Texas 2025 - 89th Regular

Texas Senate Bill SB2530 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	By: Middleton, et al. S.B. No. 2530
2	2
3	3
4	4
5	5
6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to the Texas Windstorm Insurance Association.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 2210.014, Insurance Code, is amended by
11	11	adding Subsection (d) to read as follows:
12	12	(d) The association is not subject to any insurance premium
13	13	tax or insurance maintenance fee or tax.
14	14	SECTION 2. Subchapter A, Chapter 2210, Insurance Code, is
15	15	amended by adding Section 2210.016 to read as follows:
16	16	Sec. 2210.016. LEGISLATIVE LOBBYING. (a) The association
17	17	may not use any money under its control to attempt to influence the
18	18	passage or defeat of a legislative measure.
19	19	(b) An association employee or member of the board of
20	20	directors who violates Subsection (a) is subject to:
21	21	(1) immediate termination; and
22	22	(2) a fine of $10,000 to be deposited in the
23	23	catastrophe reserve trust fund.
24	24	(c) This section does not prohibit an association employee
25	25	or member of the board of directors from using money under the
26	26	association's control to provide public information or to provide
27	27	information responsive to a request for public information.
28	28	SECTION 3. Subchapter B, Chapter 2210, Insurance Code, is
29	29	amended by adding Section 2210.063 to read as follows:
30	30	Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The
31	31	headquarters of the association must be located in a first tier
32	32	coastal county or a second tier coastal county.
33	33	SECTION 4. Section 2210.072(a), Insurance Code, is amended
34	34	to read as follows:
35	35	(a) Losses not paid under Section 2210.0715 shall be paid as
36	36	provided by this section from the proceeds from Class 1 public
37	37	securities issued in accordance with Subchapter M before, on, or
38	38	after the date of any occurrence or series of occurrences that
39	39	results in insured losses. Public securities described by this
40	40	section must be paid within a period not to exceed 14 years, and
41	41	shall [may] be paid sooner if the board of directors identifies that
42	42	the association has the ability [elects] to do so and the
43	43	commissioner approves.
44	44	SECTION 5. Section 2210.0725(a), Insurance Code, is amended
45	45	to read as follows:
46	46	(a) Losses in a catastrophe year not paid under Sections
47	47	2210.0715 and 2210.072 shall be paid as provided by this section
48	48	from Class 1 member assessments in an amount of at least [not to
49	49	exceed] $500 million, adjusted annually proportional to the growth
50	50	in the association's probable maximum loss, for that catastrophe
51	51	year.
52	52	SECTION 6. Section 2210.073(a), Insurance Code, is amended
53	53	to read as follows:
54	54	(a) Losses not paid under Sections 2210.0715, 2210.072, and
55	55	2210.0725 shall be paid as provided by this section from the
56	56	proceeds from Class 2 public securities authorized to be issued in
57	57	accordance with Subchapter M on or after the date of any occurrence
58	58	or series of occurrences that results in insured losses. Public
59	59	securities issued under this section must be paid within a period
60	60	not to exceed 10 years and shall [may] be paid sooner if the board of
61	61	directors identifies that the association has the ability [elects]
62	62	to do so and the commissioner approves.
63	63	SECTION 7. Section 2210.074(a), Insurance Code, is amended
64	64	to read as follows:
65	65	(a) Losses in a catastrophe year not paid under Sections
66	66	2210.0715, 2210.072, 2210.0725, and 2210.073 shall be paid as
67	67	provided by this section from Class 2 member assessments in an
68	68	amount of at least [not to exceed] $250 million, adjusted annually
69	69	proportional to the growth in the association's probable maximum
70	70	loss, for that catastrophe year.
71	71	SECTION 8. Section 2210.0741(a), Insurance Code, is amended
72	72	to read as follows:
73	73	(a) Losses not paid under Sections 2210.0715, 2210.072,
74	74	2210.0725, 2210.073, and 2210.074 shall be paid as provided by this
75	75	section from the proceeds from Class 3 public securities authorized
76	76	to be issued in accordance with Subchapter M on or after the date of
77	77	any occurrence or series of occurrences that results in insured
78	78	losses. Public securities issued under this section must be paid
79	79	within a period not to exceed 10 years and shall [may] be paid
80	80	sooner if the board of directors identifies that the association
81	81	has the ability [elects] to do so and the commissioner approves.
82	82	SECTION 9. Section 2210.0742(a), Insurance Code, is amended
83	83	to read as follows:
84	84	(a) Losses in a catastrophe year not paid under Sections
85	85	2210.0715, 2210.072, 2210.0725, 2210.073, 2210.074, and 2210.0741
86	86	shall be paid as provided by this section from Class 3 member
87	87	assessments in an amount of at least [not to exceed] $250 million,
88	88	adjusted annually proportional to the growth in the association's
89	89	probable maximum loss, for that catastrophe year.
90	90	SECTION 10. Section 2210.102, Insurance Code, is amended to
91	91	read as follows:
92	92	Sec. 2210.102. COMPOSITION. (a) The board of directors is
93	93	composed of nine members appointed by the commissioner in
94	94	accordance with this section.
95	95	(b) Three members must be representatives of the insurance
96	96	industry who actively write and renew windstorm and hail insurance
97	97	in the first tier coastal counties.
98	98	(c) Three members must, as of the date of the appointment,
99	99	reside in the first tier coastal counties. Each of the following
100	100	regions must be represented by a member residing in the region and
101	101	appointed under this subsection:
102	102	(1) the region consisting of Cameron, Kenedy, Kleberg,
103	103	and Willacy Counties;
104	104	(2) the region consisting of Aransas, Calhoun, Nueces,
105	105	Refugio, and San Patricio Counties; and
106	106	(3) the region consisting of Brazoria, Chambers,
107	107	Galveston, Jefferson, and Matagorda Counties and any part of Harris
108	108	County designated as a catastrophe area under Section 2210.005.
109	109	(c-1) At least one [One] of the members appointed under
110	110	Subsection (c) must be a property and casualty agent who is licensed
111	111	under this code and is not a captive agent.
112	112	(d) Three members must reside in an area of this state that
113	113	is located outside a first tier coastal county [more than 100 miles
114	114	from the Texas coastline].
115	115	(e) All members must have demonstrated experience in
116	116	insurance, general business, or actuarial principles and the
117	117	member's area of expertise, if any, sufficient to make the success
118	118	of the association probable.
119	119	(f) Repealed by Acts 2023, 88th Leg., R.S., Ch. 530 (H.B.
120	120	3311), Sec. 1, eff. September 1, 2023.]
121	121	(g) Members appointed to the board of directors under
122	122	Subsections (c) and (d), other than the member appointed under
123	123	Subsection (c-1), must represent the general public in the regions
124	124	described by those subsections. A person may not be appointed to
125	125	represent the general public under Subsection (c) or (d) if the
126	126	person or the person's spouse:
127	127	(1) is employed by or participates in the management
128	128	of a business entity or other organization:
129	129	(A) operating in the property and casualty
130	130	insurance industry in this state;
131	131	(B) receiving money from the association, other
132	132	than insurance claim payments; or
133	133	(C) receiving money from association
134	134	policyholders with respect to the policyholders' claims;
135	135	(2) owns or controls, directly or indirectly, more
136	136	than a 10 percent interest in a business entity or other
137	137	organization:
138	138	(A) operating in the property and casualty
139	139	insurance industry in this state;
140	140	(B) receiving money from the association, other
141	141	than insurance claim payments; or
142	142	(C) receiving money from association
143	143	policyholders with respect to the policyholders' claims; or
144	144	(3) uses or receives a substantial amount of tangible
145	145	goods, services, or money from the association, other than:
146	146	(A) insurance claim payments; or
147	147	(B) compensation or reimbursement authorized by
148	148	law for the board members' membership, attendance, or expenses.
149	149	(h) Repealed by Acts 2015, 84th Leg., R.S., Ch. 615 , Sec.
150	150	31(1), eff. September 1, 2015.
151	151	SECTION 11. Section 2210.105, Insurance Code, is amended by
152	152	adding Subsections (h) and (i) to read as follows:
153	153	(h) A meeting to establish the association's probable
154	154	maximum loss and the annual rate setting meeting shall be held
155	155	in-person at a location within a first tier coastal county.
156	156	(i) A vote by a member of the board of directors at a meeting
157	157	described by Subsection (h) shall only count towards the
158	158	establishment of the probable maximum loss or the adoption of the
159	159	annual rate filing if the vote is cast by a member of the board of
160	160	directors in person at the meeting.
161	161	SECTION 12. Subchapter E, Chapter 2210, Insurance Code, is
162	162	amended by adding Section 2210.211 to read as follows:
163	163	Sec. 2210.211. LIMITATIONS ON CERTAIN ADJUSTMENTS. The
164	164	association may not adjust premiums, fees, or any other costs to
165	165	policyholders for inflation without a vote by the board of
166	166	directors.
167	167	SECTION 13. Sec. 2210.352(a), Insurance Code, is amended to
168	168	read as follows:
169	169	(a) Not later than September [August] 15 of each year, the
170	170	association shall file with the department a proposed manual rate
171	171	for all types and classes of risks written by the association.
172	172	SECTION 14. Section 2210.355(b), Insurance Code, is amended
173	173	to read as follows:
174	174	(b) In adopting rates under this chapter, the following must
175	175	be considered:
176	176	(1) the past and prospective loss experience within
177	177	[and outside] this state of hazards for which insurance is made
178	178	available through the plan of operation, if any;
179	179	(2) expenses of operation, including acquisition
180	180	costs;
181	181	(3) a reasonable margin for profit and contingencies;
182	182	(4) payment of public security obligations issued
183	183	under this chapter, including the additional amount of any debt
184	184	service coverage determined by the association to be required for
185	185	the issuance of marketable public securities; and
186	186	(5) all other relevant factors, within [and outside]
187	187	this state.
188	188	SECTION 15. Section 2210.453(b), Insurance Code, is amended
189	189	to read as follows:
190	190	(b) The association shall maintain total available loss
191	191	funding in an amount not less than the probable maximum loss for the
192	192	association for a catastrophe year with a probability of one in 50
193	193	[100]. If necessary, the required funding level shall be achieved
194	194	through the purchase of reinsurance or the use of alternative
195	195	financing mechanisms, or both, to operate in addition to or in
196	196	concert with the trust fund, public securities, financial
197	197	instruments, and assessments authorized by this chapter.
198	198	SECTION 16. Subchapter J, Chapter 2210, Insurance Code, is
199	199	amended by adding Section 2210.4531 to read as follows:
200	200	Sec. 2210.4531. DETERMINATION OF PROBABLE MAXIMUM LOSS.
201	201	(a) The association shall file with the department a proposed
202	202	probable maximum loss, subject to Section 2210.453.
203	203	(b) In determining the probable maximum loss, the
204	204	association:
205	205	(1) shall, to the extent possible, contract with any
206	206	disinterested third parties necessary to execute any catastrophe
207	207	models that were executed in the preceding storm season;
208	208	(2) shall, if the association is unable to contract
209	209	for the execution of a catastrophe model described by Subdivision
210	210	(2), contract with any disinterested third party necessary to
211	211	execute a catastrophe model that is substantially similar to the
212	212	model for which the association is unable to contract under
213	213	Subdivision (2);
214	214	(3) may contract with any disinterested third parties
215	215	to execute catastrophe models in addition to the models required
216	216	under Subdivisions (1) and (2);
217	217	(4) shall provide to a disinterested third party
218	218	executing a catastrophe model any information necessary to comply
219	219	with this subsection;
220	220	(5) may not use a combination of catastrophe models to
221	221	determine the probable maximum loss; and
222	222	(6) may use only the catastrophe model that produces
223	223	the lowest probable maximum loss.
224	224	(c) The association shall make any information produced in
225	225	compliance with Subsection (b) publicly available on the
226	226	association's Internet website.
227	227	(d) The association may only use a probable maximum loss
228	228	that is approved by the commissioner. The commissioner may reject a
229	229	probable maximum loss filed with the department by the association
230	230	and set a probable maximum loss at any amount determined by the
231	231	commissioner.
232	232	(e) The amount of loss adjustment expense, as adopted by the
233	233	board of directors for a catastrophe year and used for the
234	234	association's rate indication for purposes of filing a rate under
235	235	this chapter, must be considered above the probable maximum loss.
236	236	SECTION 17. Section 2210.063, Insurance Code, as added by
237	237	this Act, applies to the Texas Windstorm Insurance Association
238	238	beginning on January 1, 2027.
239	239	SECTION 18. Sections 2210.0725(a), 2210.074(a), and
240	240	2210.0742(a), as amended by this Act, applies to assessments
241	241	beginning January 1, 2026. The amounts of assessments on January 1,
242	242	2026 shall be equivalent to the amount of assessments on that date
243	243	after adjusted to the growth in the association's probable maximum
244	244	loss from January 1, 2021 to January 1, 2026.
245	245	SECTION 19. This Act takes effect immediately if it
246	246	receives a vote of two-thirds of all the members elected to each
247	247	house, as provided by Section 39, Article III, Texas Constitution.
248	248	If this Act does not receive the vote necessary for immediate
249	249	effect, this Act takes effect September 1, 2025.