Bill Text: TX HB2245 | 2015-2016 | 84th Legislature | Introduced
Bill Title: Relating to the operation of the Texas Windstorm Insurance Association and the renaming of the Texas Windstorm Insurance Association as the Texas Coastal Insurance Association.
Spectrum: Moderate Partisan Bill (Republican 7-1)
Status: (Introduced - Dead) 2015-04-22 - Left pending in committee [HB2245 Detail]
Download: Texas-2015-HB2245-Introduced.html
84R8470 PMO-D | ||
By: Bonnen of Galveston | H.B. No. 2245 |
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relating to the operation of the Texas Windstorm Insurance | ||
Association and the renaming of the Texas Windstorm Insurance | ||
Association as the Texas Coastal Insurance Association. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. The heading to Chapter 2210, Insurance Code, is | ||
amended to read as follows: | ||
CHAPTER 2210. TEXAS COASTAL [ |
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SECTION 2. Section 2210.001, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.001. PURPOSE. The primary purpose of the Texas | ||
Coastal [ |
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adequate market for windstorm and hail insurance in the seacoast | ||
territory of this state. The legislature finds that the provision | ||
of adequate windstorm and hail insurance is necessary to the | ||
economic welfare of this state, and without that insurance, the | ||
orderly growth and development of this state would be severely | ||
impeded. This chapter provides a method by which adequate | ||
windstorm and hail insurance may be obtained in certain designated | ||
portions of the seacoast territory of this state. The association | ||
is intended to serve as a residual insurer of last resort for | ||
windstorm and hail insurance in the seacoast territory. The | ||
association shall: | ||
(1) function in such a manner as to not be a direct | ||
competitor in the private market; and | ||
(2) provide windstorm and hail insurance coverage to | ||
those who are unable to obtain that coverage in the private market. | ||
SECTION 3. Section 2210.002, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (a-1) to read as | ||
follows: | ||
(a) This chapter may be cited as the Texas Coastal | ||
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(a-1) A reference in this chapter or other law to the Texas | ||
Windstorm Insurance Association means the Texas Coastal Insurance | ||
Association. | ||
SECTION 4. Section 2210.003, Insurance Code, is amended by | ||
amending Subdivision (1) and adding Subdivisions (1-a) and (9-a) to | ||
read as follows: | ||
(1) "Administrator" means the entity contractually | ||
retained to: | ||
(A) manage the association and administer the | ||
plan of operation under Section 2210.062; and | ||
(B) manage the contracts with primary insurers | ||
under Section 2210.063. | ||
(1-a) "Association" means the Texas Coastal | ||
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(9-a) "Primary insurer" means a member insurer that: | ||
(A) has primary coverage for loss by fire on a | ||
property that is or may be insured under this chapter; and | ||
(B) acts on behalf of the association under this | ||
chapter. | ||
SECTION 5. Section 2210.014, Insurance Code, is amended by | ||
amending Subsection (b) and adding Subsection (c) to read as | ||
follows: | ||
(b) Chapter 542 does not apply to [ |
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representative of the association. | ||
(c) A primary insurer, adjuster, agent or representative of | ||
the primary insurer, or the administrator contracted under Sections | ||
2210.062 and 2210.063, is an agent of the association for purposes | ||
of administering and issuing association policies and adjusting and | ||
processing association claims under this chapter. | ||
SECTION 6. Subchapter A, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.015 to read as follows: | ||
Sec. 2210.015. STUDY OF MARKET INCENTIVES; BIENNIAL | ||
REPORTING. (a) Each biennium, the department shall conduct a study | ||
of market incentives to promote participation in the voluntary | ||
windstorm and hail insurance market in the seacoast territory of | ||
this state. The study must address as possible incentives the | ||
mandatory or voluntary issuance of windstorm and hail insurance in | ||
conjunction with the issuance of a homeowners policy in the | ||
seacoast territory. | ||
(b) The department shall include the results of the study | ||
conducted under this section in the report submitted under Section | ||
32.022. | ||
SECTION 7. Subchapter B, Chapter 2210, Insurance Code, is | ||
amended by adding Sections 2210.062, 2210.063, 2210.064, 2210.065, | ||
2210.066, and 2210.067 to read as follows: | ||
Sec. 2210.062. ADMINISTRATION BY CONTRACTED ADMINISTRATOR. | ||
(a) Notwithstanding any other law, the commissioner shall contract | ||
with an administrator to manage the association and administer the | ||
plan of operation beginning December 1, 2015. The administrator | ||
may not exercise any power under the contract before December 1, | ||
2015. | ||
(b) The administrator must hold either a managing general | ||
agent license issued under Chapter 4053 or a third-party | ||
administrator certificate of authority issued under Chapter 4151. | ||
(c) The term of the administrator's contract may not exceed | ||
five years. The contract may be renewed for additional terms not to | ||
exceed five years for each term. | ||
(d) In establishing the compensation paid to the | ||
administrator under the contract, the commissioner shall consider | ||
the cost of operations of the association and make every reasonable | ||
effort to ensure that the cost of operations of the association | ||
under the contract does not exceed average historical costs. | ||
Sec. 2210.063. CONTRACTS BETWEEN ADMINISTRATOR AND PRIMARY | ||
INSURERS. (a) Notwithstanding any other law, the administrator | ||
shall contract with each primary insurer to administer and issue | ||
association policies and adjust and process claims under | ||
association policies beginning January 1, 2016. A primary insurer | ||
may not exercise any power under the contract before January 1, | ||
2016. | ||
(b) In establishing the compensation paid to each primary | ||
insurer under the contract, the administrator shall consider the | ||
cost of operations of the association and make every reasonable | ||
effort to ensure that the cost of operations of the association | ||
under the contract does not exceed average historical costs. | ||
Sec. 2210.064. PROPRIETARY INFORMATION. (a) Any | ||
information, analyses, programs, or data acquired or created by the | ||
administrator under a contract under this chapter are property of | ||
the department. | ||
(b) Information, analyses, programs, or data described by | ||
Subsection (a) are confidential and exempt from public disclosure | ||
under Chapter 552, Government Code. | ||
Sec. 2210.065. OFFICE. (a) The administrator shall | ||
maintain an office in Austin, Texas. | ||
(b) The commissioner may arrange to lease office space of | ||
the department to the administrator. | ||
Sec. 2210.066. AUDIT. (a) The administrator is subject to | ||
audit by the commissioner and shall pay the costs incurred by the | ||
commissioner in performing an audit under this section in an amount | ||
the commissioner finds reasonable. | ||
(b) Work papers, as defined by Section 401.020(a), from an | ||
audit are confidential and not subject to disclosure under Chapter | ||
552, Government Code. | ||
Sec. 2210.067. ANNUAL REPORT OF ADMINISTRATOR. (a) Not | ||
later than March 1 of each year, the administrator shall submit a | ||
report regarding the administrator's duties under this chapter to: | ||
(1) the governor; | ||
(2) the lieutenant governor; | ||
(3) the speaker of the house of representatives; | ||
(4) the senate committee on business and commerce or | ||
the successor of that committee with jurisdiction over insurance; | ||
(5) the house committee on insurance or the successor | ||
of that committee with jurisdiction over insurance; and | ||
(6) the legislative oversight board established under | ||
Subchapter N. | ||
(b) The report must be made in accordance with the terms of | ||
the administrator's contract with the department. | ||
SECTION 8. Subchapter B-1, Chapter 2210, Insurance Code, is | ||
amended by amending Section 2210.071 and adding Sections 2210.0715 | ||
and 2210.0716 to read as follows: | ||
Sec. 2210.071. PAYMENT OF EXCESS LOSSES[ |
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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. | ||
Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. [ |
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The association shall pay losses in excess of premium and other | ||
revenue of the association from available reserves of the | ||
association and available amounts in the catastrophe reserve trust | ||
fund. | ||
Sec. 2210.0716. PAYMENT FROM CLASS 1 ASSESSMENTS. (a) | ||
Losses in a catastrophe year not paid under Section 2210.0715 shall | ||
be paid as provided by this section from Class 1 member assessments | ||
not to exceed $500 million for that catastrophe year. | ||
(b) The administrator, with the approval of the | ||
commissioner, shall notify each member of the amount of the | ||
member's assessment under this section. The proportion of the | ||
losses allocable to each insurer under this section shall be | ||
determined in the manner used to determine each insurer's | ||
participation in the association for the year under Section | ||
2210.052. | ||
(c) A member of the association may not recoup an assessment | ||
paid under this section through a premium surcharge or tax credit. | ||
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SECTION 9. Sections 2210.072(a), (b), (b-1), (c), and (f), | ||
Insurance Code, are amended to read as follows: | ||
(a) Losses not paid under Sections 2210.0715 and 2210.0716 | ||
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from the proceeds from Class 1 public securities authorized to be | ||
issued in accordance with Subchapter M before, on, or after the date | ||
of any occurrence or series of occurrences that results in insured | ||
losses. Public securities issued under this section must be paid | ||
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paid [ |
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the commissioner approves. | ||
(b) Public securities described by Subsection (a) that are | ||
issued before an occurrence or series of occurrences that results | ||
in incurred losses: | ||
(1) may be issued on the request of the board of | ||
directors with the approval of the commissioner; and | ||
(2) may not, in the aggregate, exceed $500 million [ |
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in which the outstanding public securities were issued. | ||
(b-1) Public securities described by Subsection (a): | ||
(1) shall be issued as necessary in a principal amount | ||
not to exceed $500 million [ |
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aggregate, for securities issued during that catastrophe year | ||
before the occurrence or series of occurrences that results in | ||
incurred losses in that year and securities issued on or after the | ||
date of that occurrence or series of occurrences, and regardless of | ||
whether for a single occurrence or a series of occurrences; and | ||
(2) subject to the [ |
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Subdivision (1), may be issued, in one or more issuances or | ||
tranches, during the calendar year in which the occurrence or | ||
series of occurrences occurs or, if the public securities cannot | ||
reasonably be issued in that year, during the following calendar | ||
year. | ||
(c) If public securities are issued as described by this | ||
section, the public securities shall be paid [ |
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prescribed by Subchapter M [ |
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(f) If, under Subsection (e), the proceeds of any | ||
outstanding public securities issued during a previous catastrophe | ||
year must be depleted, those proceeds shall count against the $500 | ||
million [ |
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section in the catastrophe year in which the proceeds must be | ||
depleted. | ||
SECTION 10. Subchapter B-1, Chapter 2210, Insurance Code, | ||
is amended by adding Section 2210.0725 to read as follows: | ||
Sec. 2210.0725. PAYMENT FROM CLASS 2 ASSESSMENTS. (a) | ||
Losses in a catastrophe year not paid under Sections 2210.0715, | ||
2210.0716, and 2210.072 shall be paid as provided by this section | ||
from Class 2 member assessments not to exceed $500 million for that | ||
catastrophe year. | ||
(b) The administrator, with the approval of the | ||
commissioner, shall notify each member of the amount of the | ||
member's assessment under this section. The proportion of the | ||
losses allocable to each insurer under this section shall be | ||
determined in the manner used to determine each insurer's | ||
participation in the association for the year under Section | ||
2210.052. | ||
(c) A member of the association may not recoup an assessment | ||
paid under this section through a premium surcharge or tax credit. | ||
SECTION 11. Section 2210.073, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.073. PAYMENT FROM CLASS 2 PUBLIC SECURITIES. (a) | ||
Losses not paid under Sections 2210.0715, 2210.0716, [ |
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2210.072, and 2210.0725 shall be paid as provided by this section | ||
from the proceeds from Class 2 public securities authorized to be | ||
issued in accordance with Subchapter M on or after the date of any | ||
occurrence or series of occurrences that results in insured losses | ||
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section must be paid [ |
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years[ |
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elects to do so and the commissioner approves. | ||
(b) Public securities described by Subsection (a): | ||
(1) shall [ |
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amount not to exceed $500 million [ |
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year, in the aggregate, whether for a single occurrence or a series | ||
of occurrences; and | ||
(2) subject to the [ |
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Subdivision (1), may be issued, in one or more issuances or | ||
tranches, during the calendar year in which the occurrence or | ||
series of occurrences occurs or, if the public securities cannot | ||
reasonably be issued in that year, during the following calendar | ||
year. | ||
(c) If the losses are paid with public securities described | ||
by this section, the public securities shall be paid [ |
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manner prescribed by Subchapter M. | ||
SECTION 12. Section 2210.102, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.102. COMPOSITION. (a) The board of directors is | ||
composed of nine members appointed by the governor [ |
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in accordance with this section. | ||
(b) Three [ |
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insurance industry who actively write and renew windstorm and hail | ||
insurance in the first tier coastal counties. | ||
(c) Three [ |
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appointment, reside in the first tier coastal counties. Each of | ||
the following regions must be represented by a member residing in | ||
the region and [ |
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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) One of the members appointed under Subsection (c) must | ||
be a property and casualty agent who is licensed under this code and | ||
is not a captive agent. | ||
(d) One member must be a representative of an area of this | ||
state that is not located in the seacoast territory [ |
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(d-1) One member must be an engineer who: | ||
(1) is knowledgeable of, and has professional | ||
expertise in, wind-related design and construction practices in | ||
coastal areas that are subject to high winds and hurricanes; and | ||
(2) resides in a second tier coastal county. | ||
(d-2) One member must be a representative of the financial | ||
industry who resides in a second tier coastal county. | ||
(e) All members must have demonstrated experience in | ||
insurance, general business, or actuarial principles and the | ||
member's area of expertise, if any, sufficient to make the success | ||
of the association probable. | ||
(f) Insurers who are members of the association shall | ||
nominate, from among those members, persons to fill any vacancy in | ||
the three [ |
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representatives of the insurance industry. The board of directors | ||
shall solicit nominations from the members and submit the | ||
nominations to the governor [ |
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submitted to the governor [ |
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include at least three more names than the number of vacancies. The | ||
governor may [ |
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industry representatives from the nominee slate. | ||
(g) In addition to the nine members appointed under | ||
Subsection (a), the governor [ |
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individuals [ |
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members [ |
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nonvoting member appointed under this section must: | ||
(1) hold an elective office of this state or a | ||
political subdivision of this state; and | ||
(2) reside in and represent one of the following | ||
areas: | ||
(A) the northern portion of the seacoast | ||
territory [ |
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(B) the southern portion of the seacoast | ||
territory [ |
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(C) an area of this state that is not located in | ||
the seacoast territory [ |
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(h) The persons appointed under Subsection (g) [ |
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each reside in a [ |
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(g)(2) and in different counties. | ||
SECTION 13. Section 2210.103(c), Insurance Code, is amended | ||
to read as follows: | ||
(c) A member of the board of directors may be removed by the | ||
governor [ |
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the association's website. The governor [ |
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appoint a replacement in accordance with [ |
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Section 2210.102 for a member who leaves or is removed from the | ||
board of directors. | ||
SECTION 14. Chapter 2210, Insurance Code, is amended by | ||
adding Subchapter D-1 to read as follows: | ||
SUBCHAPTER D-1. PRIMARY INSURER | ||
Sec. 2210.175. ADMINISTRATION AND ISSUANCE OF ASSOCIATION | ||
POLICIES AND ADJUSTMENT AND PROCESSING OF CLAIMS BY PRIMARY | ||
INSURER. (a) A primary insurer that has primary coverage on | ||
property for loss by fire shall administer and issue an association | ||
policy providing windstorm and hail insurance coverage for the same | ||
property and adjust and process all claims made on the association | ||
policy in accordance with this chapter, the plan of operation, and | ||
the contract entered into under Section 2210.063. | ||
(b) An insurer acting under this chapter is an agent of the | ||
association for purposes of Sections 2210.014 and 2210.572. | ||
(c) An insurer acting in accordance with this section is not | ||
liable for any amount payable under the terms of the association | ||
policy. | ||
SECTION 15. Subchapter E, Chapter 2210, Insurance Code, is | ||
amended by adding Sections 2210.2022 and 2210.211 to read as | ||
follows: | ||
Sec. 2210.2022. INFORMATION REQUIRED FOR CERTAIN | ||
APPLICATIONS. An application for association coverage, including | ||
an application for new or renewal coverage on or after January 1, | ||
2016, must include information on any policy covering the property | ||
for perils other than windstorm and hail, including: | ||
(1) the total premium for the policy, including a | ||
policy number for coverage issued by the FAIR Plan Association | ||
under Chapter 2211, if applicable, and: | ||
(A) the amount of insurance on the dwelling and | ||
contents provided by the policy; or | ||
(B) if the policy is a tenants policy or | ||
condominium owners policy, the insured amount for the contents | ||
coverage; and | ||
(2) the deductibles applicable for the policy. | ||
Sec. 2210.211. CONFIDENTIAL INFORMATION. (a) Except as | ||
provided by Subsection (b), all information, data, and databases | ||
collected and used under Section 2210.2022 are confidential | ||
information not subject to disclosure under Chapter 552, Government | ||
Code. | ||
(b) Information described by Subsection (a) may be used for | ||
the purposes and in the manner described by this chapter and Chapter | ||
2211. | ||
SECTION 16. The heading to Subchapter J, Chapter 2210, | ||
Insurance Code, is amended to read as follows: | ||
SUBCHAPTER J. CATASTROPHE RESERVE TRUST FUND; [ |
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ALTERNATIVE RISK FINANCING [ |
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SECTION 17. Section 2210.452, Insurance Code, is amended by | ||
amending Subsections (a), (c), and (d) and adding Subsection (f) to | ||
read as follows: | ||
(a) The commissioner shall adopt rules under which the | ||
association makes payments to the catastrophe reserve trust fund. | ||
Except as otherwise specifically provided by this section, the | ||
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funding the payment of insured losses, including: | ||
(1) funding [ |
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fund under Subchapter B-1; and | ||
(2) purchasing reinsurance or using alternative risk | ||
financing mechanisms under Section 2210.453. | ||
(c) At the end of each calendar year or policy year, the | ||
association shall use the net gain from operations of the | ||
association, including all premium and other revenue of the | ||
association in excess of incurred losses, operating expenses, | ||
public security obligations, and public security administrative | ||
expenses, to make payments to the trust fund, [ |
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reinsurance, or use alternative risk financing mechanisms, or to | ||
make payments to the trust fund and [ |
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alternative risk financing mechanisms. | ||
(d) The commissioner by rule shall establish the procedure | ||
relating to the disbursement of money from the trust fund to | ||
policyholders and for association administrative expenses directly | ||
related to funding the payment of insured losses in the event of an | ||
occurrence or series of occurrences within a catastrophe area that | ||
results in a disbursement under Subchapter B-1. | ||
(f) The commissioner by rule shall establish the procedure | ||
relating to the disbursement of money from the trust fund to pay for | ||
operating expenses, including reinsurance or alternative risk | ||
financing mechanisms under Section 2210.453, if the association | ||
does not have sufficient premium and other revenue. | ||
SECTION 18. Section 2210.453, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.453. REINSURANCE AND ALTERNATIVE RISK FINANCING | ||
MECHANISMS. (a) The association shall [ |
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financing mechanisms in an amount equal to the probable maximum | ||
loss for the association for a catastrophe year with a probability | ||
of one in 100. | ||
(b) Any [ |
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purchased or alternative risk financing mechanism used under this | ||
section operates [ |
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instruments, and assessments authorized by this chapter. | ||
(c) The attachment point for reinsurance purchased under | ||
this section may not be less than the aggregate amount of all | ||
funding available to the association under Subchapter B-1. [ |
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SECTION 19. Section 2210.602, Insurance Code, is amended by | ||
adding Subdivisions (2-a) and (3-a) to read as follows: | ||
(2-a) "Class 1 public security trust fund" means the | ||
dedicated trust fund established by the board and held by the Texas | ||
Treasury Safekeeping Trust Company into which premium surcharges | ||
collected under Section 2210.612 for the purpose of repaying Class | ||
1 public securities are deposited. | ||
(3-a) "Class 2 public security trust fund" means the | ||
dedicated trust fund established by the board and held by the Texas | ||
Treasury Safekeeping Trust Company into which premium surcharges | ||
collected under Section 2210.613 for the purpose of repaying Class | ||
2 public securities are deposited. | ||
SECTION 20. Section 2210.604(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) At the request of the association and with the approval | ||
of the commissioner, the Texas Public Finance Authority shall issue | ||
Class 1 or [ |
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association shall submit to the commissioner a cost-benefit | ||
analysis of various financing methods and funding structures when | ||
requesting the issuance of public securities under this subsection. | ||
SECTION 21. Section 2210.609, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.609. REPAYMENT OF ASSOCIATION'S PUBLIC SECURITY | ||
OBLIGATIONS. (a) The board and the association shall enter into an | ||
agreement under which the association shall provide for the payment | ||
of all public security obligations from available funds collected | ||
by the association and deposited as required by this subchapter | ||
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association determines that it is unable to pay the public security | ||
obligations and public security administrative expenses, if any, | ||
with available funds, the association shall pay those obligations | ||
and expenses in accordance with Sections 2210.612 and [ |
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[ |
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2[ |
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subordinate lien basis with other Class 1 or [ |
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(b) If any public securities issued under this chapter are | ||
outstanding, the authority shall notify the association of the | ||
amount of the public security obligations and the estimated amount | ||
of public security administrative expenses, if any, each calendar | ||
year in a period sufficient, as determined by the association, to | ||
permit the association to determine the availability of funds[ |
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(c) The association shall deposit all revenue collected | ||
under Section 2210.612 in the Class 1 public security trust fund and | ||
[ |
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under Section 2210.613 [ |
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trust fund [ |
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permitted by general law. Money in a fund required to be used to | ||
pay public security obligations and public security administrative | ||
expenses, if any, shall be transferred to the appropriate funds in | ||
the manner and at the time specified in the proceedings authorizing | ||
the public securities to ensure timely payment of obligations and | ||
expenses. This may include the board establishing funds and | ||
accounts with the comptroller that the board determines are | ||
necessary to administer and repay the public security | ||
obligations. If the association has not transferred amounts | ||
sufficient to pay the public security obligations to the board's | ||
designated interest and sinking fund in a timely manner, the board | ||
may direct the Texas Treasury Safekeeping Trust Company to transfer | ||
from the Class 1 public security trust fund [ |
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Class 2 public security trust fund [ |
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to the appropriate account the amount necessary to pay the public | ||
security obligation. | ||
(d) The association shall provide for the payment of the | ||
public security obligations and the public security administrative | ||
expenses by irrevocably pledging revenues received from premiums, | ||
[ |
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the Class 1 public security trust fund [ |
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public security trust fund [ |
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with any public security reserve fund, as provided in the | ||
proceedings authorizing the public securities and related credit | ||
agreements. | ||
(e) An amount owed by the board under a credit agreement | ||
shall be payable from and secured by a pledge of revenues received | ||
by the association [ |
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[ |
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proceedings authorizing the credit agreement. | ||
SECTION 22. Section 2210.610(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) Revenues received from the premium surcharges under | ||
Sections 2210.612 and [ |
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provided by this subchapter. | ||
SECTION 23. Section 2210.611, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT | ||
EARNINGS. Revenue collected in any calendar year from a premium | ||
surcharge under Sections 2210.612 and [ |
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exceeds the amount of the public security obligations and public | ||
security administrative expenses payable in that calendar year and | ||
interest earned on the funds [ |
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in the discretion of the association, be: | ||
(1) used to pay public security obligations payable in | ||
the subsequent calendar year, offsetting the amount of the premium | ||
surcharge [ |
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otherwise be required to be levied for the year under this | ||
subchapter; | ||
(2) used to redeem or purchase outstanding public | ||
securities; or | ||
(3) deposited in the catastrophe reserve trust fund. | ||
SECTION 24. Section 2210.612, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.612. PAYMENT OF CLASS 1 PUBLIC SECURITIES. | ||
(a) The association shall pay Class 1 public securities issued | ||
under Section 2210.072 from: | ||
(1) [ |
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(2) if net premium and other revenue are not | ||
sufficient to pay the securities, a catastrophe area premium | ||
surcharge collected in accordance with this section. | ||
(b) On approval by the commissioner, the association shall | ||
assess, as provided by this section, a premium surcharge to each | ||
policyholder of a policy described by Subsection (c). The premium | ||
surcharge must be set in an amount sufficient to pay, for the | ||
duration of the issued public securities, all debt service not | ||
already covered by available funds and all related expenses on the | ||
public securities. | ||
(c) The premium surcharge under this section shall be | ||
assessed on all policyholders of association policies issued under | ||
this chapter. | ||
(d) A premium surcharge under this section is a separate | ||
charge in addition to the premiums collected and is not subject to | ||
premium tax or commissions. Failure by a policyholder to pay the | ||
surcharge constitutes failure to pay premium for purposes of policy | ||
cancellation. | ||
(e) [ |
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as described by Section 2210.072(d) as necessary to obtain public | ||
securities issued under Section 2210.072. Nothing in this | ||
subsection shall prevent the authorization and creation of one or | ||
more programs for the issuance of commercial paper before the date | ||
of an occurrence or series of occurrences that results in insured | ||
losses under Section 2210.072(a). | ||
SECTION 25. Section 2210.613, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.613. PAYMENT OF CLASS 2 PUBLIC SECURITIES. (a) | ||
The association shall pay Class 2 public securities issued under | ||
Section 2210.073 from: | ||
(1) net premium and other revenue; and | ||
(2) if net premium and other revenue are not | ||
sufficient to pay the securities, a catastrophe area premium | ||
surcharge collected in accordance with this section. | ||
(b) On approval by the commissioner, the association and | ||
each insurer that provides insurance in a catastrophe area shall | ||
assess, as provided by this section, a premium surcharge to each | ||
policyholder of a policy described by Subsection (c). The premium | ||
surcharge must be set in an amount sufficient to pay, for the | ||
duration of the issued public securities, all debt service not | ||
already covered by available funds and all related expenses on the | ||
public securities [ |
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(c) The premium surcharge under this section [ |
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insured property that is located in a catastrophe area, including | ||
automobiles principally garaged in a catastrophe area. The | ||
premium surcharge shall be assessed on each Texas windstorm and | ||
hail insurance policy and each property and casualty insurance | ||
policy, including an automobile insurance policy, issued for | ||
automobiles and other property located in the catastrophe area. | ||
The [ |
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(1) all policies written under the following lines of | ||
insurance: | ||
(A) fire and allied lines; | ||
(B) farm and ranch owners; | ||
(C) residential property insurance; | ||
(D) private passenger automobile liability and | ||
physical damage insurance; and | ||
(E) commercial automobile liability and physical | ||
damage insurance; and | ||
(2) the property insurance portion of a commercial | ||
multiple peril insurance policy. | ||
(d) A premium surcharge under this section [ |
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is a separate charge in addition to the premiums collected and is | ||
not subject to premium tax or commissions. Failure by a | ||
policyholder to pay the surcharge constitutes failure to pay | ||
premium for purposes of policy cancellation. | ||
SECTION 26. Section 2210.614, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.614. REFINANCING PUBLIC SECURITIES. The | ||
association may request the board to refinance any public | ||
securities issued in accordance with Subchapter B-1, whether Class | ||
1 or [ |
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securities payable from the same sources as the original public | ||
securities. | ||
SECTION 27. Section 2210.616(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) The state pledges for the benefit and protection of | ||
financing parties, the board, and the association that the state | ||
will not take or permit any action that would: | ||
(1) impair the collection of [ |
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premium surcharges or the deposit of those funds into the Class 1 | ||
public security [ |
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security [ |
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(2) reduce, alter, or impair the [ |
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financing parties until the principal, interest, and premium, and | ||
any other charges incurred and contracts to be performed in | ||
connection with the related public securities, have been paid and | ||
performed in full; or | ||
(3) in any way impair the rights and remedies of the | ||
public security owners until the public securities are fully | ||
discharged. | ||
SECTION 28. Section 2210.6165, Insurance Code, is amended | ||
to read as follows: | ||
Sec. 2210.6165. PROPERTY RIGHTS. If public securities | ||
issued under this subchapter are outstanding, the rights and | ||
interests of the association, a successor to the association, any | ||
member of the association, or any member of the Texas FAIR Plan | ||
Association, including the right to impose, collect, and receive a | ||
premium surcharge [ |
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subchapter, are only contract rights until those revenues are first | ||
pledged for the repayment of the association's public security | ||
obligations as provided by Section 2210.609. | ||
SECTION 29. The following provisions of Chapter 2210, | ||
Insurance Code, are repealed: | ||
(1) Section 2210.074; | ||
(2) Sections 2210.602(4), (5-a), (6-b), (6-c), and | ||
(10); | ||
(3) Section 2210.605(c); and | ||
(4) Sections 2210.6135 and 2210.6136. | ||
SECTION 30. (a) The board of directors of the Texas | ||
Windstorm Insurance Association established under Section | ||
2210.102, Insurance Code, as that section existed before amendment | ||
by this Act, is abolished effective October 1, 2015. | ||
(b) The governor shall appoint the members of the board of | ||
directors of the Texas Coastal Insurance Association under Section | ||
2210.102, Insurance Code, as amended by this Act, effective October | ||
1, 2015. The initial directors shall draw lots to achieve staggered | ||
terms, with three of the directors serving one-year terms, three of | ||
the directors serving two-year terms, and three of the directors | ||
serving three-year terms. | ||
(c) The term of a person who is serving as a member of the | ||
board of directors of the Texas Windstorm Insurance Association | ||
immediately before the abolition of that board under Subsection (a) | ||
of this section expires on October 1, 2015. Such a person is | ||
eligible for appointment by the governor to the new board of | ||
directors of the Texas Coastal Insurance Association under Section | ||
2210.102, Insurance Code, as amended by this Act. | ||
(d) Section 2210.175, Insurance Code, as added by this Act, | ||
applies only to administering or issuing a policy or adjusting or | ||
processing a claim under a policy issued on or after January 1, | ||
2016. | ||
(e) Subchapter M, Chapter 2210, Insurance Code, as it | ||
existed before the effective date of this Act, is applicable to bond | ||
obligations incurred under Chapter 2210, Insurance Code, before the | ||
effective date of this Act, and that law is continued in effect for | ||
that purpose. | ||
(f) It is the intent of the legislature that each member of | ||
the legislative oversight board appointed under Section 2210.652, | ||
Insurance Code, and serving on the effective date of this Act | ||
continues to serve after the effective date of this Act until a | ||
successor is appointed under that section. | ||
SECTION 31. 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, 2015. |