Bill Text: TX HB272 | 2011-2012 | 82nd Legislature | Engrossed
Bill Title: Relating to the operation of the Texas Windstorm Insurance Association and to the resolution of certain disputes concerning claims made to that association; providing penalties.
Spectrum: Partisan Bill (Republican 31-0)
Status: (Engrossed - Dead) 2011-05-27 - Senate appoints conferees-reported [HB272 Detail]
Download: Texas-2011-HB272-Engrossed.html
By: Smithee, Chisum, Hancock, Margo, Sheets, | H.B. No. 272 | |
et al. |
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relating to the operation and name of the Texas Windstorm Insurance | ||
Association and to the resolution of certain disputes concerning | ||
claims made to that association; providing penalties. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 83.002, Insurance Code, is amended by | ||
adding Subsection (c) to read as follows: | ||
(c) This chapter also applies to: | ||
(1) a person appointed as a qualified inspector under | ||
Section 2210.254 or 2210.255; and | ||
(2) a person acting as a qualified inspector under | ||
Section 2210.254 or 2210.255 without being appointed as a qualified | ||
inspector under either of those sections. | ||
SECTION 2. Section 541.152, Insurance Code, is amended by | ||
amending Subsection (b) and adding Subsection (c) to read as | ||
follows: | ||
(b) Except as provided by Subsection (c), on [ |
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by the trier of fact that the defendant knowingly committed the act | ||
complained of, the trier of fact may award an amount not to exceed | ||
three times the amount of actual damages. | ||
(c) Subsection (b) does not apply to an action under this | ||
subchapter brought against the Texas Windstorm Insurance | ||
Association by a person who is insured under Chapter 2210. | ||
SECTION 3. The heading to Chapter 2210, Insurance Code, is | ||
amended to read as follows: | ||
CHAPTER 2210. TEXAS COASTAL [ |
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SECTION 4. Section 2210.002, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.002. SHORT TITLE; SUNSET PROVISION. (a) This | ||
chapter may be cited as the Texas Coastal [ |
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Plan [ |
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Insurance Act means this chapter. | ||
(b) The association is subject to review under Chapter 325, | ||
Government Code (Texas Sunset Act), but is not abolished under that | ||
chapter. The association shall be reviewed during the period in | ||
which state agencies abolished in 2013 [ |
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association shall pay the costs incurred by the Sunset Advisory | ||
Commission in performing the review of the association under this | ||
subsection. The Sunset Advisory Commission shall determine the | ||
costs of the review performed under this subsection, and the | ||
association shall pay the amount of those costs promptly on receipt | ||
of a statement from the Sunset Advisory Commission regarding those | ||
costs. This subsection expires September 1, 2013 [ |
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SECTION 5. Section 2210.003(1), Insurance Code, is amended | ||
to read as follows: | ||
(1) "Association" means the Texas Coastal [ |
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Insurance Plan Association. | ||
SECTION 6. Section 2210.003, Insurance Code, is amended by | ||
adding Subdivision (3-b) to read as follows: | ||
(3-b) "Catastrophe year" means a calendar year in | ||
which an occurrence or a series of occurrences results in insured | ||
losses, regardless of when the insured losses are ultimately paid. | ||
SECTION 7. Subchapter A, Chapter 2210, Insurance Code, is | ||
amended by adding Sections 2210.0081, 2210.010, 2210.012, and | ||
2210.013 to read as follows: | ||
Sec. 2210.0081. CERTAIN ACTIONS BROUGHT AGAINST | ||
ASSOCIATION BY COMMISSIONER. In an action brought by the | ||
commissioner against the association under Chapter 441: | ||
(1) the association's inability to satisfy obligations | ||
under Subchapter M related to the issuance of public securities | ||
under this chapter constitutes a condition that makes the | ||
association's continuation in business hazardous to the public or | ||
to the association's policyholders for the purposes of Section | ||
441.052; | ||
(2) the time for the association to comply with the | ||
requirements of supervision or for the conservator to complete the | ||
conservator's duties, as applicable, is limited to three years from | ||
the date the commissioner commences the action against the | ||
association; and | ||
(3) unless the commissioner takes further action | ||
against the association under Chapter 441, as a condition of | ||
release from supervision, the association must demonstrate to the | ||
satisfaction of the commissioner that the association is able to | ||
satisfy obligations under Subchapter M related to the issuance of | ||
public securities under this chapter. | ||
Sec. 2210.010. APPLICABILITY OF CERTAIN OTHER LAW. (a) A | ||
person may not bring a private action against the association, | ||
including a claim against an agent or representative of the | ||
association, under Chapter 541 or 542. | ||
(b) Chapter 542 does not apply to the processing and | ||
settlement of claims by the association. | ||
Sec. 2210.012. STANDARDS OF CONDUCT: BOARD OF DIRECTORS AND | ||
EMPLOYEES; REPORT OF CERTAIN FRAUDULENT CONDUCT. (a) A member of | ||
the board of directors or an employee of the association may not: | ||
(1) accept or solicit any gift, favor, or service that | ||
might reasonably tend to influence the member or employee in the | ||
discharge of duties related to the operation or business of the | ||
association or that the member or employee knows or should know is | ||
being offered with the intent to influence the member's or | ||
employee's conduct related to the operation or business of the | ||
association; | ||
(2) accept other employment or engage in a business or | ||
professional activity that the member or employee might reasonably | ||
expect would require or induce the member or employee to disclose | ||
confidential information acquired by reason of the member's or | ||
employee's position with the association; | ||
(3) accept other employment or compensation that could | ||
reasonably be expected to impair the member's or employee's | ||
independence of judgment in the performance of the member's or | ||
employee's duties related to the operation or business of the | ||
association; | ||
(4) make personal investments that could reasonably be | ||
expected to create a substantial conflict between the member's or | ||
employee's private interest and the interest of the association; or | ||
(5) intentionally or knowingly solicit, accept, or | ||
agree to accept any benefit for having exercised the member's or | ||
employee's powers related to the operation or business of the | ||
association or having performed, in favor of another, the member's | ||
or employee's duties related to the operation or business of the | ||
association. | ||
(b) An association employee who violates Subsection (a) or a | ||
code of conduct established under Section 2210.107(a)(4) is subject | ||
to an employment-related sanction, including termination of the | ||
employee's employment with the association. | ||
(c) A member of the board of directors or an association | ||
employee who violates Subsection (a) is subject to any applicable | ||
civil or criminal penalty if the violation also constitutes a | ||
violation of another statute or rule. | ||
(d) A board member, employee of the association, or member | ||
of the windstorm insurance legislative oversight board established | ||
under Subchapter N who reasonably suspects that a fraudulent | ||
insurance act has been or is about to be committed by any board | ||
member, employee of the association, or member of the windstorm | ||
insurance legislative oversight board established under Subchapter | ||
N shall, not later than the 30th day after discovering the conduct, | ||
report the conduct and identity of the person engaging in the | ||
conduct to the Travis County district attorney or the department. | ||
Sec. 2210.013. CERTAIN EMPLOYMENT AND CONTRACTS | ||
PROHIBITED. A member of the board of directors or an employee of | ||
the association may not appoint or employ, or contract with, the | ||
following individuals for the provision of goods or services in | ||
connection with the operation or business of the association, if | ||
the individual to be appointed or employed, or with whom a contract | ||
is to be entered into, is to be directly or indirectly compensated | ||
from funds of the association: | ||
(1) an individual related to the member or employee | ||
within a degree of relationship described by Section 573.002, | ||
Government Code; or | ||
(2) an individual related to any member of the board of | ||
directors or employee of the association within a degree of | ||
relationship described by Section 573.002, Government Code. | ||
SECTION 8. Section 2210.053, Insurance Code, is amended by | ||
adding Subsection (c) to read as follows: | ||
(c) The association may not be considered a debtor | ||
authorized to file a petition or seek relief in bankruptcy under | ||
Title 11, United States Code. | ||
SECTION 9. Subchapter B, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.058 to read as follows: | ||
Sec. 2210.058. CLAIMS PRACTICES AUDIT. (a) If the | ||
commissioner determines that 100 or more claims have been filed | ||
under association policies the bases of which are damage to insured | ||
property caused by the same storm, the department shall conduct a | ||
random audit of the claim files of those claims to: | ||
(1) determine whether the association is adequately | ||
and properly documenting claims decisions in each claim file; and | ||
(2) ensure that each claim is being handled | ||
appropriately, including being handled in accordance with the terms | ||
of the policy under which the claim is filed. | ||
(b) The department shall conduct an audit required under | ||
this section as soon as possible after the filing of the 100th claim | ||
described by Subsection (a) to ensure the quality of the process | ||
with which the association is handling claims described by | ||
Subsection (a). | ||
(c) If, following an audit conducted under this section, the | ||
commissioner determines that the association is not adequately and | ||
properly documenting claims decisions or that claims described by | ||
Subsection (a) are not otherwise being handled appropriately, the | ||
commissioner shall: | ||
(1) notify the board of directors of that | ||
determination; and | ||
(2) identify the manner in which the association | ||
should correct any deficiencies identified by the commissioner. | ||
SECTION 10. Section 2210.071(a), Insurance Code, is amended | ||
to read as follows: | ||
(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. | ||
SECTION 11. Section 2210.072, Insurance Code, is amended by | ||
amending Subsections (a), (b), and (c) and adding Subsection (b-1) | ||
to read as follows: | ||
(a) Losses not paid under Section 2210.071 shall be paid as | ||
provided by this section 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 repaid within a period not to | ||
exceed 10 years, and may be repaid sooner if the board of directors | ||
elects to do so and 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 may be issued if the board of directors | ||
determines, before the date of any occurrence, that the amount | ||
available from premium and other revenue, in combination with the | ||
amounts available from the catastrophe reserve trust fund, may be | ||
insufficient to pay insured losses. | ||
(b-1) Public securities described by Subsection (a) shall | ||
be issued as necessary in a principal amount not to exceed $1 | ||
billion per catastrophe year, in the aggregate, for securities | ||
issued 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. | ||
(c) If [ |
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issued as described by this section, the public securities shall be | ||
repaid in the manner prescribed by Subchapter M from association | ||
premium revenue. | ||
SECTION 12. Section 2210.073(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) Public securities described by Subsection (a) may be | ||
issued as necessary in a principal amount not to exceed $1 billion | ||
per catastrophe year. If the losses are paid with public securities | ||
described by this section, the public securities shall be repaid in | ||
the manner prescribed by Subchapter M. | ||
SECTION 13. Section 2210.074(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) Public securities described by Subsection (a) may be | ||
issued as necessary in a principal amount not to exceed $500 million | ||
per catastrophe year. If the losses are paid with public securities | ||
described by this section, the public securities shall be repaid in | ||
the manner prescribed by Subchapter M through member assessments as | ||
provided by this section. The association shall notify each member | ||
of the association 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. A member of the association may not | ||
recoup an assessment paid under this subsection through a premium | ||
surcharge or tax credit. | ||
SECTION 14. Section 2210.102, Insurance Code, is amended by | ||
adding Subsection (i) to read as follows: | ||
(i) Notwithstanding Subsection (f), for a vacancy occurring | ||
in a position under Subsection (b), the commissioner may appoint, | ||
for the lesser of 120 days or until the vacancy is filled, a person | ||
who has demonstrated knowledge in insurance principles. This | ||
subsection does not apply to a vacancy due to the expiration of a | ||
term occurring under Section 2210.103. This subsection expires | ||
December 31, 2012, and any appointment in effect on that date is | ||
continued until the expiration of the term of the appointment. | ||
SECTION 15. Section 2210.104, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.104. OFFICERS AND MANAGERIAL EMPLOYEES; SALARIES | ||
AND BONUSES. (a) The board of directors shall elect from the | ||
board's membership an executive committee consisting of a presiding | ||
officer, assistant presiding officer, and secretary-treasurer. | ||
(b) The association shall post on the association's | ||
Internet website the salary of each association employee who serves | ||
in a managerial capacity and any bonuses paid to those association | ||
employees. | ||
SECTION 16. Section 2210.105, Insurance Code, is amended by | ||
amending Subsections (a) and (b) and adding Subsections (b-1), (e), | ||
and (f) to read as follows: | ||
(a) Except for an emergency meeting, the association shall: | ||
(1) notify the department not later than the 11th day | ||
before the date of a meeting of the board of directors or of the | ||
members of the association; and | ||
(2) not later than the seventh day before the date of a | ||
meeting of the board of directors, post notice of the meeting on the | ||
association's Internet website and the department's Internet | ||
website. | ||
(b) Except for a closed meeting authorized by Subchapter D, | ||
Chapter 551, Government Code, a meeting of the board of directors or | ||
of the members of the association is open to[ |
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(b-1) A meeting of the board of directors or the members of | ||
the association, including a closed meeting authorized by | ||
Subchapter D, Chapter 551, Government Code, is open to the | ||
commissioner or the commissioner's designated representative. The | ||
commissioner or the commissioner's designated representative shall | ||
maintain the confidentiality of, and may not disclose the content | ||
of, any confidential information discussed in a closed meeting | ||
authorized by Subchapter D, Chapter 551, Government Code. | ||
(e) The association shall: | ||
(1) broadcast live on the association's Internet | ||
website all meetings of the board of directors, other than closed | ||
meetings; and | ||
(2) maintain on the association's Internet website an | ||
archive of meetings of the board of directors. | ||
(f) A recording of a meeting must be maintained in the | ||
archive required under Subsection (e) through and including the | ||
second anniversary of the meeting. | ||
SECTION 17. Section 2210.107, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.107. PRIMARY BOARD OBJECTIVES; REPORT. (a) The | ||
primary objectives of the board of directors are to ensure that the | ||
board and the association: | ||
(1) operate [ |
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chapter, the plan of operation, and commissioner rules; | ||
(2) comply [ |
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principles; [ |
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(3) meet [ |
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chapter; | ||
(4) establish a code of conduct and performance | ||
standards for association employees and persons with which the | ||
association contracts; and | ||
(5) establish, and adhere to terms of, an annual | ||
evaluation of association management necessary to achieve the | ||
statutory purpose, board objectives, and any performance or | ||
enterprise risk management objectives established by the board. | ||
(b) Not later than June 1 of each year, the association | ||
shall submit to the commissioner, the legislative oversight board | ||
established under Subchapter N, the governor, the lieutenant | ||
governor, and the speaker of the house of representatives a report | ||
evaluating the extent to which the board met the objectives | ||
described by Subsection (a) in the 12-month period immediately | ||
preceding the date of the report. | ||
SECTION 18. Subchapter C, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.108 to read as follows: | ||
Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. (a) Except | ||
as specifically provided by this chapter or another law, the | ||
association is subject to Chapters 551 and 552, Government Code. | ||
(b) A settlement agreement to which the association is a | ||
party: | ||
(1) is public information and is not exempted from | ||
required disclosure under Chapter 552, Government Code; and | ||
(2) if applicable, must contain the name of any | ||
attorney or adjuster involved with the claim that is the basis of | ||
the settlement. | ||
(c) Subsection (b) may not be construed to limit or | ||
otherwise restrict the categories of information that are public | ||
information under Section 552.022, Government Code. | ||
SECTION 19. Section 2210.152, Insurance Code, is amended by | ||
adding Subsection (c) to read as follows: | ||
(c) The plan of operation shall require the association to | ||
use the claim settlement guidelines published by the commissioner | ||
under Section 2210.577(f) in evaluating the extent to which a loss | ||
to insured property is incurred as a result of wind, waves, tidal | ||
surges, rising waters not caused by waves or surges, or wind-driven | ||
rain associated with a storm. | ||
SECTION 20. Section 2210.202, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.202. APPLICATION FOR COVERAGE. (a) A person who | ||
has an insurable interest in insurable property may apply to the | ||
association for insurance coverage provided under the plan of | ||
operation and an inspection of the property, subject to any rules | ||
established by the board of directors and approved by the | ||
commissioner. The association shall make insurance available to | ||
each applicant in the catastrophe area whose property is insurable | ||
property but who, after diligent efforts, is unable to obtain | ||
property insurance through the voluntary market, as evidenced by | ||
one declination from an insurer authorized to engage in the | ||
business of, and writing, property insurance providing windstorm | ||
and hail coverage in the first tier coastal counties. For purposes | ||
of this section, "declination" has the meaning assigned by the plan | ||
of operation and shall include a refusal to offer coverage for the | ||
perils of windstorm and hail and the inability to obtain | ||
substantially equivalent insurance coverage for the perils of | ||
windstorm and hail. Notwithstanding Section 2210.203(c), evidence | ||
of one declination every three calendar years is also required with | ||
an application for renewal of an association policy. | ||
(b) A property and casualty agent must submit an application | ||
for initial [ |
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forms prescribed by the association. A person insured under this | ||
chapter may submit an application for renewal coverage directly to | ||
the association on forms prescribed by the association. An [ |
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application for initial or renewal coverage must contain: | ||
(1) a statement as to whether the applicant has | ||
submitted or will submit the premium in full from personal funds or, | ||
if not, to whom a balance is or will be due; and | ||
(2) [ |
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behalf of the applicant possesses proof of the declination | ||
described by Subsection (a) and proof of flood insurance coverage | ||
or unavailability of that coverage as described by Section | ||
2210.203(a-1), regardless of whether the agent or the applicant | ||
submits the application for coverage. | ||
SECTION 21. Section 2210.203, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (d) to read as | ||
follows: | ||
(a) If the association determines that the property for | ||
which an application for initial insurance coverage is made is | ||
insurable property, the association, on payment of the premium, | ||
shall direct the issuance of an insurance policy as provided by the | ||
plan of operation. | ||
(d) The commissioner shall adopt rules governing the rate of | ||
agent commissions on policies renewed under Subsection (c). Rules | ||
adopted under this subsection must require that commission rates be | ||
reasonable and not excessive, based on the time required of, and the | ||
nature of work to be performed by, an agent. | ||
SECTION 22. Sections 2210.204(d) and (e), Insurance Code, | ||
are amended to read as follows: | ||
(d) If an insured requests cancellation of the insurance | ||
coverage, the association shall refund the unearned premium, less | ||
any minimum retained premium set forth in the plan of operation, | ||
payable to the insured and the holder of an unpaid balance. The | ||
property and casualty agent who received a commission as the result | ||
of the issuance of an association policy providing the canceled | ||
coverage [ |
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commission on any unearned premium in the same manner. | ||
(e) For cancellation of insurance coverage under this | ||
section, the minimum retained premium in the plan of operation must | ||
be for a period of not less than 90 [ |
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specified in the plan of operation that reflect a significant | ||
change in the exposure or the policyholder concerning the insured | ||
property, including: | ||
(1) the purchase of similar coverage in the voluntary | ||
market; | ||
(2) sale of the property to an unrelated party; | ||
(3) death of the policyholder; or | ||
(4) total loss of the property. | ||
SECTION 23. Subchapter E, Chapter 2210, Insurance Code, is | ||
amended by adding Sections 2210.205 and 2210.210 to read as | ||
follows: | ||
Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR | ||
FILING CLAIM; NOTICE CONCERNING RESOLUTION OF CERTAIN DISPUTES. | ||
(a) A windstorm and hail insurance policy issued by the association | ||
must: | ||
(1) require an insured to file a claim under the policy | ||
not later than the first anniversary of the date on which the damage | ||
to property that is the basis of the claim occurs; and | ||
(2) contain, in boldface type, a conspicuous notice | ||
concerning the resolution of disputes under the policy, including: | ||
(A) the processes and deadlines for appraisal | ||
under Section 2210.575 and independent coverage review under | ||
Section 2210.576; and | ||
(B) the necessity of complying with the | ||
requirements of Subchapter L-1 to seek administrative or judicial | ||
relief. | ||
(b) The commissioner, on a showing of good cause by a person | ||
insured under this chapter, may extend the one-year period | ||
described by Subsection (a)(1) for a period not to exceed 180 days. | ||
Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED. | ||
The association may not issue coverage for the following | ||
structures, regardless of whether the structure is otherwise | ||
insurable property under this chapter: | ||
(1) a wind turbine; | ||
(2) a structure used primarily as a casino or other | ||
gambling establishment; | ||
(3) a structure used as a sexually oriented business, | ||
as defined by Section 243.002, Local Government Code; or | ||
(4) a structure in which, or in any portion of which, | ||
an establishment is located that is used primarily for the | ||
operation of video lottery machines, eight-liners, or other | ||
gambling devices, regardless of whether the gambling devices are | ||
regulated under state law. | ||
SECTION 24. Section 2210.254, Insurance Code, is amended by | ||
adding Subsection (e) to read as follows: | ||
(e) The department may establish an annual renewal period | ||
for persons appointed as qualified inspectors. | ||
SECTION 25. Subchapter F, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.2551 to read as follows: | ||
Sec. 2210.2551. EXCLUSIVE ENFORCEMENT AUTHORITY; RULES. | ||
(a) The department has exclusive authority over all matters | ||
relating to the appointment and oversight of qualified inspectors | ||
for purposes of this chapter. | ||
(b) The commissioner by rule shall establish criteria to | ||
ensure that a person seeking appointment as a qualified inspector | ||
under this subchapter, including an engineer seeking appointment | ||
under Section 2210.255, possesses the knowledge, understanding, | ||
and professional competence to perform windstorm inspections under | ||
this chapter and to comply with other requirements of this chapter. | ||
(c) Subsection (b) applies only to a determination | ||
concerning the appointment of a qualified inspector under this | ||
chapter. The exclusive jurisdiction of the department under this | ||
section does not apply to the practice of engineering as defined by | ||
Section 1001.003, Occupations Code, or to a license issued, | ||
qualification required, determination made, order issued, judgment | ||
rendered, or other action of a board operating under Chapter 1001, | ||
Occupations Code. In the event of conflict, the authority of that | ||
board prevails with regard to the practice of engineering. | ||
SECTION 26. The heading to Section 2210.256, Insurance | ||
Code, is amended to read as follows: | ||
Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING | ||
APPOINTED INSPECTORS AND CERTAIN OTHER PERSONS. | ||
SECTION 27. Section 2210.256, Insurance Code, is amended by | ||
adding Subsection (a-1) to read as follows: | ||
(a-1) In addition to any other action authorized under this | ||
section, the commissioner ex parte may enter an emergency cease and | ||
desist order under Chapter 83 against a qualified inspector, or a | ||
person acting as a qualified inspector, if: | ||
(1) the commissioner believes that: | ||
(A) the qualified inspector has: | ||
(i) through submitting or failing to submit | ||
to the department sealed plans, designs, calculations, or other | ||
substantiating information, failed to demonstrate that a structure | ||
or a portion of a structure subject to inspection meets the | ||
requirements of this chapter and department rules; or | ||
(ii) refused to comply with requirements | ||
imposed under this chapter or department rules; or | ||
(B) the person acting as a qualified inspector is | ||
acting without appointment as a qualified inspector under Section | ||
2210.254 or 2210.255; and | ||
(2) the commissioner determines that the conduct | ||
described by Subdivision (1) is fraudulent or hazardous or creates | ||
an immediate danger to the public. | ||
SECTION 28. Subchapter F, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.260 to read as follows: | ||
Sec. 2210.260. ALTERNATIVE ELIGIBILITY FOR COVERAGE. (a) | ||
On and after January 1, 2012, a person who has an insurable interest | ||
in a residential structure may obtain insurance coverage through | ||
the association for that structure without obtaining a certificate | ||
of compliance under Section 2210.251(g) in accordance with this | ||
section and rules adopted by the commissioner. | ||
(b) The department may issue an alternative certification | ||
for a residential structure if the person who has an insurable | ||
interest in the structure demonstrates that at least one qualifying | ||
structural building component of the structure has been: | ||
(1) inspected by a department inspector or by a | ||
qualified inspector; and | ||
(2) determined to be in compliance with applicable | ||
building code standards, as set forth in the plan of operation. | ||
(c) The commissioner shall adopt reasonable and necessary | ||
rules to implement this section. The rules adopted under this | ||
section must establish which structural building components are | ||
considered qualifying structural building components for the | ||
purposes of Subsection (b), taking into consideration those items | ||
that are most probable to generate losses for the association's | ||
policyholders and the cost to upgrade those items. | ||
(d) Except as provided in Section 2210.251(f), a person who | ||
has an insurable interest in a residential structure that is | ||
insured by the association as of January 1, 2012, but for which the | ||
person has not obtained a certificate of compliance under Section | ||
2210.251(g), must obtain an alternative certification under this | ||
section before the association, on or after January 1, 2013, may | ||
renew coverage for the structure. | ||
(e) Each residential structure for which a person obtains an | ||
alternative certification under this section must comply with: | ||
(1) the requirements of this chapter, including | ||
Section 2210.258; and | ||
(2) the association's underwriting requirements, | ||
including maintaining the structure in an insurable condition and | ||
paying premiums in the manner required by the association. | ||
(f) The association shall develop and implement an | ||
actuarially sound rate, credit, or surcharge that reflects the | ||
risks presented by structures with reference to which alternative | ||
certifications have been obtained under this section. A rate, | ||
credit, or surcharge under this subsection may vary based on the | ||
number of qualifying structural building components included in a | ||
structure with reference to which an alternative certification is | ||
obtained under this section. | ||
SECTION 29. Section 2210.453, Insurance Code, is amended by | ||
adding Subsections (c) and (d) to read as follows: | ||
(c) If the association does not purchase reinsurance as | ||
authorized by this section, the board, not later than June 1 of each | ||
year, shall submit to the commissioner, the legislative oversight | ||
board established under Subchapter N, the governor, the lieutenant | ||
governor, and the speaker of the house of representatives a report | ||
containing an actuarial plan for paying losses in the event of a | ||
catastrophe with estimated damages of $2.5 billion or more. The | ||
report required by this subsection must: | ||
(1) document and denominate the association's | ||
resources available to pay claims, including cash or other highly | ||
liquid assets, assessments that the association is projected to | ||
impose, pre-event and post-event bonding capacity, and | ||
private-sector recognized risk-transfer mechanisms, including | ||
catastrophe bonds and reinsurance; | ||
(2) include an independent, third-party appraisal of | ||
the likelihood of an assessment, the maximum potential size of the | ||
assessment, and an estimate of the probability that the assessment | ||
would not be adequate to meet the association's needs; and | ||
(3) include an analysis of financing alternatives to | ||
assessments that includes the costs of borrowing and the | ||
consequences that additional purchase of reinsurance, catastrophe | ||
bonds, or other private-sector recognized risk-transfer | ||
instruments would have in reducing the size or potential of | ||
assessments. | ||
(d) A person who prepares a report required by Subsection | ||
(c) may not contract to provide any other service to the | ||
association, except for the preparation of similar reports, before | ||
the third anniversary of the date the last report prepared by the | ||
person under that subsection is submitted. | ||
SECTION 30. Subchapter J, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.455 to read as follows: | ||
Sec. 2210.455. CATASTROPHE PLAN. (a) Not later than June 1 | ||
of each year, the board shall submit to the commissioner, the | ||
legislative oversight board established under Subchapter N, the | ||
governor, the lieutenant governor, and the speaker of the house of | ||
representatives a catastrophe plan covering the period beginning on | ||
the date the plan is submitted and ending on the following May 31. | ||
(b) The catastrophe plan must: | ||
(1) describe the manner in which the association will, | ||
during the period covered by the plan, evaluate losses and process | ||
claims after the following windstorms affecting an area of maximum | ||
exposure to the association: | ||
(A) a windstorm with a four percent chance of | ||
occurring during the period covered by the plan; | ||
(B) a windstorm with a two percent chance of | ||
occurring during the period covered by the plan; and | ||
(C) a windstorm with a one percent chance of | ||
occurring during the period covered by the plan; and | ||
(2) include, if the association does not purchase | ||
reinsurance under Section 2210.453 for the period covered by the | ||
plan, an actuarial plan for paying losses in the event of a | ||
catastrophe with estimated damages of $2.5 billion or more. | ||
(c) The catastrophe plan must include a description of how | ||
losses under association policies will be paid, and how claims | ||
under association policies will be administered and adjusted, | ||
during the period covered by the plan. | ||
SECTION 31. Sections 2210.551(a) and (b), Insurance Code, | ||
are amended to read as follows: | ||
(a) This section: | ||
(1) does not apply to a person who is required to | ||
resolve a dispute under Subchapter L-1; and | ||
(2) applies only to: | ||
(A) [ |
||
(1) who is insured under this chapter or an authorized | ||
representative of the person; or | ||
(B) [ |
||
(b) A person or entity described by Subsection (a)(2) [ |
||
who is aggrieved by an act, ruling, or decision of the association | ||
may appeal to the commissioner not later than the 30th day after the | ||
date of that act, ruling, or decision. | ||
SECTION 32. The heading to Section 2210.552, Insurance | ||
Code, is amended to read as follows: | ||
Sec. 2210.552. [ |
||
VENUE. | ||
SECTION 33. Section 2210.552, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (e) to read as | ||
follows: | ||
(a) Except as provided by Sections 2210.007 and 2210.106 and | ||
Subchapter L-1, a person insured under this chapter who is | ||
aggrieved by an act, ruling, or decision of the association | ||
[ |
||
|
||
(1) bring an action against the association[ |
||
|
||
(2) appeal the act, ruling, or decision under Section | ||
2210.551. | ||
(e) A person who brings an action against the association | ||
under this section: | ||
(1) may recover only the amount of actual damages, | ||
plus court costs and reasonable and necessary attorney's fees; and | ||
(2) may not recover consequential, punitive, or | ||
exemplary damages, including damages under Section 541.152(b) of | ||
this code or Section 17.50, Business & Commerce Code. | ||
SECTION 34. Subchapter L, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.553 to read as follows: | ||
Sec. 2210.553. LIMITATIONS PERIOD. (a) Notwithstanding | ||
any other law, including Section 541.162, a person insured under | ||
this chapter who brings an action against the association in the | ||
manner described by Section 2210.552(a)(1) must bring the action | ||
not later than the second anniversary of the date of the act, | ||
ruling, or decision of the association by which the insured is | ||
aggrieved. | ||
(b) This section is a statute of repose and controls over | ||
any other applicable limitations period. | ||
SECTION 35. Chapter 2210, Insurance Code, is amended by | ||
adding Subchapter L-1 to read as follows: | ||
SUBCHAPTER L-1. CLAIMS: SETTLEMENT AND DISPUTE RESOLUTION | ||
Sec. 2210.571. DEFINITIONS. In this subchapter: | ||
(1) "Association policy" means a windstorm and hail | ||
insurance policy issued by the association. | ||
(2) "Causation dispute" means a dispute involving the | ||
extent to which damage to property insured under an association | ||
policy was caused by an event or peril covered under the policy. | ||
(3) "Claim" means a request for payment under an | ||
association policy. The term also includes any other claim against | ||
the association, or an agent or representative of the association, | ||
relating to an insured loss, under any theory or cause of action of | ||
any kind, regardless of the theory under which the claim is | ||
asserted, the cause of action brought, or the type of damages | ||
sought. | ||
(4) "Claimant" means a person who makes a claim. | ||
(5) "Coverage dispute" means a dispute that involves | ||
whether, or the extent to which, an association policy covers | ||
damages to property alleged to be insured under the policy. The | ||
term does not include a causation dispute. | ||
(6) "Damage dispute" means a dispute that involves the | ||
extent of damage to property, or the cost of repairing or replacing | ||
property, insured under an association policy. The term does not | ||
include a causation dispute or coverage dispute. | ||
Sec. 2210.572. EXCLUSIVE REMEDIES AND LIMITATION ON AWARD. | ||
(a) This subchapter provides the exclusive remedies for a claim | ||
against the association, including an agent or representative of | ||
the association. | ||
(b) The association or an agent or representative of the | ||
association may not be held liable for any amount on a claim other | ||
than: | ||
(1) amounts payable under the terms of the association | ||
policy for loss to an insured structure, loss to contents of an | ||
insured structure, and additional living expenses; and | ||
(2) any costs and fees awarded under Section 2210.578. | ||
(c) The association or an agent or representative of the | ||
association may not be held liable for damages under Chapter 17, | ||
Business & Commerce Code, or under any provision of any law | ||
providing for trebling of damages or a penalty. | ||
Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a) | ||
Subject to Section 2210.205(b), an insured must file a claim under | ||
an association policy not later than the first anniversary of the | ||
date on which the damage to property that is the basis of the claim | ||
occurs. | ||
(b) Except as provided by Subsection (d), not later than the | ||
90th day after the date the association receives a claim, the | ||
association shall: | ||
(1) notify the claimant in writing of the amount of | ||
money, if any, the association will pay the claimant for the claim; | ||
and | ||
(2) provide the claimant with: | ||
(A) a detailed description of the assumptions or | ||
estimates used by the association in determining the amount of the | ||
claim to be paid, including the estimated labor and materials | ||
required and the estimated prices for the labor and materials; or | ||
(B) if the association determines that, in whole | ||
or in part, the property damaged is not insured under the | ||
association policy, or that the property insured under the | ||
association policy was damaged by an event or peril not covered by | ||
the association policy, a detailed description of the factual and | ||
legal basis on which the association determined that a coverage or | ||
causation dispute exists concerning all or part of the claim. | ||
(c) If the association does not notify the claimant within | ||
the period required by Subsection (b), the claim is presumed to be | ||
covered by the association policy. | ||
(d) The association may extend the 90-day period described | ||
by Subsection (b) for a period not to exceed 90 days, if, before the | ||
end of the 90-day period described by Subsection (b), the | ||
association determines that special circumstances require an | ||
extension of the 90-day period described by Subsection (b) and | ||
notifies the claimant in writing of that determination and those | ||
circumstances. | ||
(e) If a claimant fails to submit information necessary for | ||
the association to determine whether to pay a claim or any portion | ||
of a claim or to deny payment of a claim or any portion of a claim, | ||
the association shall, not later than the 15th day after the date | ||
the association receives notice of the claim, request in writing | ||
any necessary information from the claimant. For good cause, the | ||
association may make a request for additional information under | ||
this subsection not later than the 30th day after the date the | ||
association receives notice of a claim. If the association makes a | ||
written request for information, the applicable period described by | ||
Subsection (b) or (d) is tolled from the date the association | ||
requests the information until the date the association receives | ||
from the claimant information responsive to the request. | ||
(f) In addition to the notice and information otherwise | ||
required under this section, the association shall notify a | ||
claimant of the time limits under Section 2210.574 to request | ||
review of the association's determination under Subsection (e). | ||
Sec. 2210.574. REQUEST FOR REVIEW OF ASSOCIATION | ||
DETERMINATION. (a) A claimant aggrieved by a determination of the | ||
association under Section 2210.573 may, not later than the 30th day | ||
after the date the claimant receives the association's | ||
determination, request in writing a review of the determination. A | ||
claimant may submit written comments, documents, records, and other | ||
information to the association with or following the request for | ||
review. | ||
(b) The association shall, on request and free of charge, | ||
provide a claimant requesting review of an association | ||
determination under Subsection (a) reasonable access to all | ||
information relevant to the determination of the association that | ||
is being reviewed. The claimant may copy the information at the | ||
claimant's own cost or may request the association to provide a copy | ||
of all or part of the information to the claimant. The association | ||
may charge a claimant the actual cost incurred by the association in | ||
providing a copy of information under this section, excluding any | ||
amount for labor involved in making any information or copy of | ||
information available to a claimant. | ||
(c) Not later than the 60th day after the date the | ||
association receives a request for review under Subsection (a), the | ||
association shall notify the claimant in writing of the outcome of | ||
the association's review. The association and the claimant may | ||
agree to extend the 60-day period described by this subsection. | ||
(d) The association's notice to the claimant of the outcome | ||
of the association's review must be in writing, contain the reasons | ||
for the outcome, and notify the claimant of the time limits to | ||
request, as applicable, appraisal under Section 2210.575 or review | ||
by an independent review panel under Section 2210.576. | ||
Sec. 2210.575. APPRAISAL IN DAMAGE DISPUTES. (a) If, after | ||
review of an association determination under Section 2210.574, a | ||
damage dispute exists with reference to a claim filed under an | ||
association policy, but a coverage or causation dispute does not | ||
exist with reference to that claim, the claimant may request | ||
appraisal of the extent of damage to the property, or the cost of | ||
repairing or replacing the property, insured under the policy. | ||
(b) A claimant must make a written request for appraisal not | ||
later than the 30th day after the date the claimant receives actual | ||
or constructive notice of the outcome of the association's review | ||
of a determination under Section 2210.574 that is the basis of the | ||
damage dispute. If a claimant, on a showing of good cause and not | ||
later than the 60th day after the expiration of the 30-day period | ||
described by this subsection, requests in writing that the 30-day | ||
period to request appraisal be extended, the commissioner may grant | ||
an additional 30-day period in which the claimant may request | ||
appraisal. | ||
(c) If a claimant requests appraisal under Subsection (b), | ||
the claimant and the association shall resolve the damage dispute | ||
through appraisal, in accordance with the terms of the association | ||
policy. The results of the appraisal: | ||
(1) are binding on the claimant and the association | ||
and are subject to appeal and judicial review only in the manner | ||
provided by Section 2210.578; and | ||
(2) become final and appealable on the 15th day after | ||
the date the appealing party receives actual or constructive notice | ||
of the results. | ||
(d) A request for appraisal, and participation in the | ||
appraisal process, under this section is a condition precedent to | ||
contesting a determination made by the association concerning the | ||
extent of damage to property, or the cost of repairing or replacing | ||
property, insured under an association policy. A claimant who does | ||
not request appraisal within the applicable period described by | ||
Subsection (b) waives the claimant's right to contest a | ||
determination of the association concerning the extent of damage to | ||
property, or the cost of repairing or replacing property, insured | ||
under an association policy. | ||
(e) If a claimant requests appraisal under this section, the | ||
claimant is responsible for paying any costs incurred or charged by | ||
an appraiser retained by and on behalf of the claimant, the | ||
association is responsible for paying any costs incurred or charged | ||
by an appraiser retained by and on behalf of the association, and | ||
the claimant and the association are responsible in equal shares | ||
for any costs incurred or charged by any other appraiser chosen by | ||
the claimant's and the association's appraisers to participate in | ||
the resolution of the dispute. | ||
(f) The commissioner by rule shall establish policies and | ||
procedures for an appraisal requested and conducted under this | ||
section. | ||
Sec. 2210.576. REVIEW BY INDEPENDENT REVIEW PANEL. (a) If, | ||
after review of an association determination under Section | ||
2210.574, a coverage or causation dispute exists with reference to | ||
a claim filed under an association policy, the claimant may seek | ||
resolution of all disputes concerning the claim, including a damage | ||
dispute, through review by an independent review panel. | ||
(b) A claimant must make a written request, mailed or served | ||
on the association or the commissioner, for review by an | ||
independent review panel not later than the 30th day after the date | ||
the claimant receives actual or constructive notice of the outcome | ||
of the association's review of a determination under Section | ||
2210.574 that is the basis of the causation, coverage, or damage | ||
dispute. If a claimant mails or serves a request for review by an | ||
independent review panel, the association shall immediately | ||
forward the request for review to the commissioner. | ||
(c) If a claimant, on a showing of good cause and not later | ||
than the 60th day after the expiration of the 30-day period | ||
described by Subsection (b), requests in writing that the 30-day | ||
period to request review by an independent review panel be | ||
extended, the commissioner may grant an additional 30-day period in | ||
which the claimant may request independent review under this | ||
section. | ||
(d) The commissioner shall appoint an independent review | ||
panel to resolve a dispute in the manner described by this section. | ||
A panel appointed under this section must consist of three members, | ||
selected by the commissioner from a roster of qualified panel | ||
members maintained and published by the commissioner. If a | ||
selected panel member cannot serve or declines to serve for any | ||
reason, the commissioner shall select a new panel member not later | ||
than the 10th day after the date the panel member notifies the | ||
commissioner of the member's inability or unwillingness to serve. | ||
The commissioner shall appoint one member of the panel to serve as | ||
the presiding officer of the panel. | ||
(e) An independent review panel appointed under Subsection | ||
(b) shall make a determination concerning, as applicable, the | ||
causation, coverage, or damage dispute submitted to the panel for | ||
review and notify the claimant and the association in writing of the | ||
panel's determination as soon as practicable, but not later than | ||
the 120th day after the date the independent review panel is | ||
appointed. If the independent review panel does not make a | ||
determination concerning a dispute before the 120th day, the | ||
commissioner may grant a reasonable extension for the panel to make | ||
a determination or dissolve the panel and appoint a new panel to | ||
conduct the review. | ||
(f) An independent review panel shall determine whether the | ||
review of a dispute involves a technical issue requiring guidance | ||
or information from the technical panel appointed under Section | ||
2210.577. If the review of a dispute involves a technical issue, the | ||
independent review panel shall request from the technical panel | ||
guidance and any information relevant to the dispute. | ||
(g) The 120-day period described by Subsection (e) is tolled | ||
from the date the independent review panel requests guidance or | ||
information from the technical panel through the date on which the | ||
independent review panel receives the requested guidance or | ||
information. | ||
(h) The determination of an independent review panel: | ||
(1) is binding on the claimant and the association and | ||
is subject to appeal and judicial review only in the manner provided | ||
by Section 2210.578; and | ||
(2) becomes final and appealable on the 15th day after | ||
the date the appealing party receives actual or constructive notice | ||
of the determination. | ||
(i) The commissioner by rule shall establish: | ||
(1) the qualifications for members of the independent | ||
review panel; | ||
(2) procedures and deadlines to be used in independent | ||
review; | ||
(3) procedures and requirements relating to the | ||
exchange of documents during the independent review process, | ||
including the content of those documents; and | ||
(4) procedures or requirements necessary for any other | ||
matter regarding the handling of requests for review. | ||
(j) The rules adopted by the commissioner under Subsection | ||
(i) must ensure that the independent review process is fair to the | ||
claimant and enables the claimant to participate in the independent | ||
review process without engaging legal counsel. | ||
Sec. 2210.577. TECHNICAL PANEL. (a) The commissioner | ||
shall appoint a technical panel of experts to advise the | ||
association concerning the extent to which damage to property | ||
insured under an association policy was incurred as a result of | ||
wind, waves, tidal surges, rising waters not caused by waves or | ||
surges, and wind-driven rain associated with a storm. The panel | ||
shall consist of a number of experts to be decided by the | ||
commissioner. The commissioner shall appoint one member of the | ||
panel to serve as the presiding officer of the panel. | ||
(b) Members of the panel must have professional expertise | ||
in, and be knowledgeable concerning, the geography and meteorology | ||
of the Texas seacoast territory, as well as the scientific basis for | ||
determining the extent to which damage to property is caused by | ||
wind, waves, tidal surges, rising waters not caused by waves or | ||
surges, and wind-driven rain associated with a storm. | ||
(c) The panel shall meet at the request of the commissioner | ||
or the call of the presiding officer of the panel. | ||
(c-1) The commissioner shall adopt rules regarding notice | ||
of panel meetings and the transparency of deliberations of the | ||
technical panel. | ||
(d) The panel shall investigate, collect, and evaluate the | ||
information necessary to provide recommendations under Subsection | ||
(e) and to provide guidance or other information requested by an | ||
independent review panel under Section 2210.576. | ||
(e) At the request of the commissioner, the technical panel | ||
shall recommend to the commissioner methods for determining the | ||
extent to which damage to property insured under an association | ||
policy resulted from wind, waves, tidal surges, rising waters not | ||
caused by waves or surges, and wind-driven rain associated with a | ||
storm for geographic areas or regions designated by the | ||
commissioner. | ||
(f) After consideration of the recommendations made by the | ||
panel under Subsection (e), the commissioner shall publish | ||
guidelines that the association will use to settle claims. | ||
(g) A member of the technical panel is not individually | ||
liable for an act or failure to act in the performance of the | ||
official duties in connection with the individual's work on the | ||
panel. | ||
Sec. 2210.578. JUDICIAL REVIEW. (a) A claimant who has | ||
exhausted all administrative remedies under this subchapter and who | ||
is aggrieved by an appraisal under Section 2210.575 or the | ||
determination of an independent review panel under Section 2210.576 | ||
is entitled to judicial review. A claimant may not seek judicial | ||
review before exhausting all administrative remedies under this | ||
subchapter. | ||
(b) A claimant may seek judicial review of an appraisal | ||
under Section 2210.575 or the determination of an independent | ||
review panel under Section 2210.576 in the manner provided for the | ||
appeal of contested cases under Subchapter G, Chapter 2001, | ||
Government Code. The standard for judicial review under this | ||
section is the substantial evidence rule. | ||
(c) In a proceeding for judicial review under this section, | ||
the court may award only the amount described by Section | ||
2210.572(b), plus court costs and reasonable and necessary | ||
attorney's fees. | ||
(d) Notwithstanding Subsection (b), a claimant aggrieved by | ||
an appraisal process under Section 2210.575 or the determination of | ||
an independent review panel under Section 2210.576 may appeal to a | ||
district court in the county in which the loss that, as applicable, | ||
is the subject of the appraisal or independent review occurred, for | ||
a determination concerning: | ||
(1) the amount of the loss; | ||
(2) whether the loss is covered by or insured under the | ||
association policy; | ||
(3) whether the loss was caused by a hazard or risk | ||
insured under the policy; and | ||
(4) the amount of court costs and reasonable and | ||
necessary attorney's fees. | ||
(e) An appeal to a district court under Subsection (d) shall | ||
be trial de novo. The only questions that may be presented and | ||
determined at the trial de novo are: | ||
(1) the amount of the loss; | ||
(2) whether the loss is covered by or insured under the | ||
association policy; | ||
(3) whether the loss was caused by a hazard or risk | ||
insured under the policy; and | ||
(4) the amount of court costs and reasonable and | ||
necessary attorney's fees. | ||
(f) The only evidence that may be admitted in a trial de novo | ||
under Subsection (d) is evidence that was admitted or presented in | ||
the appraisal process under Section 2210.575 or the independent | ||
review process under Section 2210.576. The Texas Rules of Evidence | ||
govern whether evidence presented during the appraisal process | ||
under Section 2210.575 or the independent review process under | ||
Section 2210.576 is admissible in a trial de novo under Subsection | ||
(d). | ||
(g) A petition for trial de novo under Subsection (d) must | ||
be filed with a district court in the county in which the loss that, | ||
as applicable, is the subject of the appraisal or independent | ||
review occurred, not later than the 30th day after the date on which | ||
the determination being appealed is final and appealable under this | ||
subchapter. | ||
(h) The appeal seeking a trial de novo under Subsection (d) | ||
shall be presided over by a judge appointed by the judicial panel on | ||
multidistrict litigation designated under Section 74.161, | ||
Government Code. A judge appointed under this section must be a | ||
resident of a first tier coastal county or a second tier coastal | ||
county. | ||
(i) The Texas Supreme Court shall adopt rules governing the | ||
proceedings of a trial de novo under Subsection (d). | ||
Sec. 2210.579. CONSTRUCTION WITH OTHER LAW. To the extent | ||
of any conflict between a provision of this subchapter and any other | ||
law, the provision of this subchapter prevails. | ||
Sec. 2210.580. MEDIATION; CERTAIN DEADLINES TOLLED. A | ||
deadline imposed on a claimant under Section 2210.574, 2210.575, or | ||
2210.576 is tolled for a single period not to exceed 45 consecutive | ||
days during which the claimant is actively seeking resolution of | ||
the causation dispute, coverage dispute, or damage dispute through | ||
a mediation administered by the department. | ||
SECTION 36. Section 2210.602(2), Insurance Code, is amended | ||
to read as follows: | ||
(2) "Class 1 public securities" means public | ||
securities authorized to be issued before, on, or after an | ||
occurrence or series of occurrences by Section 2210.072, including | ||
a commercial paper program authorized before the occurrence of a | ||
catastrophic event but in which [ |
||
commercial paper is issued under the program until after the | ||
catastrophic event. | ||
SECTION 37. Section 2210.604, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (a-1) 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, Class 2, or Class 3 public securities. The 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. | ||
(a-1) The association and the commissioner must approve | ||
each tranche of commercial paper issued under a commercial paper | ||
program established under this chapter. | ||
SECTION 38. Section 2210.609(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The board 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 and assess a | ||
premium surcharge if necessary. | ||
SECTION 39. 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 Section 2210.613 that exceeds the amount of the | ||
public security obligations and public security administrative | ||
expenses payable in that calendar year and interest earned on the | ||
public security obligation fund may, 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 that would 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 40. Section 2210.612(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The association may enter financing arrangements as | ||
described by Section 2210.072(d) as necessary to obtain public | ||
securities issued under that section. Nothing in this subsection | ||
prevents [ |
||
more programs for the issuance of commercial paper before the date | ||
of an occurrence that results in insured losses under Section | ||
2210.072(a) but in which [ |
||
is issued under a commercial paper program until after such an | ||
occurrence. | ||
SECTION 41. 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 as provided by this section. Thirty percent of the | ||
cost of the public securities shall be paid through member | ||
assessments as provided by this section. The association shall | ||
notify each member of the association 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. A member of the | ||
association: | ||
(1) may not recoup an assessment paid under this | ||
subsection through a premium surcharge or tax credit; and | ||
(2) notwithstanding Section 2210.073(a), may elect to | ||
pay an assessment under this subsection in a lump sum. | ||
(b) Seventy percent of the cost of the public securities | ||
shall be paid by a [ |
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under this section in an amount set by the commissioner. On | ||
approval by the commissioner, each insurer, the association, and | ||
the Texas FAIR Plan Association shall assess, as provided by this | ||
section, a premium surcharge to each policyholder of a policy that | ||
is in effect on or after the 180th day after the date the | ||
commissioner issues notice of the approval of the public securities | ||
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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 Subsection (b) shall be | ||
assessed on all policyholders of policies that cover [ |
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catastrophe area, including automobiles principally garaged in a | ||
catastrophe area. The premium surcharge shall be assessed on [ |
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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. A premium surcharge under Subsection (b) applies | ||
to: | ||
(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 passenger automobile liability | ||
and physical damage insurance; and | ||
(2) the property insurance portion of a commercial | ||
multiple peril insurance [ |
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(d) A premium surcharge under Subsection (b) is a separate | ||
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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 42. Sections 2210.6135(a) and (c), Insurance Code, | ||
are amended to read as follows: | ||
(a) The association shall pay Class 3 public securities | ||
issued under Section 2210.074 as provided by this section through | ||
member assessments. The association, for the payment of the | ||
losses, shall assess the members of the association an amount not to | ||
exceed $500 million per catastrophe year [ |
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association of the amount of the member's assessment under this | ||
section. | ||
(c) A member of the association: | ||
(1) may not recoup an assessment paid under this | ||
section through a premium surcharge or tax credit; and | ||
(2) notwithstanding Section 2210.074(a), may elect to | ||
pay an assessment under this section in a lump sum. | ||
SECTION 43. Section 2210.551(e), Insurance Code, is | ||
repealed. | ||
SECTION 44. (a) A legislative interim study committee | ||
shall conduct a study of alternative ways to provide insurance to | ||
the seacoast territory of this state through a quasi-governmental | ||
entity. | ||
(b) The committee is composed of nine members appointed as | ||
follows: | ||
(1) three members of the senate appointed by the | ||
lieutenant governor; | ||
(2) three members of the house of representatives | ||
appointed by the speaker of the house of representatives; and | ||
(3) three public members with a background in | ||
actuarial science or insurance appointed as follows: | ||
(A) one by the governor; | ||
(B) one by the lieutenant governor; and | ||
(C) one by the speaker of the house of | ||
representatives. | ||
(c) The speaker of the house of representatives and the | ||
lieutenant governor shall jointly designate a chair or, | ||
alternatively, designate two co-chairs, from among the committee | ||
membership. | ||
(d) The committee shall: | ||
(1) examine alternative ways to provide insurance to | ||
the seacoast territory of this state through a quasi-governmental | ||
entity; | ||
(2) recommend: | ||
(A) the appropriate scope of authority and | ||
responsibility for the entity to provide insurance to the seacoast | ||
territory of this state; | ||
(B) an organizational structure to exercise | ||
authority and responsibility over the provision of insurance to the | ||
seacoast territory of this state; | ||
(C) a timetable for implementation; and | ||
(D) specific amendments to state laws and rules | ||
that are necessary to implement the committee's recommendations | ||
under this subdivision; and | ||
(3) estimate funding requirements to implement the | ||
recommendations. | ||
(e) The committee may adopt rules necessary to conduct | ||
business under and implement this section. | ||
(f) Except as specifically provided by this section, the | ||
committee may operate in the same manner as a joint committee of the | ||
82nd Legislature. | ||
(g) Not later than December 1, 2012, the committee shall | ||
report to the governor and the legislature the recommendations made | ||
under this section. | ||
SECTION 45. (a) The name of the Texas Windstorm Insurance | ||
Association is changed to the Texas Coastal Insurance Plan | ||
Association. | ||
(b) A reference in law to the Texas Windstorm Insurance | ||
Association or the Texas Windstorm Insurance Association Act means | ||
the Texas Coastal Insurance Plan Association or the Texas Coastal | ||
Insurance Plan Act, respectively. | ||
SECTION 46. (a) The adjuster advisory board established | ||
under this section is composed of the following nine members | ||
appointed by the commissioner: | ||
(1) two public insurance adjusters; | ||
(2) two members who represent the general public; | ||
(3) two independent adjusters; | ||
(4) one adjuster who represents a domestic insurer | ||
authorized to engage in business in this state; | ||
(5) one adjuster who represents a foreign insurer | ||
authorized to engage in business in this state; and | ||
(6) one representative of the Independent Insurance | ||
Agents of Texas. | ||
(b) A member who represents the general public may not be: | ||
(1) an officer, director, or employee of: | ||
(A) an adjuster or adjusting company; | ||
(B) an insurance agent or agency; | ||
(C) an insurance broker; | ||
(D) an insurer; or | ||
(E) any other business entity regulated by the | ||
department; | ||
(2) a person required to register as a lobbyist under | ||
Chapter 305, Government Code; or | ||
(3) a person related within the second degree of | ||
affinity or consanguinity to a person described by Subdivision (1) | ||
or (2). | ||
(c) The advisory board shall make recommendations to the | ||
commissioner regarding: | ||
(1) matters related to the licensing, testing, and | ||
continuing education of licensed adjusters; | ||
(2) matters related to claims handling, catastrophic | ||
loss preparedness, ethical guidelines, and other professionally | ||
relevant issues; and | ||
(3) any other matter the commissioner submits to the | ||
advisory board for a recommendation. | ||
(d) A member of the advisory board serves without | ||
compensation. If authorized by the commissioner, a member is | ||
entitled to reimbursement for reasonable expenses incurred in | ||
attending meetings of the advisory board. | ||
(e) The advisory board is subject to Chapter 2110, | ||
Government Code. | ||
SECTION 47. This Act applies only to a Texas windstorm and | ||
hail insurance policy, and a claim or dispute arising under a Texas | ||
windstorm and hail insurance policy, delivered, issued for | ||
delivery, or renewed by the Texas Windstorm Insurance Association | ||
on or after the 30th day after the effective date of this Act. A | ||
Texas windstorm and hail insurance policy, and a claim or dispute | ||
arising under a Texas windstorm and hail insurance policy, | ||
delivered, issued for delivery, or renewed by the Texas Windstorm | ||
Insurance Association before the 30th day after the effective date | ||
of this Act, are governed by the law in effect immediately before | ||
the effective date of this Act, and the former law is continued in | ||
effect for that purpose. | ||
SECTION 48. The Texas Windstorm Insurance Association shall | ||
amend the association's plan of operation to conform to the changes | ||
in law made by this Act not later than January 1, 2012. | ||
SECTION 49. If any provision of this Act or its application | ||
to any person or circumstance is held invalid, the invalidity does | ||
not affect other provisions or applications of this Act that can be | ||
given effect without the invalid provision or application, and to | ||
this end the provisions of this Act are severable. | ||
SECTION 50. 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, 2011. |