Bill Text: TX SB615 | 2019-2020 | 86th Legislature | Enrolled

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Bill Title: Relating to the operations and functions of the Texas Windstorm Insurance Association and the sunset review date for and programs administered by the association; authorizing a fee.

Sponsorship: Moderate Partisan Bill (Republican 5-1)

Status: (Passed) 2019-06-07 - Effective on 9/1/19 [SB615 Detail]

Download: Texas-2019-SB615-Enrolled.html

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S.B. No. 615

AN ACT
relating to the operations and functions of the Texas Windstorm
Insurance Association and the sunset review date for and programs
administered by the association; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2210.002(b), Insurance Code, is amended
to read as follows:
(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 2031 [2019] are reviewed. The
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, 2031 [2019].
SECTION 2. Section 2210.008, Insurance Code, is amended by
adding Subsections (d), (e), and (f) to read as follows:
(d) The association may propose a rule for adoption by the
commissioner. Except as provided by this section, the
association's proposal is governed by Subchapter B, Chapter 2001,
Government Code. The association is an interested person under
that subchapter for purposes of a proceeding initiated under this
section.
(e) Notwithstanding Section 2001.021(c), Government Code,
not later than the 30th day after the date the commissioner receives
a proposed rule from the association, the commissioner shall
initiate a rulemaking proceeding under Subchapter B, Chapter 2001,
Government Code.
(f) The association may request a public hearing under
Section 2001.029, Government Code, in connection with a rule
proposed under this section.
SECTION 3. Section 2210.102, Insurance Code, is amended by
adding Subsection (g) to read as follows:
(g) Members appointed to the board of directors under
Subsections (c) and (d), other than the member appointed under
Subsection (c-1), must represent the general public in the regions
described by those subsections. A person may not be appointed to
represent the general public under Subsection (c) or (d) if the
person or the person's spouse:
(1) is employed by or participates in the management
of a business entity or other organization:
(A) operating in the property and casualty
insurance industry in this state;
(B) receiving money from the association, other
than insurance claim payments; or
(C) receiving money from association
policyholders with respect to the policyholders' claims;
(2) owns or controls, directly or indirectly, more
than a 10 percent interest in a business entity or other
organization:
(A) operating in the property and casualty
insurance industry in this state;
(B) receiving money from the association, other
than insurance claim payments; or
(C) receiving money from association
policyholders with respect to the policyholders' claims; or
(3) uses or receives a substantial amount of tangible
goods, services, or money from the association, other than:
(A) insurance claim payments; or
(B) compensation or reimbursement authorized by
law for the board members' membership, attendance, or expenses.
SECTION 4. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.1031 to read as follows:
Sec. 2210.1031. TRAINING. (a) A person who is appointed
to and qualifies for office as a member of the board of directors
may not vote, deliberate, or be counted as a member in attendance at
a meeting of the board of directors until the person completes a
training program that complies with this section.
(b) The training program must provide the person with
information regarding:
(1) the law governing the operation of the
association;
(2) the programs, functions, rules, and budget of the
association;
(3) the scope of and limitations on the rulemaking
authority of the board of directors;
(4) the results of the most recent formal audit of the
association;
(5) the requirements of:
(A) laws relating to open meetings, public
information, administrative procedure, and conflict of interest
disclosure; and
(B) other laws applicable to the board of
directors in performing the board's duties; and
(6) any applicable ethics policies adopted by the
association or the Texas Ethics Commission.
(c) The general manager of the association shall create a
training manual that includes the information required by
Subsection (b). The general manager shall distribute a copy of the
training manual annually to each member of the board of directors.
Each member of the board of directors shall sign and submit to the
general manager a statement acknowledging that the member received
and has reviewed the training manual.
SECTION 5. Subchapter C, Chapter 2210, Insurance Code, is
amended by adding Section 2210.109 to read as follows:
Sec. 2210.109. DISCLOSURE OF CONFLICTS. (a) A member of
the board of directors, or a member of a subcommittee of the board
of directors that relates to underwriting and actuarial matters,
shall disclose any potential conflict of interest of the member
known by the member with respect to a matter for discussion or vote
by the board or subcommittee, as applicable, before the discussion
or vote. A potential conflict of interest is an interest that may
reasonably be expected to diminish the member's independent
judgment with respect to the matter for discussion or vote.
Potential conflicts of interest required to be disclosed under this
section include:
(1) a financial or personal interest in an entity that
may financially benefit from the outcome of the discussion or vote;
and
(2) holding an insurance policy issued by the
association that may be affected by the discussion or vote.
(b) A disclosure under this section must be made available
to the public. A board or subcommittee member satisfies this
requirement if:
(1) with respect to an open meeting or meeting
broadcast live on the association's Internet website, the member
publicly discloses the conflict of interest in the meeting or
during the broadcast; or
(2) with respect to a meeting that is not an open
meeting or broadcast live on the association's Internet website,
the member discloses the conflict of interest in the agenda of the
meeting and makes the agenda publicly available on the
association's Internet website before the meeting.
SECTION 6. Section 2210.202, Insurance Code, is amended to
read as follows:
Sec. 2210.202. APPLICATION FOR COVERAGE; DECLINATION
REQUIREMENT. (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 before [with an application for]
renewal of an association policy.
(b) A property and casualty agent must submit an application
for initial insurance coverage on behalf of the applicant on forms
prescribed by the association. [The association shall develop a
simplified renewal process that allows for the acceptance of an
application for renewal coverage, and payment of premiums, from a
property and casualty agent or a person insured under this
chapter.] An application for initial [or renewal] coverage must
contain:
(1) a statement as to whether the applicant has
submitted or will submit the required premium payment [in full]
from personal funds or, if not, to whom a balance is or will be due;
and
(2) a statement that the agent acting on 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).
SECTION 7. Sections 2210.203(a) and (c), Insurance Code,
are amended 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 in
full or in part as authorized under Section 2210.2032, shall direct
the issuance of an insurance policy as provided by the plan of
operation.
(c) A policy may be renewed annually [on application for
renewal] as long as the property continues to be insurable
property.
SECTION 8. Subchapter E, Chapter 2210, Insurance Code, is
amended by adding Sections 2210.2031 and 2210.2032 to read as
follows:
Sec. 2210.2031. AUTOMATIC RENEWAL. (a) The association
shall establish a process for automatic renewal of a policy in
accordance with this section.
(b) The process established under Subsection (a) must:
(1) provide for the association to verify:
(A) the declination required by Section
2210.202;
(B) flood insurance coverage required by Section
2210.203; and
(C) any other information related to
insurability of a property, including changes to the condition or
value of the property that would affect the availability of
coverage or premium cost to insure the property; and
(2) provide an opportunity for the policyholder to
elect to cancel the policy before the policy automatically renews.
Sec. 2210.2032. PREMIUM PAYMENT METHODS. (a) The
association shall accept payment of premium by credit card. The
association may impose a fee on a policyholder for the use of a
credit card to pay premium. The fee may not exceed the amount
necessary to recoup the cost incurred by the association in
connection with the policyholder's use of a credit card.
(b) The association shall provide to policyholders the
option to pay premium in installments. A policyholder that pays
premium in accordance with an installment payment plan established
by the association and remains current on the payments satisfies
the obligation for payment of premium under this chapter.
SECTION 9. Section 2210.205(a), Insurance Code, is amended
to read as follows:
(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 2210.574 and alternative dispute resolution under
Section 2210.575;
(B) the binding effect of appraisal under Section
2210.574; and
(C) the necessity of complying with the
requirements of Subchapter L-1 to seek relief, including judicial
relief; and
(3) contain a conspicuous notice concerning the
availability of supplemental payments under the policy, including:
(A) a description of the process for requesting a
supplemental payment; and
(B) notice of applicable deadlines related to
supplemental payments.
SECTION 10. Sections 2210.207(c) and (d), Insurance Code,
are amended to read as follows:
(c) If, on the effective date of an association policy [at
the time of loss], the total amount of insurance applicable to a
dwelling is equal to 80 percent or more of the full replacement cost
of the dwelling or equal to the maximum amount of insurance
otherwise available through the association, coverage applicable
to the dwelling under the policy is extended to include the full
cost of repair or replacement, without a deduction for
depreciation.
(d) If, on the effective date of an association policy [at
the time of loss], the total amount of insurance applicable to a
dwelling is equal to less than 80 percent of the full replacement
cost of the dwelling and less than the maximum amount of insurance
available through the association, liability for loss under the
policy may not exceed the replacement cost of the part of the
dwelling that is damaged or destroyed, less depreciation.
SECTION 11. Section 2210.251(g), Insurance Code, is amended
to read as follows:
(g) A certificate of compliance issued by the department [or
association] under Section 2210.2515 demonstrates compliance with
the applicable building code under the plan of operation. The
certificate is evidence of insurability of the structure by the
association.
SECTION 12. Section 2210.2515, Insurance Code, is amended
by amending Subsection (c) and adding Subsections (c-1), (c-2), and
(i) to read as follows:
(c) A person may apply to the department [association] on a
form prescribed by the department for a certificate of compliance
for a completed improvement. The department [association] shall
issue a certificate of compliance for a completed improvement if a
professional engineer licensed by the Texas Board of Professional
Engineers:
(1) has designed the improvement, has affixed the
engineer's seal on the design, and submits to the department
[association] on a form prescribed by the department an affirmation
that the design complies [of compliance] with the applicable
building code under the plan of operation and that the improvement
was constructed in accordance with the design; or
(2) completes and submits to the department a sealed
post-construction evaluation report that:
(A) confirms the improvement's compliance with
the applicable building code under the plan of operation; and
(B) includes documentation supporting the
engineer's post-construction evaluation report on a form
prescribed by the department on which the engineer has affixed the
engineer's seal.
(c-1) The department may deny an application for a
certificate of compliance under Subsection (c) if the evaluation
report is not fully documented as required under Subsection (c).
(c-2) A form prescribed by the department under Subsection
(c) may not require a professional engineer to assume liability for
the construction of an improvement.
(i) The department is authorized to submit a formal
complaint under Chapter 1001, Occupations Code, to the Texas Board
of Professional Engineers related to the engineering work of a
professional engineer as reflected in materials submitted by an
engineer under Subsection (c).
SECTION 13. Subchapter H, Chapter 2210, Insurance Code, is
amended by adding Section 2210.3511 to read as follows:
Sec. 2210.3511. PUBLIC ACCESS TO RATE ADEQUACY ANALYSIS.
(a) The association shall make the association's rate adequacy
analysis publicly available on its Internet website for at least 14
days before the date the board of directors votes on the submission
of a proposed rate filing based on the analysis to the department.
The rate adequacy analysis must include:
(1) all user selected hurricane model input
assumptions; and
(2) output data:
(A) with the same content and in the same format
that is customarily provided to:
(i) the association by hurricane modelers;
and
(ii) the department by the association; and
(B) in a searchable electronic format that allows
for efficient analysis and is sufficiently detailed to allow the
historical experience in this state to be compared to results
produced by the model.
(b) The association shall accept public comment with
respect to the association's rate adequacy analysis at a public
meeting of the board of directors before the board of directors
votes on the submission of a proposed rate filing to the department.
SECTION 14. Section 2210.573, Insurance Code, is amended by
adding Subsection (f-1) to read as follows:
(f-1) In a notice described by Subsection (d)(1) or (2), the
association must include additional information concerning the
availability of supplemental payments under the policy, including:
(1) a description of the process for requesting a
supplemental payment; and
(2) applicable deadlines related to supplemental
payments.
SECTION 15. Subchapter L-1, Chapter 2210, Insurance Code,
is amended by adding Section 2210.5732 to read as follows:
Sec. 2210.5732. SUPPLEMENTAL PAYMENTS. (a) The
association is authorized to provide for supplemental payments
under a windstorm and hail insurance policy issued by the
association.
(b) The commissioner shall adopt rules clarifying the
deadlines related to supplemental payments. The commissioner shall
solicit and consider comments from the association, association
members, and policyholders in adopting rules under this section.
(c) The rules adopted under this section must ensure that a
request for supplemental payment will not impair a policyholder's
right to appraisal under Section 2210.574.
SECTION 16. Section 2210.705, Insurance Code, is amended to
read as follows:
Sec. 2210.705. TRANSFER OF POLICIES. The commissioner
shall by rule establish the procedure for the transfer of reinsured
policies. The rules may not contain deadlines that require a
property and casualty insurer or agent or a policyholder to take
action or make a decision on or after June 1 or before December 1 in
any year. The rule must provide that a reinsurance agreement
include:
(1) [an offer commencement date of December 1;
[(2)] the opportunity for the policyholder to opt out
of the reinsurance agreement not more than 60 days after the
policyholder receives notice of the reinsurance agreement [on or
before May 31];
(2) [(3)] a transfer of the earned premium on a
reinsured policy to a trust account to be held until the expiration
of the opt-out period described by Subdivision (1) [(2)] when the
earned premium for the final reinsured policy will be transferred
to the reinsurer;
(3) [(4)] a period of not less than 60 days for the
agent of record to accept an appointment or other written agreement
with the reinsurer; and
(4) [(5)] any other requirements as the commissioner
determines necessary for the protection of policyholders and the
policyholders' agents.
SECTION 17. Section 2210.107(b), Insurance Code, is
repealed.
SECTION 18. (a) Not later than January 1, 2020, the Texas
Windstorm Insurance Association shall provide for a training
program for members of the association's board of directors as
required by Section 2210.1031, Insurance Code, as added by this
Act.
(b) A member of the board of directors may not vote,
deliberate, or be counted as a member in attendance at a meeting of
the board held on or after January 1, 2020, until the member
completes the training required by Section 2210.1031, Insurance
Code, as added by this Act.
(c) Not later than March 31, 2020, the commissioner of
insurance shall adopt or amend rules as required by Section
2210.705, Insurance Code, as amended by this Act.
(d) Not later than June 1, 2020, the commissioner of
insurance shall adopt or amend rules as required by Section
2210.5732, Insurance Code, as added by this Act.
SECTION 19. (a) Except as provided by Section 18 of this
Act, Sections 2210.102(g) and 2210.1031, Insurance Code, as added
by this Act, do not affect the entitlement of a member serving on
the board of directors of the Texas Windstorm Insurance Association
immediately before the effective date of this Act to continue to
serve on the board for the remainder of the term to which the member
was appointed.
(b) The Texas Windstorm Insurance Association is not
required to comply with Section 2210.2031, Insurance Code, as added
by this Act, before January 1, 2020.
(c) The Texas Windstorm Insurance Association is not
required to comply with Section 2210.2032, Insurance Code, as added
by this Act, before January 1, 2021.
(d) Section 2210.205(a), Insurance Code, as amended by this
Act, applies only to an association policy that is delivered,
issued for delivery, or renewed on or after July 1, 2020. An
association policy delivered, issued for delivery, or renewed
before July 1, 2020, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
(e) Section 2210.207, Insurance Code, as amended by this
Act, applies only to an insurance policy that is delivered, issued
for delivery, or renewed on or after January 1, 2020. A policy
delivered, issued for delivery, or renewed before January 1, 2020,
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
(f) Section 2210.251(g), Insurance Code, as amended by this
Act, does not affect the status of a certificate of compliance
issued by the Texas Windstorm Insurance Association before June 1,
2020, or after June 1, 2020, in response to an application made
before that date for purposes of establishing evidence of
insurability.
(g) Section 2210.2515, Insurance Code, as amended by this
Act, applies only to an application for a certificate of compliance
made on or after June 1, 2020. An application for a certificate of
compliance made before June 1, 2020, is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
(h) Section 2210.3511, Insurance Code, as added by this Act,
applies only to a rate adequacy analysis made in relation to a rate
filing made on or after the effective date of this Act.
(i) Section 2210.573(f-1), Insurance Code, as added by this
Act, applies only to a notice with respect to a claim submitted
under an association policy that is delivered, issued for delivery,
or renewed on or after July 1, 2020. A notice with respect to a
claim submitted under an association policy delivered, issued for
delivery, or renewed before July 1, 2020, is governed by the law as
it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 20. This Act takes effect September 1, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 615 passed the Senate on
April 4, 2019, by the following vote: Yeas 30, Nays 1; and that
the Senate concurred in House amendment on May 21, 2019, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 615 passed the House, with
amendment, on May 17, 2019, by the following vote: Yeas 140,
Nays 2, three present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor