Bill Text: TX HB1900 | 2019-2020 | 86th Legislature | Enrolled
Bill Title: Relating to certain operations and functions of the Texas Windstorm Insurance Association and studies relating to the Texas Windstorm Insurance Association and the Fair Access to Insurance Requirements Plan; authorizing a penalty; authorizing an assessment.
Spectrum: Slight Partisan Bill (Republican 3-1)
Status: (Passed) 2019-06-10 - Effective immediately [HB1900 Detail]
Download: Texas-2019-HB1900-Enrolled.html
H.B. No. 1900 |
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relating to certain operations and functions of the Texas Windstorm | ||
Insurance Association and studies relating to the Texas Windstorm | ||
Insurance Association and the Fair Access to Insurance Requirements | ||
Plan; authorizing a penalty; authorizing an assessment. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2210.071, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (a) If, in a | ||
catastrophe year, an occurrence or series of occurrences in a | ||
catastrophe area results in insured losses and operating expenses | ||
of the association in excess of premium and other revenue of the | ||
association, the excess losses and operating expenses shall be paid | ||
as provided by this subchapter. | ||
(b) The association may not pay insured losses and operating | ||
expenses resulting from an occurrence or series of occurrences in a | ||
catastrophe year with premium and other revenue earned in a | ||
subsequent year. | ||
SECTION 2. Section 2210.0715, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a) | ||
The association shall pay losses resulting from an occurrence or | ||
series of occurrences in a catastrophe year in excess of premium and | ||
other revenue of the association for that catastrophe year from | ||
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during that catastrophe year and [ |
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catastrophe reserve trust fund available before or accrued during | ||
that catastrophe year. | ||
(b) Proceeds of [ |
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assessments made before or as a result [ |
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or series of occurrences in a catastrophe year that results in | ||
insured losses may not be included in [ |
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available for a subsequent catastrophe year for purposes of this | ||
section. | ||
SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.1052 to read as follows: | ||
Sec. 2210.1052. EMERGENCY MEETING. If the ultimate loss | ||
estimate for an occurrence or series of occurrences made by the | ||
chief financial officer or chief actuary of the association | ||
indicates member insurers may be subject to an assessment under | ||
Subchapter B-1, the board of directors shall call an emergency | ||
meeting to notify the member insurers about the assessment. | ||
SECTION 4. Sections 2210.207(c) and (d), Insurance Code, | ||
are amended to read as follows: | ||
(c) If, on the effective date of an association policy [ |
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dwelling is equal to 80 percent or more of the full replacement cost | ||
of the dwelling or equal to the maximum amount of insurance | ||
otherwise available through the association, coverage applicable | ||
to the dwelling under the policy is extended to include the full | ||
cost of repair or replacement, without a deduction for | ||
depreciation. | ||
(d) If, on the effective date of an association policy [ |
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dwelling is equal to less than 80 percent of the full replacement | ||
cost of the dwelling and less than the maximum amount of insurance | ||
available through the association, liability for loss under the | ||
policy may not exceed the replacement cost of the part of the | ||
dwelling that is damaged or destroyed, less depreciation. | ||
SECTION 5. Section 2210.251(g), Insurance Code, is amended | ||
to read as follows: | ||
(g) A certificate of compliance issued by the department [ |
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the applicable building code under the plan of operation. The | ||
certificate is evidence of insurability of the structure by the | ||
association. | ||
SECTION 6. Section 2210.2515, Insurance Code, is amended by | ||
amending Subsection (c) and adding Subsections (c-1), (i), (j), and | ||
(k) to read as follows: | ||
(c) A person may apply to the department [ |
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form prescribed by the department for a certificate of compliance | ||
for a completed improvement. The department [ |
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issue a certificate of compliance for a completed improvement if a | ||
professional engineer licensed by the Texas Board of Professional | ||
Engineers: | ||
(1) has designed the improvement, has affixed the | ||
engineer's seal on the design, and submits to the department | ||
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that the design complies [ |
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building code under the plan of operation and that the improvement | ||
was constructed in accordance with the design; or | ||
(2) completes and submits to the department a sealed | ||
post-construction evaluation report that: | ||
(A) confirms the improvement's compliance with | ||
the applicable building code under the plan of operation; and | ||
(B) includes documentation supporting the | ||
engineer's post-construction evaluation report on a form | ||
prescribed by the department on which the engineer has affixed the | ||
engineer's seal. | ||
(c-1) The department may deny an application for a | ||
certificate of compliance under Subsection (c) if the evaluation | ||
report or the form prescribed by the department under Subsection | ||
(c)(1) is not fully documented as required under Subsection (c). | ||
(i) The department is authorized to submit a formal | ||
complaint under Chapter 1001, Occupations Code, to the Texas Board | ||
of Professional Engineers related to the engineering work of a | ||
professional engineer as reflected in the sealed post-construction | ||
evaluation report or other materials submitted by an engineer under | ||
Subsection (c). | ||
(j) If the department finds that a person acting as a | ||
qualified inspector under Section 2210.254 has failed to provide | ||
complete and accurate information in connection with an inspection | ||
for a certificate of compliance under this section, the department | ||
may impose a reasonable penalty on the inspector, including by | ||
prohibiting the inspector from applying for certificates of | ||
compliance under this section. The commissioner may adopt rules as | ||
necessary to implement this subsection. | ||
(k) The department may rescind a certificate of compliance | ||
issued under this section if the department finds that the | ||
improvement does not comply with the applicable building code under | ||
the plan of operation. The commissioner may adopt rules as | ||
necessary to implement this subsection. | ||
SECTION 7. Subchapter H, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.3511 to read as follows: | ||
Sec. 2210.3511. PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS. | ||
(a) The association shall make the association's rate adequacy | ||
analysis publicly available on its Internet website for at least 14 | ||
days before the date the board of directors votes on the submission | ||
of a proposed rate filing based on the analysis to the department. | ||
The rate adequacy analysis must include: | ||
(1) all user selected hurricane model input | ||
assumptions; and | ||
(2) output data: | ||
(A) with the same content and in the same format | ||
that is customarily provided to: | ||
(i) the association by hurricane modelers; | ||
and | ||
(ii) the department by the association; and | ||
(B) in a searchable electronic format that allows | ||
for efficient analysis and is sufficiently detailed to allow the | ||
historical experience in this state to be compared to results | ||
produced by the model. | ||
(b) The association shall accept public comment with | ||
respect to the association's rate adequacy analysis at a public | ||
meeting of the board of directors before the board of directors | ||
votes on the submission of a proposed rate filing to the department. | ||
SECTION 8. Section 2210.453, Insurance Code, is amended by | ||
adding Subsections (d) and (e) to read as follows: | ||
(d) The cost of the reinsurance purchased or alternative | ||
financing mechanisms used under this section in excess of the | ||
minimum funding level required by Subsection (b) shall be paid by | ||
assessments as provided by this subsection. The association, with | ||
the approval of the commissioner, shall notify each member of the | ||
association of the amount of the member's assessment under this | ||
subsection. The proportion of the cost to each insurer under this | ||
subsection shall be determined in the manner used to determine each | ||
insurer's participation in the association for the year under | ||
Section 2210.052. | ||
(e) A member of the association may not recoup an assessment | ||
paid under Subsection (d) through a premium surcharge or tax | ||
credit. | ||
SECTION 9. Subchapter L-1, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.5741 to read as follows: | ||
Sec. 2210.5741. REPLACEMENT COST COVERAGE CLAIM | ||
PROCESSING. (a) After the association accepts coverage for a claim | ||
in full or in part, a claimant whose association policy includes | ||
replacement cost coverage for the claim may request the replacement | ||
cost payment by submitting to the association documentation of the | ||
cost and completion of the repairs related to the claim not later | ||
than the 545th day after the date the claimant receives a | ||
notification under Section 2210.573(d)(1) or (2). | ||
(b) Not later than the 30th day after the date the | ||
association receives documentation under Subsection (a), the | ||
association shall provide the claimant, in writing, notification | ||
of: | ||
(1) the amount of the replacement cost payment the | ||
association will make; and | ||
(2) the deadline to request appraisal under this | ||
section. | ||
(c) The association shall pay the amount described by | ||
Subsection (b)(1) not later than the 10th day after the date | ||
notification is provided under Subsection (b). | ||
(d) If a claimant has not demanded appraisal with respect to | ||
a claim under Section 2210.574 and the claimant disputes the | ||
replacement cost amount the association will pay with respect to | ||
the claim, the claimant may demand appraisal of the replacement | ||
cost amount not later than the 30th day after the date the claimant | ||
receives the notification under Subsection (b). A claimant may | ||
demand appraisal under this section without regard to whether all | ||
repairs related to the claim are complete. | ||
(e) Except with respect to the deadlines applicable to an | ||
appraisal under this section, the appraisal under this section | ||
shall be conducted in the same manner as an appraisal demanded under | ||
Section 2210.574. | ||
(f) If a claimant's association policy includes replacement | ||
cost coverage, the written notification provided to the claimant | ||
under Section 2210.573(d)(1) or (2) must notify the claimant of the | ||
deadlines under this section for: | ||
(1) completing repairs and submitting documentation | ||
under Subsection (a); and | ||
(2) demanding appraisal under this section. | ||
SECTION 10. Section 2210.581, Insurance Code, is amended by | ||
amending Subsections (a) and (b) and adding Subsection (d) to read | ||
as follows: | ||
(a) Subject to Subsection (b), the commissioner, on a | ||
showing of good cause, may by rule extend any deadline established | ||
under this subchapter and set the number of days by which the | ||
deadline is extended. | ||
(b) The [ |
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related to claims arising from an occurrence may not exceed 120 days | ||
in the aggregate for deadlines applicable only to the association. | ||
The limitation on extensions under this subsection does not apply | ||
to the extension of a deadline imposed on a claimant, or on both a | ||
claimant and the association. | ||
(d) The commissioner shall adopt rules as necessary to | ||
implement this section. Section 2001.0045, Government Code, does | ||
not apply to rules adopted under this section. | ||
SECTION 11. Chapter 2210, Insurance Code, is amended by | ||
adding Subchapter N-1 to read as follows: | ||
SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE | ||
OVERSIGHT BOARD | ||
Sec. 2210.661. DEFINITION. In this subchapter, "board" | ||
means the windstorm insurance legislative funding and funding | ||
structure oversight board. | ||
Sec. 2210.662. COMPOSITION OF BOARD. The board is composed | ||
of eight members as follows: | ||
(1) four members of the senate appointed by the | ||
lieutenant governor including the chairperson of the Senate | ||
Business and Commerce Committee, who shall serve as co-chairperson | ||
of the board; and | ||
(2) four members of the house of representatives | ||
appointed by the speaker of the house of representatives. | ||
Sec. 2210.663. POWERS AND DUTIES OF BOARD. (a) The board | ||
shall: | ||
(1) gather information regarding: | ||
(A) how the association's current funding and | ||
funding structure operate; | ||
(B) how the catastrophic risk pools of other | ||
states operate; and | ||
(C) other information that the board considers | ||
necessary to prepare the report required by Section 2210.664; and | ||
(2) hold public meetings to hear testimony from | ||
experts, stakeholders, and other interested parties regarding | ||
recommendations and proposals for establishing and implementing | ||
sustainable funding and a sustainable funding structure for the | ||
association. | ||
(b) The board may request reports and other information as | ||
necessary to implement this subchapter from: | ||
(1) the department; | ||
(2) the association; and | ||
(3) experts, stakeholders, and other interested | ||
parties described by Subsection (a)(2). | ||
Sec. 2210.664. REPORT. (a) The board shall prepare a | ||
report of the board's findings regarding the current funding and | ||
funding structure of the association, problems with the funding and | ||
funding structure, and recommendations for legislative action | ||
related to the funding, funding structure, and sustainability of | ||
the association. The report must include: | ||
(1) an analysis of the current funding, funding | ||
structure, and sustainability of the association, including the | ||
association | ||
's reliance on debt and reinsurance; and | ||
(2) recommendations for legislative action necessary | ||
to: | ||
(A) address problems with the current funding and | ||
funding structure of the association; and | ||
(B) foster the stability and sustainability of | ||
the association. | ||
(b) Not later than November 15, 2020, the board shall | ||
deliver the report prepared under Subsection (a) to: | ||
(1) the governor; | ||
(2) the lieutenant governor; and | ||
(3) the speaker of the house of representatives. | ||
Sec. 2210.665. EXPIRATION. This subchapter expires | ||
September 1, 2021. | ||
SECTION 12. Section 2210.2515(f), Insurance Code, is | ||
repealed. | ||
SECTION 13. (a) Section 2210.251(g), Insurance Code, as | ||
amended by this Act, does not affect the status of a certificate of | ||
compliance issued by the Texas Windstorm Insurance Association | ||
before June 1, 2020, or after June 1, 2020, in response to an | ||
application made before that date for purposes of establishing | ||
evidence of insurability. | ||
(b) Section 2210.2515, Insurance Code, as amended by this | ||
Act, applies only to an application for a certificate of compliance | ||
made on or after June 1, 2020. An application for a certificate of | ||
compliance made before June 1, 2020, is governed by the law as it | ||
existed immediately before the effective date of this Act, and that | ||
law is continued in effect for that purpose. | ||
(c) Section 2210.3511, Insurance Code, as added by this Act, | ||
applies only to a rate adequacy analysis made in relation to a rate | ||
filing made on or after the effective date of this Act. | ||
SECTION 14. (a) The windstorm insurance legislative | ||
oversight board established under Subchapter N, Chapter 2210, | ||
Insurance Code, shall conduct a study to evaluate a merger of the | ||
Texas Windstorm Insurance Association established under Chapter | ||
2210, Insurance Code, and the Fair Access to Insurance Requirements | ||
Plan established under Chapter 2211, Insurance Code. | ||
(b) The evaluation must consider: | ||
(1) the affordability and availability of windstorm | ||
and hail insurance throughout this state and, in particular, in the | ||
seacoast territory as defined by Section 2210.003, Insurance Code; | ||
(2) the affordability and availability of residential | ||
property insurance throughout this state and, in particular, in | ||
underserved areas as defined by Section 2211.001, Insurance Code; | ||
(3) the advisability of merging the Texas Windstorm | ||
Insurance Association and the Fair Access to Insurance Requirements | ||
Plan to provide windstorm and hail and residential property | ||
insurance in this state; | ||
(4) any efficiencies or inefficiencies from a merger | ||
of the Texas Windstorm Insurance Association and the Fair Access to | ||
Insurance Requirements Plan; | ||
(5) the funding necessary to ensure that windstorm and | ||
hail and residential property insurance are available after the | ||
merger of the Texas Windstorm Insurance Association and the Fair | ||
Access to Insurance Requirements Plan; and | ||
(6) any other items the windstorm insurance | ||
legislative oversight board determines are relevant to a merger of | ||
the Texas Windstorm Insurance Association and the Fair Access to | ||
Insurance Requirements Plan. | ||
(c) Not later than January 1, 2021, the windstorm insurance | ||
legislative oversight board shall submit to the governor, the | ||
lieutenant governor, the speaker of the house of representatives, | ||
and the Texas Department of Insurance a written report of the study | ||
conducted under this section. The report must include the findings | ||
and legislative recommendations of the board. | ||
(d) This section expires January 1, 2022. | ||
SECTION 15. Sections 2210.207 and 2210.581, Insurance Code, | ||
as amended by this Act, and Section 2210.5741, Insurance Code, as | ||
added by this Act, apply only to an insurance policy delivered, | ||
issued for delivery, or renewed on or after January 1, 2020. A | ||
policy delivered, issued for delivery, or renewed before January 1, | ||
2020, is governed by the law as it existed immediately before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
SECTION 16. 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, 2019. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 1900 was passed by the House on April | ||
18, 2019, by the following vote: Yeas 147, Nays 0, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 1900 on May 23, 2019, by the following vote: Yeas 143, Nays 0, | ||
1 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 1900 was passed by the Senate, with | ||
amendments, on May 20, 2019, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |