Insurance Code, is amended to
98	98	read as follows:
99	99	Sec. 2211.153. INSPECTION BUREAU. The association, with
100	100	the approval of the commissioner, shall designate one or more
101	101	organizations as the inspection bureau. The inspection bureau
102	102	shall:
103	103	(1) make inspections to determine the condition of a
104	104	property for which residential property insurance or property
105	105	owners' association insurance is sought; and
106	106	(2) perform other duties authorized by the association
107	107	or the commissioner.
108	108	SECTION 6. Section 2211.154(a), Insurance Code, is amended
109	109	to read as follows:
110	110	(a) A person who has an insurable interest in real or
111	111	tangible personal property at a fixed location in an underserved
112	112	area and who, after diligent effort, is unable to obtain
113	113	residential property insurance, or a property owners' association
114	114	located in an area for which insurance coverage may be provided
115	115	under Section 2211.1515 that, after diligent effort, is unable to
116	116	obtain property owners' association insurance, as evidenced by two
117	117	current declinations from insurers authorized to engage in the
118	118	business of residential property insurance or property owners'
119	119	association insurance, as applicable, in this state and actually
120	120	writing residential property insurance or property owners'
121	121	association insurance in this state, is entitled on application to
122	122	the association to an inspection and evaluation of the property by
123	123	representatives of the inspection bureau.
124	124	SECTION 7. Section 2211.155, Insurance Code, is amended to
125	125	read as follows:
126	126	Sec. 2211.155. INSPECTION RESULTS; REINSPECTION. (a) If,
127	127	after an inspection, the inspection bureau determines that
128	128	[residential] property meets the underwriting standards
129	129	established in the plan of operation, the applicant must be
130	130	informed in writing of that determination and the association shall
131	131	issue a policy or binder. If the [residential] property does not
132	132	meet the underwriting standards, the applicant must be informed in
133	133	writing of the reason for the failure of the [residential] property
134	134	to meet the standards.
135	135	(b) If, at any time, an applicant whose [residential]
136	136	property did not meet the underwriting standards makes improvements
137	137	to the property or the property's condition that the applicant
138	138	believes are sufficient to make the property meet the standards, an
139	139	inspection bureau representative shall reinspect the property on
140	140	request. In any case, the applicant is eligible for one
141	141	reinspection on or before the 60th day after the date of the initial
142	142	inspection.
143	143	(c) If, on reinspection, the [residential] property meets
144	144	the underwriting standards, the applicant must be informed in
145	145	writing of that fact and the association shall issue a policy or
146	146	binder.
147	147	SECTION 8. Section 2211.201, Insurance Code, is amended to
148	148	read as follows:
149	149	Sec. 2211.201. PURPOSE. The legislature finds that
150	150	issuing public securities to provide a method to raise funds to
151	151	provide residential property insurance and property owners'
152	152	association insurance in this state through the association is to
153	153	benefit the public and to further a public purpose.
154	154	SECTION 9. This Act takes effect September 1, 2023.