Bill Text: TX HB769 | 2021-2022 | 87th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the administration of the Texas Windstorm Insurance Association.

Spectrum: Slight Partisan Bill (Republican 5-3)

Status: (Passed) 2021-06-15 - Effective on 9/1/21 [HB769 Detail]

Download: Texas-2021-HB769-Introduced.html
  87R2261 SMT-D
 
  By: Middleton H.B. No. 769
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the administration of the Texas Windstorm Insurance
  Association.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter B, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.063 to read as follows:
         Sec. 2210.063.  LOCATION OF ASSOCIATION HEADQUARTERS. The
  headquarters of the association must be located in a first tier
  coastal county or second tier coastal county.
         SECTION 2.  Subchapter H, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.3512 to read as follows:
         Sec. 2210.3512.  REQUIREMENT FOR VOTE ON RATE FILING. The
  board of directors may not vote on a proposed rate filing if there
  is a vacancy on the board.
         SECTION 3.  Section 2210.452(c), Insurance Code, is amended
  to read as follows:
         (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 or pay public security
  obligations, giving priority to the obligations with the highest
  interest rates [, procure reinsurance, or use alternative risk
  financing mechanisms, or to make payments to the trust fund and
  procure reinsurance or use alternative risk financing mechanisms].
         SECTION 4.  Subchapter J, Chapter 2210, Insurance Code, is
  amended by adding Section 2210.4522 to read as follows:
         Sec. 2210.4522.  REINSURANCE REQUIRED. (a) Notwithstanding
  any other provision of this chapter, a member insurer shall provide
  to the association reinsurance in lieu of reinsurance purchased
  under Section 2210.453 at no cost to the association. The
  proportion of the losses that exceed the attachment point for the
  provided reinsurance is calculated in the manner used to determine
  each insurer's participation in the association for the year under
  Section 2210.052.
         (b)  Except as provided by Subsection (c), a member insurer
  may purchase reinsurance to cover the proportion of losses for
  which the insurer is responsible under Subsection (a).
         (c)  A member insurer may not purchase reinsurance under this
  section from an insurer that has prepared the risk model on which
  the association relies in determining the probable maximum loss
  applicable for the period covered by the reinsurance.
         (d)  A member insurer may not recoup losses incurred from
  providing the reinsurance required in Subsection (a) through a
  premium surcharge.
         SECTION 5.  Section 2210.453, Insurance Code, is amended by
  adding Subsection (b-1) to read as follows:
         (b-1)  In determining the probable maximum loss under
  Subsection (b), the association may not consider the cost of
  providing loss adjustments.
         SECTION 6.  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, 2210.613, and 2210.6131 that
  exceeds the amount of the public security obligations and public
  security administrative expenses payable in that calendar year and
  interest earned on the funds 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; or
               (2)  used to redeem or purchase outstanding public
  securities [; or
               [(3)  deposited in the catastrophe reserve trust fund].
         SECTION 7.  Sections 2210.453(d) and (e), Insurance Code,
  are repealed.
         SECTION 8.  Section 2210.063, Insurance Code, as added by
  this Act, applies to the Texas Windstorm Insurance Association
  beginning on January 1, 2022.
         SECTION 9.  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 the 60th day after the
  effective date of this Act.
         SECTION 10.  This Act takes effect September 1, 2021.
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