TLC: Insurance Code Proposed Chapters

79C36(3) KLA

CHAPTER 2210. TEXAS WINDSTORM INSURANCE ASSOCIATION

SUBCHAPTER A. GENERAL PROVISIONS

Revised Law

Sec. 2210.001. PURPOSE. An adequate market for windstorm, hail, and fire insurance is necessary to the economic welfare of this state, and without that insurance, the orderly growth and development of this state would be severely impeded. This chapter provides a method by which adequate windstorm, hail, and fire insurance may be obtained in certain designated portions of this state. (V.T.I.C. Art. 21.49, Sec. 1.)

Source Law

Art. 21.49

Sec. 1. It is hereby declared by the Legislature that an adequate market for windstorm, hail and fire insurance is necessary to the economic welfare of the State of Texas and that without such insurance the orderly growth and development of the State of Texas would be severely impeded. It is therefore the purpose of this Act to provide a method whereby adequate windstorm, hail and fire insurance may be obtained in certain designated portions of the State of Texas.

Revised Law

Sec. 2210.002. SHORT TITLE. This chapter may be cited as the Texas Windstorm Insurance Association Act. (V.T.I.C. Art. 21.49, Sec. 2.)

Source Law

Sec. 2. This Act shall be known as the "Texas Windstorm Insurance Association Act."

Revised Law

Sec. 2210.003. GENERAL DEFINITIONS. In this chapter, unless the context clearly indicates otherwise:

(1) "Association" means the Texas Windstorm Insurance Association.

(2) "Board of directors" means the board of directors of the association.

(3) "Catastrophe area" means a municipality, a part of a municipality, a county, or a part of a county designated by the commissioner under Section 2210.005.

(4) "First tier coastal county" means:

(A) Aransas County;

(B) Brazoria County;

(D) Cameron County;

(E) Chambers County;

(F) Galveston County;

(G) Jefferson County;

(H) Kenedy County;

(I) Kleberg County;

(J) Matagorda County;

(K) Nueces County;

(L) Refugio County;

(M) San Patricio County; or

(N) Willacy County.

(5) "Inadequate fire insurance area" means a municipality or county designated by the commissioner under Section 2210.005 that constitutes, or is located in, a catastrophe area.

(6) "Insurance" means Texas fire and explosion insurance and Texas windstorm and hail insurance.

(7) "Net direct premium" means gross direct written premium less return premium on each canceled contract, regardless of assumed or ceded reinsurance, that is written on property in this state, as defined by the board of directors.

(8) "New building code" means a building standard, specification, or guideline adopted by the commissioner after May 1, 1997, that must be satisfied before new residential construction qualifies for a certificate of compliance that constitutes evidence of insurability of the structure by the association.

(9) "Plan of operation" means the plan adopted under this chapter for the operation of the association.

(10) "Seacoast territory" means the territory of this state composed of the first tier coastal counties and the second tier coastal counties.

(11) "Second tier coastal county" means:

(A) Bee County;

(B) Brooks County;

(D) Goliad County;

(E) Hardin County;

(F) Harris County;

(G) Hidalgo County;

(H) Jackson County;

(I) Jim Wells County;

(J) Liberty County;

(K) Live Oak County;

(L) Orange County;

(M) Victoria County; or

(N) Wharton County.

(12) "Texas fire and explosion insurance" means insurance against direct loss to insurable property incurred as a result of fire or explosion, as those terms are defined and limited in policies and forms approved by the department.

(13) "Texas windstorm and hail insurance" means deductible insurance against:

(A) direct loss to insurable property incurred as a result of windstorm or hail, as those terms are defined and limited in policies and forms approved by the department; and

(B) indirect losses resulting from the direct loss. (V.T.I.C. Art. 21.49, Secs. 3(b), (c) (part), (d), (e), (g), (h) (part), (i) (part), (j), (l), (m), (n), (o); New.)

Source Law

Sec. 3. In this Act, unless the context clearly dictates to the contrary:

(b) "Association" means the Texas Windstorm Insurance Association as established pursuant to the provisions of this Act.

(d) "Texas Windstorm and Hail Insurance" means deductible insurance against direct loss, and indirect losses resulting from a direct loss, to insurable property as a result of windstorm or hail, as such terms shall be defined and limited in policies and forms approved by the State Board of Insurance.

(e) "Texas Fire and Explosion Insurance" means insurance against direct loss to insurable property as a result of fire and explosion as such terms shall be defined and limited in policies and forms approved by the State Board of Insurance.

(g) "Net Direct Premiums" means gross direct written premiums less return premiums upon canceled contracts (irrespective of reinsurance assumed or ceded) written on property in this State as defined by the Board of Directors of the Association.

(h) "Catastrophe Area" means a city or a part of a city or a county or a part of a county in which it may be determined by the commissioner, … .

(i) "Inadequate Fire Insurance Area" means a city or county which is, or is within an area, designated as a catastrophe area, as defined in Paragraph (h), above, and … .

(j) "Insurance" as hereinafter used in this Act shall mean the types of insurance described in Paragraphs (d) and (e) of this Section 3.

(l) "First Tier Coastal County" means:

(1) Aransas County;

(2) Brazoria County;

(3) Calhoun County;

(4) Cameron County;

(5) Chambers County;

(6) Galveston County;

(7) Jefferson County;

(8) Kenedy County;

(9) Kleberg County;

(10) Matagorda County;

(11) Nueces County;

(12) Refugio County;

(13) San Patricio County; or

(14) Willacy County.

(m) "Second Tier Coastal County" means:

(1) Bee County;

(2) Brooks County;

(3) Fort Bend County;

(4) Goliad County;

(5) Hardin County;

(6) Harris County;

(7) Hidalgo County;

(8) Jackson County;

(9) Jim Wells County;

(10) Liberty County;

(11) Live Oak County;

(12) Orange County;

(13) Victoria County; or

(14) Wharton County.

(n) "Seacoast Territory" means the area of this state composed of the first tier coastal counties and the second tier coastal counties.

(o) "New building code" means any new building standard, specification, or guideline adopted by the commissioner after May 1, 1997, that must be met before any new residential construction qualifies for a certificate of compliance that is evidence of insurability of the structure by the Association.

Revisor's Note

(1) The definition of "board of directors" is added to the revised law for drafting convenience and to eliminate frequent, unnecessary repetition of the substance of the definition.

(2) Section 3(h), V.T.I.C. Article 21.49, refers to "a city." Throughout this chapter, the revised law substitutes the term "municipality" for "city" because that is the term used in the Local Government Code.

(3) Section 3(a), V.T.I.C. Article 21.49, defines "board" as the State Board of Insurance. Chapter 685, Acts of the 73rd Legislature, Regular Session, 1993, abolished the State Board of Insurance and transferred its functions to the commissioner of insurance and the Texas Department of Insurance. Throughout this chapter, references to the board have been changed appropriately. For this reason, the revised law omits the definition of "board." The omitted law reads:

Sec. 3. (a) "Board" means the State Board of Insurance of the State of Texas.

Revised Law

Sec. 2210.004. DEFINITION OF INSURABLE PROPERTY. (a) For purposes of this chapter and subject to this section, "insurable property" means immovable property at a fixed location in a catastrophe area or corporeal movable property located in that immovable property, as designated in the plan of operation, that is determined by the association according to the criteria specified in the plan of operation to be in an insurable condition against windstorm and hail or fire and explosion, as appropriate, as determined by normal underwriting standards.

(b) A structure located in a catastrophe area, construction of which began on or after the 30th day after the date of publication of the plan of operation, that is not built in compliance with building specifications set forth in the plan of operation or continued in compliance with those specifications, does not constitute an insurable risk for purposes of windstorm and hail insurance except as otherwise provided by this chapter.

(c) A structure, or an addition to a structure, that is constructed in conformity with plans and specifications that comply with the specifications set forth in the plan of operation at the time construction begins may not be declared ineligible for windstorm and hail insurance as a result of subsequent changes in the building specifications set forth in the plan of operation.

(d) Except as otherwise provided by this section, if repair of damage to a structure involves replacement of items covered in the building specifications set forth in the plan of operation, the repairs must be completed in a manner that complies with those specifications for the structure to continue to be insurable property for windstorm and hail insurance.

(e) If repair to a structure, other than a roof repair that exceeds 100 square feet, is less than five percent of the total amount of property coverage on the structure, the repairs may be completed in a manner that returns the structure to the structure's condition immediately before the loss without affecting the eligibility of the structure to qualify as insurable property.

(f) This chapter does not preclude special rating of individual risks as may be provided in the plan of operation.

(g) For purposes of this chapter, a residential structure is insurable property if:

(1) the residential structure is not:

(A) a condominium, apartment, duplex, or other multifamily residence; or

(B) a hotel or resort facility;

(2) the residential structure is located within an area designated as a unit under the Coastal Barrier Resources Act (Public Law 97-348); and

(3) a building permit or plat for the residential structure was filed with the municipality, the county, or the United States Army Corps of Engineers before January 1, 2004. (V.T.I.C. Art. 21.49, Sec. 3(f).)

Source Law

[Sec. 3. In this Act, unless the context clearly dictates to the contrary:]

(f) "Insurable Property" means immovable property at fixed locations in a catastrophe area or corporeal movable property located therein (as may be designated in the plan of operation) which property is determined by the Association, pursuant to the criteria specified in the plan of operation to be in an insurable condition against windstorm, hail and/or fire and explosion as appropriate, as determined by normal underwriting standards; provided, however, that insofar as windstorm and hail insurance is concerned, any structure located within a catastrophe area, commenced on or after the 30th day following the publication of the plan of operation, not built or continuing in compliance with building specifications set forth in the plan of operation shall not be an insurable risk under this Act except as otherwise provided under this Act. A structure, or an addition thereto, which is constructed in conformity with plans and specifications that comply with the specifications set forth in the plan of operation at the time construction commences shall not be declared ineligible for windstorm and hail insurance as a result of subsequent changes in the building specifications set forth in the plan of operation. Except as otherwise provided by this subsection, if repair of damage to a structure involves replacement of items covered in the building specifications as set forth in the plan of operation, such repairs must be completed in a manner to comply with such specifications for the structure to continue within the definition of Insurable Property for windstorm and hail insurance. If repair to a structure, other than a roof repair that exceeds 100 square feet, is less than five percent of the amount of total property coverage on the structure, the repairs may be completed in a manner that returns the structure to its condition immediately before the loss without affecting the eligibility of the structure to qualify as insurable property. Nothing in this Act shall preclude special rating of individual risks as may be provided in the plan of operation. For purposes of this Act, all residential structures, other than a condominium, apartment, duplex, or other multifamily residence, or a hotel or resort facility, which are located within those areas designated as units under the federal Coastal Barrier Resources Act (Public Law 97-348) and for which a building permit or plat has been filed with the municipality, the county, or the United States Army Corps of Engineers before the effective date of S.B. No. 14, Acts of the 78th Legislature, Regular Session, 2003, are insurable property.

Revisor's Note

(1) Section 3(f), V.T.I.C. Article 21.49, provides a definition of "insurable property" for purposes of Article 21.49, revised as this chapter, that applies "unless the context clearly dictates to the contrary." The revised law omits the quoted language with respect to the definition of "insurable property" because the references to that term throughout Article 21.49 are consistent with the definition provided in Section 3(f).

(2) Section 3(f), V.T.I.C. Article 21.49, refers to the "effective date of S.B. No. 14, Acts of the 78th Legislature, Regular Session, 2003." The various articles of that bill had different effective dates. Article 21.49 was amended by Article 9 of that bill. The effective date of that article was January 1, 2004. The revised law is drafted accordingly.

Revised Law

Sec. 2210.005. DESIGNATION AS CATASTROPHE AREA OR INADEQUATE FIRE INSURANCE AREA; REVOCATION OF DESIGNATION. (a) After at least 10 days' notice and a hearing, the commissioner may designate an area of this state as a catastrophe area if the commissioner determines that windstorm and hail insurance is not reasonably available to a substantial number of the owners of insurable property located in that territory because the territory is subject to unusually frequent and severe damage resulting from windstorms or hailstorms.

(b) After at least 10 days' notice and a hearing, the commissioner may designate an area of this state as an inadequate fire insurance area if the commissioner determines that fire and explosion insurance is not reasonably available to a substantial number of owners of insurable property located in that area.

(c) The commissioner shall revoke a designation made under Subsection (a) or (b) if the commissioner determines, after at least 10 days' notice and a hearing, that the applicable insurance coverage is no longer reasonably unavailable to a substantial number of owners of insurable property within the designated territory.

(d) If the association determines that windstorm and hail insurance or fire and explosion insurance is no longer reasonably unavailable to a substantial number of owners of insurable property in a territory designated as a catastrophe area or inadequate fire insurance area, as applicable, the association may request in writing that the commissioner revoke the designation. After at least 10 days' notice and a hearing, but not later than the 30th day after the date of the hearing, the commissioner shall:

(1) approve the request and revoke the designation; or

(2) reject the request. (V.T.I.C. Art. 21.49, Secs. 3(h) (part), (i) (part).)

Source Law

(h) "Catastrophe Area" [means a city or a part of a city or a county or a part of a county] in which it may be determined by the commissioner, after notice of not less than 10 days and a hearing, that windstorm and hail insurance is not reasonably available to a substantial number of owners of insurable property within that city or a part of that city or a county or a part of that county, due to such insurable property being located within a city or a part of that city or a county or a part of that county that is subject to unusually frequent and severe damage resulting from windstorms and/or hailstorms. Such designation shall be revoked by the commissioner if the commissioner determines, after notice of not less than 10 days and a hearing, that windstorm and hail insurance in such catastrophe area is no longer reasonably unavailable to a substantial number of owners of insurable property within such designated city or a part of that city or county or a part of that county. If the Association shall determine that windstorm and hail insurance is no longer reasonably unavailable to a substantial number of owners of insurable property in any designated catastrophe area or areas, then the Association may request in writing that the commissioner revoke the designation of any or all of such catastrophe areas and, after notice of not less than 10 days and a hearing, but within 30 days of such hearing, the commissioner shall either approve or reject the Association's request and shall, if such request be approved, revoke such designation or designations.

(i) "Inadequate Fire Insurance Area" [means a city or county which is, or is within an area, designated as a catastrophe area, as defined in Paragraph (h), above, and] in which it may be determined by the Board, after notice of not less than 10 days and a hearing, that fire and explosion insurance is not reasonably available to a substantial number of owners of insurable property within such city or county. Such designation shall be revoked by the Board if it determines, after 10 days' notice and a hearing, that fire and explosion insurance in such inadequate fire insurance area is no longer reasonably unavailable to a substantial number of owners of insurable property within such designated city or county. If the Association shall determine that fire and explosion insurance is no longer reasonably unavailable to a substantial number of owners of insurable property in any designated inadequate fire insurance area or areas, then the Association may request in writing that the Board revoke the designation of any or all such inadequate fire insurance areas, and, after notice of not less than 10 days and a hearing, but within 30 days of such hearing, the Board shall either approve or reject the Association's request and shall, if such request is approved, revoke such designation or designations.

Revised Law

Sec. 2210.006. APPLICABILITY OF CHAPTER TO CERTAIN INSURERS. (a) Except as provided by Subsection (b), this chapter applies to each insurer authorized to engage in the business of property insurance in this state, including a county mutual insurance company, a Lloyd's plan, and a reciprocal or interinsurance exchange.

(b) This chapter does not apply to:

(1) a farm mutual insurance company operating under Chapter 911;

(2) a county mutual fire insurance company described by Section 912.310; or

(3) a mutual insurance company or a statewide mutual assessment company engaged in business under Chapter 12 or 13, Title 78, Revised Statutes, respectively, before those chapters' repeal by Section 18, Chapter 40, Acts of the 41st Legislature, 1st Called Session, 1929, as amended by Section 1, Chapter 60, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929, that retains the rights and privileges under the repealed law to the extent provided by those sections. (V.T.I.C. Art. 21.49, Secs. 3(k), 18.)

Source Law

[Sec. 3. In this Act, unless the context clearly dictates to the contrary:]

(k) "Insurers" means all property insurers authorized to transact property insurance in this State and specifically includes and makes this Act applicable to county mutual companies, Lloyds and reciprocal or interinsurance exchanges, but shall not include (a) farm mutual insurance companies as authorized in Chapter 16 of this Code; (b) county mutual fire insurance companies which are writing exclusively industrial fire insurance policies as defined in Article 17.02 of this Code; and (c) any companies now operating under Chapters 12 and 13 of Title 78 of the Revised Civil Statutes of Texas, 1925, as amended, which have heretofore been repealed.

Sec. 18. This Act does not apply to farm mutual insurance companies, as defined in Article 16.01 of the Insurance Code, nor does it apply to any existing company chartered under old Chapter 12, Title 78, Revised Civil Statutes of Texas, 1925, repealed by Chapter 40, Acts of the 41st Legislature, 1st Called Session, 1929, Chapter 40.

Revisor's Note

(1) Section 3(k), V.T.I.C. Article 21.49, provides a definition of "insurer" for purposes of Article 21.49, revised as this chapter, that applies "unless the context clearly dictates to the contrary." The revised law omits the quoted language with respect to the definition of "insurer" because the references to that term throughout Article 21.49 are consistent with the definition provided in Section 3(k).

(2) Section 3(k), V.T.I.C. Article 21.49, refers to "Lloyds and reciprocal or interinsurance exchanges" and further refers to "county mutual companies." The revised law substitutes "Lloyd's plan" for "Lloyds" and "county mutual insurance company" for "county mutual companies" for consistency of terminology throughout this code.

(3) Section 3(k), V.T.I.C. Article 21.49, refers to county mutual fire insurance companies "which are writing exclusively industrial fire insurance policies as defined in Article 17.02 of this Code." The revised law omits the quoted language and substitutes a cross-reference to Section 912.310 of this code because those county mutual insurance companies and the type of policies that they are authorized to write are described by that section.

Revised Law

Sec. 2210.007. IMMUNITY FROM LIABILITY IN GENERAL. (a) This section applies to:

(1) the association and a director, agent, or association staff;

(2) the commissioner, the department, and department staff; and

(3) a participating insurer and the insurer's agents and staff.

(b) A person described by Subsection (a) is not liable for, and a cause of action does not arise against the person, for:

(1) an inspection made under the plan of operation; or

(2) any statement made in good faith by the person:

(A) in a report or communication concerning risks submitted to the association; or

(B) at any administrative hearing conducted under this chapter in connection with the inspection or statement. (V.T.I.C. Art. 21.49, Sec. 10(c).)

Source Law

(c) There shall be no liability on the part of and no cause of action of any nature shall arise against a director of the association, the Board or any of its staff, the Association or its agents or employees, or against any participating insurer or its agents or employees, for any inspections made under the plan of operation or any statements made in good faith by them in any reports or communications concerning risks submitted to the Association, or at any administrative hearings conducted in connection therewith under the provisions of this Act.

Revised Law

Sec. 2210.008. DEPARTMENT ORDERS. (a) After notice and hearing as provided by Subsection (b), the commissioner may issue any orders that the commissioner considers necessary to implement this chapter, including orders regarding maximum rates, competitive rates, and policy forms.

(b) Before the commissioner adopts an order, the department shall post notice of the hearing on the order at the secretary of state's office in Austin, and shall hold a hearing to consider the proposed order. Any person may appear at the hearing and testify for or against the adoption of the order. (V.T.I.C. Art. 21.49, Sec. 5A.)

Source Law

Sec. 5A. (a) After notice and a hearing as provided in Subsection (b) of this section, the Board may issue any orders which it considers necessary to carry out the purposes of this Act including, but not limited to, maximum rates, competitive rates, and policy forms.

(b) Before an order is adopted by the Board, it shall post notice of a hearing on the order at the Secretary of State's office in the State Capitol and shall hold a hearing to consider the proposed order. Any person may appear and testify for or against the adoption of the order.

Revisor's Note

Section 5A(a), V.T.I.C. Article 21.49, refers to "including, but not limited to" certain rates and forms. The revised law omits "but not limited to" as unnecessary. Section 311.005(13), Government Code (Code Construction Act), and Section 312.011(19), Government Code, provide that "includes" and "including" are terms of enlargement and not of limitation and do not create a presumption that components not expressed are excluded. Those sections apply to the revised law.

[Sections 2210.009-2210.050 reserved for expansion]

SUBCHAPTER B. ADMINISTRATION OF ASSOCIATION

Revised Law

Sec. 2210.051. COMPOSITION OF ASSOCIATION; REQUIRED MEMBERSHIP. (a) The association is composed of all property insurers authorized to engage in the business of property insurance in this state, other than insurers prevented by law from writing on a statewide basis coverages available through the association.

(b) As a condition of the insurer's authority to engage in the business of insurance in this state, each insurer subject to Subsection (a) must be a member of the association and must remain a member for the duration of the association's existence. An insurer that ceases to be a member of the association remains liable on insurance contracts entered into during the insurer's membership in the association to the same extent and effect as if the insurer's membership in the association had not been terminated.

(c) An insurer that becomes authorized to write and is engaged in writing insurance that requires the insurer to be a member of the association shall become a member of the association on the January 1 following the effective date of that authorization. The determination of the insurer's participation in the association is made as of the date of the insurer's membership in the manner used to determine participation for all other members of the association. (V.T.I.C. Art. 21.49, Secs. 4(a), 5(b) (part).)

Source Law

Sec. 4. (a) The Association which is hereby created shall consist of all property insurers authorized to transact property insurance in this State, except those companies that are prevented by law from writing coverages available through the pool on a Statewide basis. Every such insurer shall be a member of the Association and shall remain a member of the Association so long as the Association is in existence, as a condition of its authority to transact the business of insurance in this State. Any insurer which ceases to be a member of the Association shall remain liable on contracts of insurance entered into during its membership in the Association to the same extent and effect as if its membership in the Association had not been terminated.

[Sec. 5]

(b) … Any insurer authorized to write and engaged in writing any insurance, the writing of which required such insurer to be a member of the Association, who becomes authorized to engage in writing such insurance shall become a member of the Association on the 1st day of January immediately following such authorization and the determination of such insurer's participation in the Association shall be made as of the date of such membership in the same manner as for all other members of the Association.

Revisor's Note

(1) Section 4(a), V.T.I.C. Article 21.49, refers to "coverages available through the pool." Article 21.49, as originally enacted by Chapter 100, Acts of the 62nd Legislature, Regular Session, 1971, adopted the "Texas Catastrophe Property Insurance Pool Act." The "pool" was administered by the Texas Catastrophe Property Insurance Association. "Pool" was never a defined term under Article 21.49, and most amendments to that article referred to the "association," rather than the "pool." In 1997, the short title of the article was changed to the "Texas Windstorm Insurance Association Act" by Chapter 438, Acts of the 75th Legislature, Regular Session, 1997. The revised law substitutes "association" for "pool" to conform to the definitions used by this chapter.

(2) Section 5(b), V.T.I.C. Article 21.49, refers to "the 1st day of January immediately following" a specified determination. The revised law omits "immediately" as unnecessary because "the January 1 following" the specified determination means the January 1 immediately following that determination.

Revised Law

Sec. 2210.052. MEMBER PARTICIPATION IN ASSOCIATION. (a) Each member of the association shall participate in the writings, expenses, profits, and losses of the association in the proportion that the net direct premiums of that member during the preceding calendar year bears to the aggregate net direct premiums by all members of the association, as determined using the information provided under Subsection (b).

(b) The department shall review annual statements, other reports, and other statistics that the department considers necessary to obtain the information required under Subsection (a), and shall provide that information to the association. The department is entitled to obtain the annual statements, other reports, and other statistics from any member of the association.

(c) Each member's participation in the association shall be determined annually in the manner provided by the plan of operation. For purposes of determining participation in the association, two or more members that are subject to common ownership or that operate in this state under common management or control shall be treated as a single member. The determination shall also include the net direct premiums of an affiliate that is under that common management or control, including an affiliate that is not authorized to engage in the business of property insurance in this state.

(d) Notwithstanding Subsection (a), a member, in accordance with the plan of operation, is entitled to receive credit for similar insurance voluntarily written in an area designated by the commissioner. The member's participation in the writings of the association shall be reduced in accordance with the plan of operation. (V.T.I.C. Art. 21.49, Sec. 5(b) (part).)

Source Law

(b) All members of the Association shall participate in its writings, expenses, profits and losses in the proportion that the net direct premiums of such member written in this State during the preceding calendar year bears to the aggregate net direct premiums written in this State by all members of the Association, as furnished to the Association by the Board after review of annual statements, other reports and other statistics the Board shall deem necessary to provide the information herein required and which the Board is hereby authorized and empowered to obtain from any member of the Association, provided, however, that a member shall, in accordance with the plan of operation, be entitled to receive credit for similar insurance voluntarily written in the area designated by the Board and its participation in the writings in the Association shall be reduced in accordance with the provisions of the plan of operation. Each member's participation in the Association shall be determined annually in the manner provided in the plan of operation. For purposes of determining participation in the Association, two or more members having a common ownership or operating in this State under common management or control shall be treated as if they constituted a single member and also shall include the net direct premiums, as defined by this article, of any affiliated insurance company that is under such common management or control including affiliated insurance companies that are not authorized to transact property insurance in this State… .

Revisor's Note

Section 5(b), V.T.I.C. Article 21.49, refers to "net direct premiums … written in this State." The revised law omits the reference to "written in this State" as unnecessary because under Section 3(g), Article 21.49, revised in this chapter as Section 2210.003(7), "net direct premium" is defined in part to mean gross direct written premium on insurance written on property in this state.

Revised Law

Sec. 2210.053. OPERATION OF ASSOCIATION. (a) In accordance with this chapter and the plan of operation, and with respect to insurance on insurable property, the association, on behalf of the association's members, may:

(1) cause issuance of insurance policies to applicants for insurance coverage;

(2) assume reinsurance from the members;

(3) cede reinsurance to the members; and

(4) purchase reinsurance on behalf of the members.

(b) The department may develop programs to improve the efficient operation of the association, including a program designed to create incentives for insurers to write windstorm and hail insurance voluntarily to cover property located in a catastrophe area, especially property located on the barrier islands of this state. (V.T.I.C. Art. 21.49, Secs. 5(a), (e).)

Source Law

Sec. 5. (a) The Association shall, pursuant to the provisions of this Act and the plan of operation, and with respect to insurance on insurable property, have the power on behalf of its members to cause to be issued policies of insurance to applicants, to assume reinsurance from its members, and to cede reinsurance to its members and to purchase reinsurance on behalf of its members.

(e) The Board may develop programs to improve the efficient operation of the Association, including a program designed to create incentives for insurers to write windstorm and hail insurance voluntarily to cover property located in a catastrophe area, especially property located on the barrier islands.

Revised Law

Sec. 2210.054. ANNUAL STATEMENT. (a) The association shall file annually with the department a statement covering periods designated by the department that summarizes the transactions, conditions, operations, and affairs of the association during the preceding year.

(b) The statement must:

(1) be filed at times designated by the department;

(2) contain the information prescribed by the department; and

(3) be in the form prescribed by the department. (V.T.I.C. Art. 21.49, Sec. 12.)

Source Law

Sec. 12. The Association shall file in the office of the Board annually a statement which shall summarize the transactions, conditions, operations and affairs of the Association during the preceding year at such times and covering such periods as may be designated by the Board. Such statement shall contain such matters and information as are prescribed by the Board and shall be in such form as is required by it.

Revised Law

Sec. 2210.055. LEGAL COUNSEL. (a) The association shall establish a plan in the plan of operation under which the association's legal representation before the department and the legislature is without conflict of interest or the appearance of a conflict of interest as defined by the Texas Disciplinary Rules of Professional Conduct.

(b) The association shall adopt separate and distinct procedures for legal counsel in disputes involving policyholder claims against the association. (V.T.I.C. Art. 21.49, Sec. 12A.)

Source Law

Sec. 12A. The association shall establish a plan in its plan of operation under which the association's legal representation before the State Board of Insurance, the Texas Department of Insurance, and the Texas legislature is without conflict of interest or the appearance of a conflict of interest as defined in the Texas Disciplinary Rules of Professional Conduct. The association shall also adopt separate and distinct procedures for legal counsel in the handling of disputes involving policyholder claims against the association.

Revised Law

Sec. 2210.056. USE OF ASSOCIATION ASSETS. (a) The association's net earnings may not inure, in whole or in part, to the benefit of a private shareholder or individual.

(b) The association's assets may not be used for or diverted to any purpose other than to:

(1) satisfy, in whole or in part, the liability of the association on claims made on policies written by the association;

(2) make investments authorized under applicable law;

(3) pay reasonable and necessary administrative expenses incurred in connection with the operation of the association and the processing of claims against the association; or

(4) make remittance under the laws of this state to be used by this state to:

(A) pay claims made on policies written by the association;

(B) purchase reinsurance covering losses under those policies; or

(c) On dissolution of the association, all assets of the association revert to this state. (V.T.I.C. Art. 21.49, Secs. 4(c), (d).)

Source Law

(c) No part of the net earnings of the association may inure to the benefit of any private shareholder or individual. The assets of the association may not be used for or diverted to any purpose other than to:

(1) satisfy, in whole or in part, the liability of the association regarding a claim made on a policy written by the association;

(2) make investments authorized under applicable law;

(3) pay reasonable and necessary administrative expenses incurred in connection with the establishment and operation of the association and the processing of claims against the association; or

(4) make remittances under the laws of this state to be used by this state to:

(A) pay claims on policies written by the association;

(B) purchase reinsurance covering losses under those policies; or

(d) On dissolution of the association, all assets of the association revert to this state.

Revisor's Note

Section 4(c)(3), V.T.I.C. Article 21.49, refers to the payment of expenses incurred "in connection with the establishment and operation of the association." The revised law omits as executed the reference to the establishment of the association.

Revised Law

Sec. 2210.057. EXAMINATION OF ASSOCIATION. (a) The association is subject to Sections 401.051, 401.052, 401.054-401.062, 401.151, 401.152, 401.155, and 401.156, and Subchapter A, Chapter 86.

(b) A final examination report of the association resulting from an examination as provided by this section is a public record and is available to the public at the offices of the department in accordance with Chapter 552, Government Code. (V.T.I.C. Art. 21.49, Sec. 5B.)

Source Law

Sec. 5B. (a) The association is subject to Articles 1.15 and 1.16 of this code.

(b) A final examination report of the Association resulting from an examination under this section is a public record and available to the public at the Board's offices pursuant to the open records law, Chapter 424, Acts of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes).

Revisor's Note

(1) Section 5B(a), V.T.I.C. Article 21.49, refers to V.T.I.C. Articles 1.15 and 1.16. Article 1.15 is revised in part in Subchapter A, Chapter 86, of this code. That subchapter also consists of a provision derived in part from V.T.I.C. Article 1.19. The revised law appropriately refers to Subchapter A, Chapter 86, in its entirety because the provision that is derived from Article 1.19 is also derived from a provision of Article 1.15, and those provisions are substantively identical.

(2) Section 5B(b), V.T.I.C. Article 21.49, refers to the open records law, Chapter 424, Acts of the 63rd Legislature, Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes). That statute was codified in 1993 as Chapter 552, Government Code. The revised law is drafted accordingly.

Revised Law

Sec. 2210.058. PAYMENT OF EXCESS LOSSES; PREMIUM TAX CREDIT. (a) If, in any calendar 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 shall be paid as follows:

(1) $100 million shall be assessed against the members of the association as provided by Subsection (b);

(2) losses in excess of $100 million shall be paid from the catastrophe reserve trust fund established under Subchapter J and any reinsurance program established by the association;

(3) for losses in excess of those paid under Subdivisions (1) and (2), an additional $200 million shall be assessed against the members of the association, as provided by Subsection (b); and

(4) losses in excess of those paid under Subdivisions (1), (2), and (3) shall be assessed against members of the association, as provided by Subsection (b).

(b) The proportion of the losses allocable to each insurer under Subsections (a)(1), (3), and (4) shall be determined in the manner used to determine each insurer's participation in the association for the year under Section 2210.052.

(c) An insurer may credit an amount paid in accordance with Subsection (a)(4) in a calendar year against the insurer's premium tax under Chapter 221. The tax credit authorized under this subsection shall be allowed at a rate not to exceed 20 percent per year for five or more successive years following the year of payment of the claims. The balance of payments made by the insurer and not claimed as a premium tax credit may be reflected in the books and records of the insurer as an admitted asset of the insurer for all purposes, including exhibition in an annual statement under Section 862.001. (V.T.I.C. Art. 21.49, Sec. 19.)

Source Law

Sec. 19. (a) If, in any calendar year, an occurrence or series of occurrences within the defined catastrophe area results in insured losses and operating expenses of the association in excess of premium and other revenue of the association, any excess losses shall be paid as follows:

(1) $100 million shall be assessed to the members of the association with the proportion of the loss allocable to each insurer determined in the same manner as its participation in the association has been determined for the year under Section 5(c) of this Act;

(2) any losses in excess of $100 million shall be paid from the catastrophe reserve trust fund established under Section 8(i) of this Act and any reinsurance program established by the association;

(3) for losses in excess of those paid under Subdivisions (1) and (2) of this subsection, an additional $200 million shall be assessed to the members of the association with the proportion of the loss allocable to each insurer determined in the same manner as its participation in the association has been determined for the year under Section 5(c) of this Act;

(4) any losses in excess of those paid under Subdivisions (1), (2), and (3) of this subsection shall be assessed against members of the association, with the proportion of the total loss allocable to each insurer determined in the same manner as its participation in the association has been determined for the year under Section 5(c) of this Act.

(b) An insurer may credit any amount paid in accordance with Subsection (a)(4) of this section in a calendar year against its premium tax under Article 4.10 of this code. The tax credit herein authorized shall be allowed at a rate not to exceed 20 percent per year for five or more successive years following the year of payment of the claims. The balance of payments paid by the insurer and not claimed as such tax credit may be reflected in the books and records of the insurer as an admitted asset of the insurer for all purposes, including exhibition in annual statements pursuant to Article 6.12 of this code.

Revisor's Note

(1) Section 19(a), V.T.I.C. Article 21.49, refers to a "defined" catastrophe area. Other provisions of Article 21.49 refer to "designated" catastrophe or inadequate fire insurance areas. Throughout this chapter, the revised law omits "defined" and "designated" in this context as unnecessary because under Sections 3(h) and (i), Article 21.49, revised in relevant part in this chapter as Section 2210.005, the commissioner of insurance designates a defined territory as a catastrophe area or inadequate fire insurance area. A territory that has not been designated as a catastrophe area or inadequate fire insurance area is not one of those areas.

(2) Sections 19(a)(1), (3), and (4), V.T.I.C. Article 21.49, refer to determination of an insurer's participation in the association as made under Section 5(c) of that article. Section 5, Article 21.49, was substantially amended by Section 11.42, Chapter 242, Acts of the 72nd Legislature, Regular Session, 1991, which repealed the original Subsection (b) of that section and relettered original Subsection (c) as Subsection (b). Section 5(b), Article 21.49, in relevant part establishes participation requirements and is revised in this chapter as Section 2210.052. The revised law is drafted accordingly.

Revised Law

Sec. 2210.059. NOTIFICATION REGARDING TAX CREDITS. (a) The association shall immediately notify the department if an occurrence or series of occurrences in a catastrophe area results in insured losses that result in a tax credit under Section 2210.058(c) in a calendar year.

(b) On receipt of notice under Subsection (a), the department shall immediately notify the governor and the appropriate committees of each house of the legislature of the amount of insured losses eligible for tax credits under Section 2210.058(c). (V.T.I.C. Art. 21.49, Sec. 5(l).)

Source Law

(l) If an occurrence or series of occurrences within the defined catastrophe area results in insured losses that result in tax credits under Section 19(4) of this article in a single calendar year, the Association shall immediately notify the Board of that fact. The Board on receiving notice shall immediately notify the Governor and appropriate committees of each house of the Legislature of the amount of insured losses eligible for tax credits under Section 19(4) of this article.

Revisor's Note

Section 5(l), V.T.I.C. Article 21.49, refers to "tax credits under Section 19(4) of this article," meaning Section 19(4), Article 21.49. Section 19(4) does not exist; it is clear from the context that the correct cite is to Section 19(b), Article 21.49, revised in this chapter as Section 2210.058(c). The revised law is drafted accordingly.

Revised Law

Sec. 2210.060. INDEMNIFICATION BY ASSOCIATION. (a) Except as provided by Subsection (b), the association shall indemnify each director, officer, and employee of the association and each member of the association against all costs and expenses actually and necessarily incurred by the person or entity in connection with the defense of an action or proceeding in which the person or entity is made a party because of the person's status as a director, officer, or employee of the association or the member's status as a member of the association.

(b) Subsection (a) does not apply to a matter in which the person or entity is determined in the action or proceeding to be liable because of misconduct in the performance of duties as a director, officer, or employee of the association or a member of the association.

(c) Subsection (a) does not authorize the association to indemnify a member of the association for participating in the writings, expenses, profits, and losses of the association in the manner provided by this chapter.

(d) Indemnification under this section is not exclusive of other rights to which the member or officer may be entitled as a matter of law. (V.T.I.C. Art. 21.49, Sec. 11.)

Source Law

Sec. 11. Each person serving as a director of the Association, each member of the Association, and each officer and employee of the Association shall be indemnified by the Association against all costs and expenses actually and necessarily incurred by him or it in connection with the defense of any action, suit, or proceeding in which he or it is made a party by reason of his or its being or having been a director or member of the Association, or an officer or employee of the Association except in relation to matters as to which he or it has been judged in such action, suit or proceeding to be liable by reason of misconduct in the performance of his or its duties as a director of the Association or a member or officer or employee of the Association, provided, however, that this indemnification shall in no way indemnify a member of the Association from participating in the writings, expenses, profits, and losses of the Association in the manner set out in this Act. Indemnification hereunder shall not be exclusive of other rights to which such member or officer may be entitled as a matter of law.

Revisor's Note

Section 11, V.T.I.C. Article 21.49, refers to an "action, suit, or proceeding." The revised law omits the reference to "suit" because, in context, "suit" is included within the meaning of "action."

[Sections 2210.061-2210.100 reserved for expansion]

SUBCHAPTER C. ASSOCIATION BOARD OF DIRECTORS

Revised Law

Sec. 2210.101. ACCOUNTABLE TO COMMISSIONER. The board of directors is responsible and accountable to the commissioner. (V.T.I.C. Art. 21.49, Sec. 5(g) (part).)

Source Law

(g) The board of directors of the Association is responsible and accountable to the Board… .

Revised Law

Sec. 2210.102. COMPOSITION. (a) The board of directors is composed of the following nine members:

(1) five representatives of different insurers who are members of the association, elected by the members as provided by the plan of operation;

(2) two public representatives who are nominated by the office of public insurance counsel and who, as of the date of the appointment:

(A) reside in a catastrophe area; and

(B) are policyholders of the association; and

(3) two general property and casualty agents:

(A) who have demonstrated experience in the association; and

(B) whose principal offices, as of the date of the appointment, are located in a catastrophe area.

(b) The persons appointed under Subsections (a)(2) and (a)(3) must be from different counties. (V.T.I.C. Art. 21.49, Secs. 5(g) (part), (i).)

Source Law

(g) … The board of directors is composed of nine members as follows:

(1) five representatives of different insurers who are members of the Association who shall be elected by members as provided in the plan of operation;

(2) two representatives of the general public, nominated by the office of public insurance counsel, who, as of the date of the appointment, reside in a catastrophe area and who are policyholders, as of the date of the appointment, of the Association; and

(3) two local recording agents licensed under this Code with demonstrated experience in the Association, and whose principal offices, as of the date of the appointment, are located in a catastrophe area.

(i) The persons appointed as provided by Subsections (g)(2) and (g)(3) of this section must be from different counties.

Revisor's Note

Section 5(g)(3), V.T.I.C. Article 21.49, refers to "local recording agents licensed under this Code." Throughout this chapter, the revised law substitutes "general property and casualty agents" for "local recording agents" because the term "local recording agent" was eliminated by Chapter 703, Acts of the 77th Legislature, Regular Session, 2001, and a person who performs the duties formerly performed by a local recording agent in the context of residential property insurance is now regulated as a "general property and casualty agent" under Chapter 4051 of this code. In addition, throughout this chapter, the revised law omits references to insurance agents being "licensed" as unnecessary because under Section 4001.101 of this code, a person may not act as an agent unless the person holds a license.

Revised Law

Sec. 2210.103. TERMS. (a) Members of the board of directors serve three-year staggered terms, with the terms of three members expiring on the third Tuesday of March of each year.

(b) A person may serve on the board of directors for not more than three consecutive full terms, not to exceed nine years. (V.T.I.C. Art. 21.49, Sec. 5(h).)

Source Law

(h) Members of the board of directors of the Association serve three-year staggered terms, with the terms of three members expiring on the third Tuesday of March of each year. A person may hold a seat on the board of directors for not more than three consecutive full terms, not to exceed nine years.

Revised Law

Sec. 2210.104. OFFICERS. 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. At least one of the officers must be a member appointed under Section 2210.102(a)(2) or (a)(3). (V.T.I.C. Art. 21.49, Sec. 5(j).)

Source Law

(j) The board of directors of the Association shall elect an executive committee consisting of a chairman, vice-chairman, and secretary-treasurer from its membership. At least one of those officers must be a member appointed under Subsection (g)(2) or Subsection (g)(3) of this section.

Revisor's Note

Section 5(j), V.T.I.C. Article 21.49, refers to the election of a "chairman" and "vice-chairman." The revised law substitutes "presiding officer" and "assistant presiding officer" for those terms because, in context, the terms have the same meaning and "presiding officer" and "assistant presiding officer" are more commonly used and are gender neutral.

Revised Law

Sec. 2210.105. MEETINGS. (a) Except for an emergency meeting, the association shall 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.

(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:

(1) the commissioner or the commissioner's designated representative; and

(2) the public.

(c) Notice of a meeting of the board of directors or the association must be given as provided by Chapter 551, Government Code. (V.T.I.C. Art. 21.49, Sec. 5(k).)

Source Law

(k) Except for an emergency meeting of the Association or the board of directors of the Association, the Association shall notify the Board not later than the 11th day before the date of each meeting of the board of directors of the Association or a meeting of the members of the Association. Except for closed or executive sessions authorized by Section 2, Chapter 271, Acts of the 60th Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes), meetings of the board of directors of the Association and members of the Association shall be open to any member of the Board or the member's designated representative and to members of the public. Notice of meetings of the Association or board of directors of the Association shall be given as provided by Chapter 271, Acts of the 60th Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes).

Revisor's Note

(1) Section 5(k), V.T.I.C. Article 21.49, refers to "Chapter 271, Acts of the 60th Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes)," and to Section 2 of that act. Chapter 271, Acts of the 60th Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes), was codified in 1993 as Chapter 551, Government Code. The relevant provisions of Section 2 of that act were codified as Subchapter D, Chapter 551, Government Code. The revised law is drafted accordingly.

(2) Section 5(k), V.T.I.C. Article 21.49, refers to "closed or executive sessions" of the board of directors of the Texas Windstorm Insurance Association that are authorized by Section 2, Chapter 271, Acts of the 60th Legislature, Regular Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes), the relevant provisions of which were codified as Subchapter D, Chapter 551, Government Code. The revised law substitutes "closed meeting" for the reference to "closed or executive sessions" because "closed meeting" is the term used in Subchapter D, Chapter 551, Government Code, for that type of meeting.

Revised Law

Sec. 2210.106. IMMUNITY OF DIRECTOR OR OFFICER FROM LIABILITY. (a) A director or officer of the association is not individually liable for an act or failure to act in the performance of official duties in connection with the association.

(b) Subsection (a) does not apply to:

(1) an act or failure to act of the association or an employee of the association;

(2) an act or omission involving a motor vehicle; or

(3) an act or failure to act that constitutes bad faith, intentional misconduct, or gross negligence. (V.T.I.C. Art. 21.49, Secs. 10(a), (b).)

Source Law

Sec. 10. (a) A director or officer of the Association is not individually liable for any act or failure to act in the performance of official duties in connection with the Association.

(b) Subsection (a) does not apply to:

(1) an act or failure to act of an employee of the Association;

(2) an act or failure to act of the Association;

(3) an act or omission involving a motor vehicle; or

(4) an act or failure to act that constitutes bad faith, intentional misconduct, or gross negligence.

[Sections 2210.107-2210.150 reserved for expansion]

SUBCHAPTER D. PLAN OF OPERATION

Revised Law

Sec. 2210.151. ADOPTION OF PLAN OF OPERATION. With the advice of the board of directors, the commissioner by rule shall adopt the plan of operation to provide:

(1) Texas windstorm and hail insurance in a catastrophe area; and

(2) Texas fire and explosion insurance in an inadequate fire insurance area. (V.T.I.C. Art. 21.49, Secs. 3(c) (part), 5(c) (part).)

Source Law

[Sec. 3]

(c) ["Plan of Operation" means the] plan for providing Texas windstorm and hail insurance in a catastrophe area and Texas fire and explosion insurance in an inadequate fire insurance area which plan has been adopted by the Board … .

[Sec. 5]

(c) … The Board by rule shall adopt the plan of operation with the advice of the board of directors of the Association… .

Revised Law

Sec. 2210.152. CONTENTS OF PLAN OF OPERATION. (a) The plan of operation must:

(1) provide for the efficient, economical, fair, and nondiscriminatory administration of the association; and

(2) include:

(A) a plan for the equitable assessment of the members of the association to defray losses and expenses;

(B) underwriting standards;

(D) procedures for determining the amount of insurance to be provided to specific risks;

(E) time limits and procedures for processing applications for insurance; and

(F) other provisions as considered necessary by the department to implement the purposes of this chapter.

(b) The plan of operation may provide for liability limits for an insured structure and for the corporeal movable property located in the structure. (V.T.I.C. Art. 21.49, Secs. 3(c) (part), 5(c) (part), (d).)

Source Law

[Sec. 3]

(c) … [means the plan for providing Texas windstorm and hail insurance in a catastrophe area and Texas fire and explosion insurance in an inadequate fire insurance area which plan has been adopted by the Board for operation by the Association pursuant to the provisions of this Act,] which plan may, among other things, provide for limits of liability for each structure insured, and/or the corporeal movable property located therein.

[Sec. 5]

(c) The plan of operation of the Association shall provide for the efficient, economical, fair, and nondiscriminatory administration of the Association… .

(d) The plan of operation must include:

(1) a plan for the equitable assessment of the members of the Association to defray losses and expenses;

(2) underwriting standards;

(3) procedures for the acceptance and cession of reinsurance;

(4) procedures for determining the amount of insurance to be provided to specific risks;

(5) time limits and procedures for processing applications for insurance; and

(6) other provisions as deemed necessary by the Board to carry out the purposes of this Act.

Revised Law

Sec. 2210.153. AMENDMENTS TO PLAN OF OPERATION. (a) The association may present a recommendation for a change in the plan of operation to the department at:

(1) periodic hearings conducted by the department for that purpose; or

(2) hearings relating to property and casualty insurance rates.

(b) The association must present a proposed change to the department in writing in the manner prescribed by the commissioner. A proposed change does not take effect unless adopted by the commissioner by rule.

(c) An interested person may, in accordance with Chapter 2001, Government Code, petition the commissioner to modify the plan of operation. (V.T.I.C. Art. 21.49, Secs. 5(c) (part), (f).)

Source Law

(c) … The Association may present recommended changes in the plan of operation to the Board at periodic hearings conducted by the Board for that purpose, or at hearings relating to property and casualty insurance rates. The Association must present a proposed change to the Board in writing in the manner prescribed by the Board. A change proposed by the Association does not take effect unless adopted by the Board by rule.

(f) Any interested person may petition the Board to modify the plan of operation in accordance with the Administrative Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas Civil Statutes).

Revisor's Note

Section 5(f), V.T.I.C. Article 21.49, refers to the Administrative Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas Civil Statutes). The relevant provisions of that statute were codified in 1993 as Chapter 2001, Government Code. The revised law is drafted accordingly.

[Sections 2210.154-2210.200 reserved for expansion]

SUBCHAPTER E. INSURANCE COVERAGE

Revised Law

Sec. 2210.201. DEFINITION OF INSURABLE INTEREST. In this subchapter, "insurable interest" includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage. (V.T.I.C. Art. 21.49, Sec. 6(a) (part).)

Source Law

Sec. 6. (a) … The term "insurable interest" as used in this subsection shall be deemed to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage… .

Revisor's Note

Section 6(a), V.T.I.C. Article 21.49, refers to the term "insurable interest" as used "in this subsection," meaning Section 6(a). The same term is also used in Section 6(b), V.T.I.C. Article 21.49, revised in relevant part in this subchapter as Section 2210.204. Because it is clear from the context that the definition of "insurable interest" set forth in Section 6(a) also applies to the use of that term in Section 6(b), the revised law applies the definition to the entire subchapter and does not limit the application of the term to the parts of the revised law derived from Section 6(a), V.T.I.C. Article 21.49.

Revised Law

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, including any inspection fee, established by the board of directors and approved by the commissioner.

(b) A general property and casualty agent must submit an application for the insurance coverage on behalf of the applicant on forms prescribed by the association. The application must contain 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. (V.T.I.C. Art. 21.49, Sec. 6(a) (part).)

Source Law

(a) Any person having an insurable interest in insurable property located in an area designated by the Board shall be entitled to apply to the Association for insurance provided for under the plan of operation and for an inspection of the property under such rules and regulations, including an inspection fee, if any, as determined by the Board of Directors of the Association and approved by the State Board of Insurance… . Application shall be made on behalf of the applicant by a Local Recording Agent and shall be submitted on forms prescribed by the Association. The application shall contain a statement as to whether or not the applicant has or will submit the premium in full from personal funds, or if not, to whom a balance is or will be due.

Revisor's Note

(1) Section 6(a), V.T.I.C. Article 21.49, refers to insurable property "located in an area designated by the Board," meaning the commissioner of insurance. The revised law omits the quoted language as unnecessary. Under Section 3(f), Article 21.49, revised in this chapter as Section 2210.004, "insurable property" means, in part, property at a fixed location in a catastrophe area. Under Section 3(h), Article 21.49, revised in pertinent part in this chapter in Section 2210.005, the commissioner of insurance designates a defined territory as a catastrophe area. Because property must be located in a catastrophe area to be "insurable property" for purposes of Article 21.49, revised as this chapter, and because a catastrophe area is an area designated by the commissioner, the revised law omits the reference to "located in an area designated by the Board" as unnecessary.

(2) Section 6(a), V.T.I.C. Article 21.49, refers to "rules and regulations." The reference to "regulations" is omitted from the revised law because under Section 311.005(5), Government Code (Code Construction Act), applicable to the revised law, a rule is defined to include a regulation.

Revised Law

Sec. 2210.203. ISSUANCE OF COVERAGE; TERM; RENEWAL. (a) If the association determines that the property for which an application for 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.

(b) A policy issued under this section is for a one-year term.

(c) A policy may be renewed annually on application for renewal as long as the property continues to be insurable property. (V.T.I.C. Art. 21.49, Secs. 6(b) (part), (c).)

Source Law

(b) If the Association determines that the property is insurable, the Association, upon payment of the premium, shall cause to be issued a policy of insurance as may be provided in the plan for a term of one year… .

(c) Any policy issued pursuant to the provisions of this Act may be renewed annually, upon application therefor, so long as the property continues to meet the definition of "insurable property" set forth in Section 3 of this Act.

Revised Law

Sec. 2210.204. CANCELLATION OF CERTAIN COVERAGE. (a) Subsections (b) and (c) apply if:

(1) an agent or another person, firm, or corporation finances the payment of all or a portion of the premium for insurance coverage;

(2) there is an outstanding balance for the financing of the premium; and

(3) that balance, or an installment of that balance, is not paid before the expiration of the 10th day after the due date.

(b) The agent or other person, firm, or corporation to whom the balance described by Subsection (a) is due may request cancellation of the insurance coverage by:

(1) returning the policy, with proof that the insured was notified of the return; or

(2) requesting the association to cancel the insurance coverage by a notice mailed to the insured and to any others shown in the policy as having an insurable interest in the property.

(c) On completion of cancellation under Subsection (b), the association shall refund the unearned premium, less any minimum retained premium set forth in the plan of operation, to the person, firm, or corporation to whom the unpaid balance is due.

(d) If an insured requests cancellation of the insurance coverage, the association shall refund the unearned premium payable to the insured and the holder of an unpaid balance. The general property and casualty agent who submitted the application shall refund the agent's commission on any unearned premium in the same manner. (V.T.I.C. Art. 21.49, Sec. 6(b) (part).)

Source Law

(b) … In the event an agent or some other person, firm, or corporation shall finance the payment of all or a portion of the premium and there is a balance due for the financing of such premium and such balance, or any installment thereof, is not paid within 10 days after the due date, the agent or other person, firm, or corporation to whom such balance is due may request cancellation of the insurance by returning the policy, with proof that the insured was notified of such return, or by requesting the Association to cancel such insurance by notice mailed to the insured and any others shown in the policy as having an insurable interest in the property. Upon completion of cancellation, the Association shall refund the unearned premium, less any minimum retained premium set forth in the plan of operation, to the person, firm, or corporation to whom the unpaid balance is due. In the event an insured requests cancellation of insurance, the Association shall make refund of such unearned premium payable to the insured and the holder of an unpaid balance. The Local Recording Agent, who submitted the application, shall refund the commission on any unearned premium in the same manner.

Revised Law

Sec. 2210.205. DELETION OF INSURANCE COVERAGE FROM OTHER POLICIES. The department shall prepare endorsements and forms applicable to the standard prescribed policies that delete insurance coverages available through the association, and the commissioner shall promulgate the applicable reduction of premiums and rates for the use of the endorsement or form. (V.T.I.C. Art. 21.49, Sec. 7.)

Source Law

Sec. 7. The Board shall prepare endorsements and forms applicable to the standard policies which it has promulgated providing for the deletion of coverages available through the Association and shall promulgate the applicable reduction of premiums and rates for the use of such endorsements and forms.

Revised Law

Sec. 2210.206. INSURANCE COVERAGE FOR CERTAIN GOVERNMENTAL ENTITIES. (a) In insuring property of this state or property of a political subdivision of this state, the association may not direct an insurer to issue the policy if the insurer's organizational plan precludes the insurer from writing insurance coverage for this state or a political subdivision of this state.

(b) An insurer described by Subsection (a) may not act as a reinsurer with respect to an insurance policy described by Subsection (a). (V.T.I.C. Art. 21.49, Sec. 4(b).)

Source Law

(b) The organizational plan of certain types of insurers precludes such insurers from writing insurance coverage for the State of Texas, any city, political subdivision or agency of the State. When insuring property of the State of Texas, any city, political subdivision or agency of the State, the Association shall not cause such policies to be issued in such companies, nor shall such companies be included as reinsurers for any policies of insurance in this category.

Revisor's Note

(1) Section 4(b), V.T.I.C. Article 21.49, refers to "any city, political subdivision or agency of the State." The revised law omits the references to "city" because that term is included within the meaning of "political subdivision."

(2) Section 4(b), V.T.I.C. Article 21.49, refers to "property of the State of Texas, … or agency of the State." The revised law omits the reference to property of an agency of this state because that property is included within the meaning of "property of this state."

Revised Law

Sec. 2210.207. WINDSTORM AND HAIL INSURANCE: REPLACEMENT COST COVERAGE. (a) In this section, "roof covering" means:

(1) the roofing material exposed to the weather;

(2) the underlayments applied for moisture protection; and

(3) all flashings required in the replacement of a roof covering.

(b) Subject to any applicable deductibles and the limits for the coverage purchased by the insured, a windstorm and hail insurance policy issued by the association may include replacement cost coverage for one- and two-family dwellings, including outbuildings, as provided under the dwelling extension coverage in the policy.

(c) If, 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, 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.

(e) Notwithstanding this chapter or any other law, the commissioner, after notice and hearing, may adopt rules to:

(1) authorize the association to provide actual cash value coverage instead of replacement cost coverage on the roof covering of a building insured by the association; and

(2) establish:

(A) the conditions under which the association may provide that actual cash value coverage;

(B) the appropriate premium reductions when coverage for the roof covering is provided on an actual cash value basis; and

(C) the disclosure that must be provided to the policyholder, prominently displayed on the face of the windstorm and hail insurance policy.

(f) Notwithstanding Chapter 40, a hearing under Subsection (e) shall be held before the commissioner or the commissioner's designee.

(g) The commissioner may adopt rules as necessary to implement this section. (V.T.I.C. Art. 21.49, Sec. 8A.)

Source Law

Sec. 8A. (a) A policy of windstorm and hail insurance issued by the Association may include replacement cost coverage for one and two-family dwellings, including outbuildings, as provided under the dwelling extension coverage in the policy, subject to any applicable deductibles and the limits for the coverage purchased by the insured.

(b) If, at the time of loss, the total amount of insurance applicable to the 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. If, at the time of loss, the total amount of insurance applicable to the 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 that part of the dwelling damaged or destroyed, less depreciation. Notwithstanding any other provision of this Act or other law, the commissioner, after notice and hearing, may adopt rules to:

(1) authorize the Association to provide actual cash value coverage instead of replacement cost coverage on the roof covering of a building insured by the Association; and

(2) determine:

(A) the conditions under which the Association may provide that actual cash value coverage;

(B) the appropriate premium reductions when coverage for the roof covering is provided on an actual cash value basis; and

(C) the disclosure that must be provided to the policyholder, prominently displayed on the face of the windstorm and hail insurance policy.

(d) Notwithstanding Article 1.33B of this code, a hearing under Subsection (b) of this section shall be held before the commissioner or the commissioner's designee.

(e) For purposes of this section, "roof covering" means:

(1) the roofing material exposed to the weather;

(2) the underlayments applied for moisture protection; and

(3) all flashings required in the replacement of a roof covering.

Revisor's Note

Section 8A(c), V.T.I.C. Article 21.49, authorizes the commissioner of insurance to adopt "rules and regulations" necessary to implement Section 8A, V.T.I.C. Article 21.49. The revised law omits the reference to "regulations" for the reason stated in Revisor's Note (2) to Section 2210.202.

Revised Law

Sec. 2210.208. WINDSTORM AND HAIL INSURANCE: COVERAGE FOR CERTAIN INDIRECT LOSSES. (a) Except as provided by Subsections (e) and (f), a windstorm and hail insurance policy issued by the association for a dwelling, as that term is defined by the department or a successor to the department, must include coverage for:

(1) wind-driven rain damage, regardless of whether an opening is made by the wind;

(2) loss of use; and

(3) consequential losses.

(b) A windstorm and hail insurance policy issued by the association for tenant contents of a dwelling or other residential building must include coverage for loss of use and consequential losses.

(1) according to forms approved by the commissioner; and

(2) for a premium paid by the insured based on rates established by commissioner rule.

(d) The association shall provide coverage under this section as directed by commissioner rule.

(e) The association is not required to offer coverage for indirect losses as provided by Subsection (a) or (b) unless that coverage was excluded from a companion policy in the voluntary market.

(f) The association is not required to provide coverage for:

(1) loss of use, if the loss is loss of rent or loss of rental value; or

(2) additional living expenses, if the insured property is a secondary or a non-primary residence. (V.T.I.C. Art. 21.49, Sec. 8B.)

Source Law

Sec. 8B. (a) Except as provided by Subsections (b) and (c) of this section, a policy of windstorm and hail insurance issued by the association for a dwelling, as that term is defined by the Texas Department of Insurance or its successor, must include coverage for wind-driven rain damage, regardless of whether an opening is made by the wind, loss of use, and consequential losses, according to forms approved by the commissioner and for a premium paid by the insured based on rates established by rule adopted by the commissioner. A policy of windstorm and hail insurance issued by the association for tenant contents of a dwelling or other residential building must include coverage for loss of use and consequential losses, according to forms approved by the board and for a premium paid by the insured based on rates established by rule adopted by the commissioner. The association shall provide coverage under this section as directed by rule of the commissioner.

(b) The association is not required to offer coverage for indirect losses as provided by Subsection (a) of this section unless that coverage was excluded from a companion policy in the voluntary market.

(c) The association is not required to provide coverage for (1) "loss of use" if such "loss of use" is loss of rents or loss of rental value; or (2) "additional living expenses" when the property insured is a secondary or a non-primary residence.

[Sections 2210.209-2210.250 reserved for expansion]

SUBCHAPTER F. PROPERTY INSPECTIONS FOR WINDSTORM AND HAIL INSURANCE

Revised Law

Sec. 2210.251. INSPECTION REQUIREMENTS. (a) Except as provided by this section, to be considered insurable property eligible for windstorm and hail insurance coverage from the association, a structure that is constructed or repaired or to which additions are made on or after January 1, 1988, must be inspected or approved by the department for compliance with the plan of operation.

(b) After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule shall adopt the 2003 International Residential Code for one- and two-family dwellings published by the International Code Council. For those geographic areas, the commissioner by rule may adopt a subsequent edition of that code and may adopt any supplements published by the International Code Council and amendments to that code.

(c) After January 1, 2004, a person must submit a notice of a windstorm inspection to the unit responsible for certification of windstorm inspections at the department before beginning to construct, alter, remodel, enlarge, or repair a structure.

(d) A structure constructed or repaired or to which additions were made before January 1, 1988, that is located in an area that was governed at the time of the construction, repair, or addition by a building code recognized by the association is insurable property eligible for windstorm and hail insurance coverage from the association without compliance with the inspection or approval requirements of this section or the plan of operation.

(e) A structure constructed or repaired or to which additions were made before January 1, 1988, that is located in an area not governed by a building code recognized by the association is insurable property eligible for windstorm and hail insurance coverage from the association without compliance with the inspection or approval requirements of this section or the plan of operation if the structure was previously insured by an insurer authorized to engage in the business of insurance in this state and the structure is in essentially the same condition as when previously insured, except for normal wear and tear, and is without any structural change other than a change made according to code. For purposes of this subsection, evidence of previous insurance coverage includes:

(1) a copy of a previous insurance policy;

(2) copies of canceled checks or agent's records that show payments for previous policies; and

(3) a copy of the title to the structure or mortgage company records that show previous policies.

(f) The department shall issue a certificate of compliance for each structure that qualifies for coverage. The certificate is evidence of insurability of the structure by the association.

(g) The department may enter into agreements and contracts as necessary to implement this section.

(h) The department may charge a reasonable fee to cover the cost of making building requirements and inspection standards available to the public. (V.T.I.C. Art. 21.49, Secs. 6A(a), (b), (g), (h).)

Source Law

Sec. 6A. (a) Except as otherwise provided by this Subsection, all structures that are constructed or repaired or to which additions are made on or after January 1, 1988, to be considered insurable property for windstorm and hail insurance from the Association, must be inspected or approved by the Board for compliance with the plan of operation. After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule shall adopt the 2003 International Residential Code for one- and two-family dwellings published by the International Code Council. For those geographic areas, the commissioner by rule may adopt a subsequent edition of that code and may adopt any supplements published by the International Code Council and amendments to the code. A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area covered at the time by a building code recognized by the Association shall be considered an insurable property for windstorm and hail insurance from the Association without compliance with the inspection or approval requirements of this Section or the plan of operation. A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area not covered by a building code recognized by the Association shall be considered an insurable property for windstorm and hail insurance from the Association without compliance with the inspection or approval requirements of this Section or the plan of operation if that structure has been previously insured by a licensed insurance company authorized to do business in this State and the risk is in essentially the same condition as when previously insured, except for normal wear and tear, and without any structural change other than a change made according to code. Evidence of previous insurance includes a copy of a previous policy, copies of canceled checks or agent's records that show payments for previous policies, and a copy of the title to the structure or mortgage company records that show previous policies. After January 1, 2004, a person must submit a notice of a windstorm inspection to the unit responsible for certification of windstorm inspections at the department before beginning to construct, alter, remodel, enlarge, or repair a structure.

(b) The Board shall issue for each structure that qualifies a certificate of compliance that is evidence of insurability of the structure by the Association.

(g) The Board may make agreements and contracts as necessary to effect the provisions of this Section.

(h) The department may charge a reasonable fee to cover the cost of making building requirements and inspection standards available to the public.

Revisor's Note

Section 6A(a), V.T.I.C. Article 21.49, refers to a "licensed insurance company authorized to do business in this State." The revised law omits the reference to "licensed" as redundant because "certificate of authority" is the term used throughout this code in relation to an entity's authority to engage in business, and an insurer that is "authorized" necessarily holds a certificate of authority.

Revised Law

Sec. 2210.252. INTERNATIONAL RESIDENTIAL CODE BUILDING SPECIFICATIONS. (a) After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule may supplement the plan of operation building specifications with the structural provisions of the International Residential Code for one- and two-family dwellings, as published by the International Code Council or an analogous entity recognized by the department.

(b) For a geographic area specified under Subsection (a), the commissioner by rule may adopt a subsequent edition of the International Residential Code for one- and two-family dwellings and may adopt a supplement published by the International Code Council or an amendment to that code. (V.T.I.C. Art. 21.49, Sec. 5(m).)

Source Law

(m) After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule may supplement the building specifications in the plan of operation with the structural provisions of the International Residential Code for one- and two-family dwellings, as published by the International Code Council, or by an analogous entity recognized by the department. For those specified geographic areas, the commissioner by rule may adopt subsequent editions of that code and may adopt any supplements published by the International Code Council and amendments to that code.

Revised Law

Sec. 2210.253. INSURER ASSESSMENT: FIRST TIER COASTAL COUNTY. (a) In this section, "property insurance" means a commercial or residential insurance policy prescribed or approved by the department that provides coverage for windstorm and hail damage, including a Texas windstorm and hail insurance policy.

(b) The department shall assess each insurer that provides property insurance in a first tier coastal county in accordance with this section.

(c) The total assessment under this section in a state fiscal year must be in the amount estimated by the department as necessary to cover the administrative costs of the windstorm inspection program under Section 2210.251 to be incurred in the first tier coastal counties in that fiscal year.

(d) The assessment must be based on each insurer's proportionate share of the total extended coverage and other allied lines premium received by all insurers for property insurance in the first tier coastal counties in the calendar year preceding the year in which the assessment is made.

(e) The commissioner shall adopt rules to implement the assessment of insurers under this section. (V.T.I.C. Art. 21.49, Secs. 6B(a), (b) (part), (c), (d).)

Source Law

Sec. 6B. (a) The board shall assess each insurer who provides property insurance in a first tier coastal county in accordance with this section.

(b) The total assessment under this section must be in the amount the board estimates is necessary to cover the cost of administration of the windstorm inspection program in the first tier coastal counties under Section 6A of this article in the state fiscal year in which the assessment is made, … .

(c) The assessment must be based on each insurer's proportionate share of the total extended coverage and other allied lines premium received by all insurers for property insurance in the first tier coastal counties in the calendar year preceding the year in which the assessment is made. The board shall adopt rules to implement the assessment of insurers under this section.

(d) For purposes of this section, "property insurance" means any commercial or residential policy promulgated or approved by the board that provides coverage for the perils of windstorm and hail, including a Texas Windstorm and Hail Insurance Policy.

Revisor's Note

Section 6B(b), V.T.I.C. Article 21.49, in part provides that the assessment made under Section 6B is reduced by certain fees collected "under Section 6A(c) of this article." The revised law omits the reference to Section 6A(c) as inaccurate. Section 6A(c) in current law does not relate to the collection of fees. A former Section 6A(c) did relate to the collection of fees, but was repealed by Section 9.06, Chapter 206, Acts of the 78th Legislature, Regular Session, 2003. The omitted law reads:

[(b) The total assessment under this section must be in the amount the board estimates is necessary to cover the cost of administration of the windstorm inspection program in the first tier coastal counties under Section 6A of this article in the state fiscal year in which the assessment is made,] reduced by the total amount of fees the department estimates will be collected for that year under Section 6A(c) of this article.

Revised Law

Sec. 2210.254. QUALIFIED INSPECTORS. (a) For purposes of this chapter, a "qualified inspector" includes:

(1) a person determined by the department to be qualified because of training or experience to perform building inspections;

(2) a licensed professional engineer who meets the requirements specified by commissioner rule for appointment to conduct windstorm inspections; and

(3) an inspector who:

(A) is certified by the International Code Council, the Building Officials and Code Administrators International, Inc., the International Conference of Building Officials, or the Southern Building Code Congress International, Inc.;

(B) has certifications as a buildings inspector and coastal construction inspector; and

(b) A windstorm inspection may be performed only by a qualified inspector.

(c) Before performing building inspections, a qualified inspector must be approved and appointed or employed by the department.

(d) The department may charge a reasonable fee for the filing of applications by and determining the qualifications of persons for appointment as qualified inspectors. (V.T.I.C. Art. 21.49, Sec. 6A(d).)

Source Law

(d) A windstorm inspection may only be performed by a qualified inspector. For purposes of this article, a "qualified inspector" includes:

(1) a person determined by the department to be qualified to perform building inspections because of training or experience;

(2) a licensed professional engineer meeting the requirements of the rules adopted by the commissioner for appointment to conduct windstorm inspections; and

(3) an inspector who is certified by the International Code Council, the Building Officials and Code Administrators International, Inc., the International Conference of Building Officials, or the Southern Building Code Congress International, Inc., who has certifications as a buildings inspector and coastal construction inspector, and who also complies with other requirements specified by rule by the commissioner. A qualified inspector must be approved and appointed or employed by the department to perform building inspections. The department may charge a reasonable fee for the filing of applications and determining the qualifications of persons for appointment as qualified inspectors.

Revised Law

Sec. 2210.255. APPOINTMENT OF LICENSED ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by the Texas Board of Professional Engineers, the commissioner shall appoint the engineer as an inspector under this subchapter not later than the 10th day after the date the engineer delivers to the commissioner information demonstrating that the engineer is qualified to perform windstorm inspections under this subchapter.

(b) The commissioner shall adopt rules establishing the information to be considered in appointing engineers under this section. (V.T.I.C. Art. 21.49, Sec. 6D.)

Source Law

Sec. 6D. (a) The commissioner, on the request of an engineer licensed by the Texas Board of Professional Engineers, shall appoint the engineer under this article not later than the 10th day after the date of the engineer's delivery to the commissioner of information demonstrating that the engineer is qualified to perform windstorm inspections under this article.

(b) The commissioner shall adopt rules to determine the information the commissioner will consider in appointing engineers under Subsection (a) of this section.

Revised Law

Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING APPOINTED INSPECTORS. (a) After notice and hearing, the department may revoke an appointment made under Section 2210.254 if the appointee is found to be in violation of this subchapter or a rule of the commissioner adopted under this subchapter.

(b) The commissioner, instead of revocation, may impose one or more of the following sanctions if the commissioner determines from the facts that the sanction would be fair, reasonable, or equitable:

(1) suspension of the appointment for a specific period, not to exceed one year;

(2) issuance of an order directing the appointee to cease and desist from the specified activity or failure to act determined to be in violation of this subchapter or rules of the commissioner adopted under this subchapter; or

(3) if the commissioner finds that the appointee knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false or fraudulent statement, issuance of an order directing the appointee to pay within a specified time, not to exceed 60 days, a fine not to exceed $5,000 for the violation.

(d) If it is found after a hearing that an appointee has failed to comply with an order issued under Subsection (b), the department shall, unless the order is stayed, revoke the appointment of the person.

(e) The department may informally dispose of any matter under Subsection (a) or (b) by consent order or default.

(f) If an appointee is an engineer licensed by the Texas Board of Professional Engineers who is found by the department to have knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false or fraudulent statement, the commissioner may take action against the appointee in the manner provided by Subsections (a) and (b) but may not assess a fine against the appointee. The commissioner shall notify the Texas Board of Professional Engineers of an order issued by the commissioner against an appointee who is an engineer licensed by that board, including an order suspending or revoking the appointment of the person. (V.T.I.C. Art. 21.49, Secs. 6A(j), (j-1), (k), (k-1).)

Source Law

(j) After notice and hearing, the department may cancel or revoke an appointment made under this Section if the holder of the appointment is found to be in violation of, or to have failed to comply with, specific provisions of this Section or any rule or regulation of the commissioner made under this Section. In lieu of cancellation or revocation, the commissioner may order one or more of the following sanctions, if the commissioner determines from the facts that it would be fair, reasonable, or equitable:

(1) suspending the appointment for a specific period, not to exceed one year;

(2) an order directing the holder of the appointment to cease and desist from the specified activity determined to be in violation of specific provisions of this Section or rules and regulations of the commissioner made pursuant to this Section or from failing to comply with those provisions of this Section or the rules and regulations promulgated under this Section; or

(3) if the appointed person is found by the commissioner to have knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false, fictitious, or fraudulent statement or entry, directing the appointed person to remit within a specified time, not to exceed 60 days, a specified monetary forfeiture not to exceed $5,000 for the violation or failure to comply.

(j-1) If an appointed person is an engineer licensed by the Texas Board of Professional Engineers who is found by the department to have knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false or fraudulent statement or entry, the commissioner may take action against the appointed person in the manner provided by Subsection (j) of this Section, but may not levy any monetary fine against an appointed person who is a licensed engineer.

(k) A monetary forfeiture paid as a result of an order issued under Subsection (j)(3) of this Section shall be deposited to the credit of the general revenue fund. If it is found after hearing that any appointed person has failed to comply with an order issued under Subsection (j) of this Section, the department shall, unless the order is lawfully stayed, cancel the appointment of the person. The department may informally dispose of any matter under Subsection (j) of this Section by consent order or default.

(k-1) The commissioner shall notify the Texas Board of Professional Engineers of each order issued by the commissioner against an appointed person who is an engineer licensed by the Texas Board of Professional Engineers, including an order suspending, canceling, or revoking the appointment of that person.

Revisor's Note

(1) Section 6A(j), V.T.I.C. Article 21.49, authorizes the department to "cancel" or "revoke" an appointment to serve as an inspector and contains other similar references. The revised law omits the reference to "cancel" and other similar references because, in context, the terms are included within the meaning of the term "revoke."

(2) Section 6A(j), V.T.I.C. Article 21.49, refers to an appointee who "is found to be in violation of, or to have failed to comply with" certain requirements and contains other similar references. The revised law omits the references because, in context, a failure to comply constitutes a violation.

(3) Section 6A(j)(3), V.T.I.C. Article 21.49, refers to "a false, fictitious, or fraudulent statement or entry" and Section 6A(j-1), V.T.I.C. Article 21.49, refers to a "statement or entry." The revised law omits the reference to "fictitious" because, in context, "fictitious" is included within the meaning of "false." The revised law omits the references to "entry" because, in context, "entry" is included within the meaning of "statement."

(4) Section 6A(k), V.T.I.C. Article 21.49, refers to an order that is "lawfully" stayed. The revised law omits the reference to "lawfully" as unnecessary because the word does not add to the clear meaning of the law. An order is not stayed unless the order is stayed in compliance with applicable law.

Revised Law

Sec. 2210.257. DEPOSIT OF FEES. All fees collected by the department under this subchapter shall be deposited to the credit of the Texas Department of Insurance operating account. (V.T.I.C. Art. 21.49, Sec. 6A(i).)

Source Law

(i) All fees collected by the Board under this Section shall be deposited in the State Treasury to the credit of the State Board of Insurance operating fund.

Revisor's Note

Section 6A(i), V.T.I.C. Article 21.49, requires fees to be deposited in the state treasury to the credit of the State Board of Insurance operating fund. Under Chapter 4, Acts of the 72nd Legislature, 1st Called Session, 1991, the Texas Department of Insurance operating fund, the later name of the State Board of Insurance operating fund, was converted to an account in the general revenue fund. The revised law is drafted accordingly.

[Sections 2210.258-2210.300 reserved for expansion]

SUBCHAPTER G. WINDSTORM BUILDING CODE ADVISORY COMMITTEE

Revised Law

Sec. 2210.301. DEFINITION. In this subchapter, "advisory committee" means the windstorm building code advisory committee on specifications and maintenance. (V.T.I.C. Art. 21.49, Sec. 6C(a).)

Source Law

Sec. 6C. (a) In this section, "advisory committee" means the Windstorm Building Code Advisory Committee on Specifications and Maintenance.

Revised Law

Sec. 2210.302. ADVISORY COMMITTEE. (a) The advisory committee shall advise and make recommendations to the commissioner on building and maintenance requirements under the plan of operation.

(b) The advisory committee is composed of nine voting members appointed by the commissioner without regard to the race, color, disability, sex, religion, age, or national origin of the appointee.

(c) The commissioner or the commissioner's designee shall serve as an ex officio, nonvoting member of the advisory committee.

(d) The commissioner shall appoint the voting members of the advisory committee as follows:

(1) three members who are representatives of the building industry who reside in catastrophe areas:

(A) two of whom are residential builders; and

(B) one of whom is a representative of the building supply industry;

(2) three members who are representatives of the insurance industry:

(A) one of whom is a member of the board of directors; and

(B) two of whom are full-time employees of an insurer authorized to engage in the business of property and casualty insurance in this state that writes insurance in a catastrophe area; and

(3) three members who are representatives of the public who reside in a catastrophe area, one of whom is a professional engineer licensed in this state. (V.T.I.C. Art. 21.49, Secs. 6C(b), (c).)

Source Law

(b) The Windstorm Building Code Advisory Committee on Specifications and Maintenance is established as an advisory committee to the commissioner to advise and make recommendations to the commissioner on building requirements and maintenance in the plan of operation.

(c) The advisory committee is composed of nine members appointed by the commissioner without regard to the race, color, disability, sex, religion, age, or national origin of the appointee. The commissioner or the commissioner's designated representative shall serve as an ex officio, nonvoting member of the advisory committee. The voting members of the advisory committee shall be appointed as follows:

(1) three members must be representatives of the building industry who reside in designated catastrophe areas:

(A) two of whom are residential builders; and

(B) one of whom is a representative of the building supply industry;

(2) three members must be representatives of the insurance industry:

(A) one of whom is a member of the board of directors of the Association; and

(B) two of whom are full-time employees of an insurance company authorized to engage in the business of property and casualty insurance in this state that writes insurance in the designated catastrophe area; and

(3) three members must be representatives of the public who reside in a designated catastrophe area, one of whom is a professional engineer licensed in this state.

Revisor's Note

Section 6C(b), V.T.I.C. Article 21.49, provides that the Windstorm Building Code Advisory Committee on Specifications and Maintenance "is established." The revised law omits the reference to the establishment of the advisory committee as executed.

Revised Law

Sec. 2210.303. TERMS. A member of the advisory committee serves a three-year term. (V.T.I.C. Art. 21.49, Sec. 6C(d) (part).)

Source Law

(d) A member of the advisory committee serves a three-year term. …

Revised Law

Sec. 2210.304. COMPENSATION. A member of the advisory committee is not entitled to compensation but is entitled to reimbursement for actual and necessary expenses incurred in performing duties as an advisory committee member, subject to any applicable limitation on reimbursement provided by the General Appropriations Act. (V.T.I.C. Art. 21.49, Sec. 6C(d) (part).)

Source Law

(d) … A member of the advisory committee is not entitled to compensation but is entitled to reimbursement for actual and necessary expenses incurred in performing duties as an advisory committee member, subject to any applicable limitation on reimbursement provided by the General Appropriations Act.

Revised Law

Sec. 2210.305. PRESIDING OFFICER. The advisory committee shall elect a presiding officer from the committee members. (V.T.I.C. Art. 21.49, Sec. 6C(e) (part).)

Source Law

(e) The advisory committee shall elect a presiding officer from its members. …

Revised Law

Sec. 2210.306. MEETINGS. (a) The advisory committee shall meet at least two times each year at the call of the presiding officer with the approval of the commissioner. The advisory committee shall publish the date and location of the meeting not later than the 45th day before the date on which the meeting is scheduled to occur.

(b) The commissioner or the commissioner's designee must be present at each meeting of the advisory committee. (V.T.I.C. Art. 21.49, Sec. 6C(e) (part).)

Source Law

(e) … The advisory committee shall meet at the call of the presiding officer with the approval of the commissioner, but at least two times each year. The advisory committee shall publish the date and location of the meeting not later than the 45th day before the date on which the meeting is scheduled to occur. The commissioner or the commissioner's designee must be present at each meeting of the advisory committee.

Revised Law

Sec. 2210.307. RECOMMENDATIONS FOR CHANGES IN PLAN OF OPERATION PROCEDURES. (a) The advisory committee shall analyze and make recommendations for changes regarding procedures described under Section 2210.152(a)(2) that are adopted by the commissioner in the plan of operation. In making recommendations, the advisory committee shall seek to balance the concerns of all affected parties, including consumers, builders, and the association.

(b) Each proposal for a change in an applicable procedure must be submitted to the commissioner. Each proposal must be submitted separately in writing and must contain:

(1) the name, mailing address, and telephone number of the proponent, or, if the proponent is a group or organization, the name of the group or organization and the mailing address and telephone number of the group or organization;

(2) a citation of any applicable statute or rule;

(3) the text of the proposed change, with deletions from current language struck through with a single line and new language underlined; and

(4) a statement of the purpose of the proposed change, with supporting written or printed information.

(c) The commissioner by rule shall adopt a form to be used by a person in presenting to the commissioner a proposal for a change in an applicable procedure.

(d) To be considered at a scheduled advisory committee meeting, a proposal must be submitted not later than the 30th day before the date of that meeting and must meet the requirements of Subsection (b).

(e) The department shall review and organize each proposal submitted and shall allow the advisory committee and interested parties to view the proposals to be considered within a reasonable time before the meeting of the advisory committee. If requested by a majority of the advisory committee, the department shall make recommendations regarding each proposal submitted and provide to the advisory committee any necessary technical information.

(f) At an advisory committee meeting, any interested person may present the person's views on a proposal for a change in an applicable procedure that is included on the advisory committee's published agenda. The advisory committee shall consider each comment presented in acting on the disposition of each proposal.

(g) After consideration of a proposal for a change in an applicable procedure, the advisory committee by vote shall:

(1) recommend adoption of the proposal as initially submitted;

(2) recommend adoption of the proposal with modifications;

(3) recommend rejection of the proposal; or

(4) suspend consideration of the proposal and request additional evaluation and study of the proposal.

(h) The advisory committee shall submit to the commissioner the committee's recommendation on each proposal. The commissioner shall notify the advisory committee of the acceptance or rejection of each recommendation not later than the 30th day after the date of receipt by the commissioner. Acceptance of a recommendation by the commissioner means that the commissioner will consider adoption of that recommendation at a rulemaking hearing. Before adopting a recommendation, the commissioner must determine that the proposal, if adopted, will not weaken the integrity or diminish the effectiveness of a procedure. (V.T.I.C. Art. 21.49, Secs. 6C(f), (g), (h), (i), (j), (k), (l), (m).)

Source Law

(f) The advisory committee shall analyze and make recommendations for changes regarding procedures described under Section 5(d) of this article that are adopted by the commissioner in the plan of operation. In making recommendations, the advisory committee shall seek to balance the concerns of all affected parties, including consumers, builders, and the Association.

(g) Each proposal for a change in an applicable procedure must be submitted to the commissioner. Each proposal must be submitted separately in writing and must contain:

(2) a citation of any applicable statute or rule;

(3) the text of the proposed change, with deletions from current language struck through with a single line and new language underlined; and

(4) a statement of the purpose of the proposed change, with supporting written or printed information.

(h) The commissioner by rule shall adopt a form to be used by a person in presenting a proposal for a change in an applicable procedure to the commissioner.

(i) Each proposal shall be submitted not later than the 30th day before the date of a scheduled advisory committee meeting. A proposal that does not comply with the requirements adopted under Subsection (g) of this section and is not submitted within the time specified in this subsection may not be considered at that scheduled meeting.

(j) The department shall review and organize each proposal submitted and shall allow the advisory committee and interested parties to view the proposals to be considered within a reasonable time before the meeting of the advisory committee. If requested by a majority of the advisory committee, the department shall make recommendations regarding each proposal submitted and provide to the advisory committee any necessary technical information.

(k) At an advisory committee meeting, any interested person may present the person's views on a proposal for a change in an applicable procedure that is included on the advisory committee's published agenda. The advisory committee shall consider each comment presented in its action on the disposition of each proposal.

(l) After consideration of a proposal for a change in an applicable procedure, the advisory committee by vote shall:

(1) recommend adoption of the proposal as initially submitted;

(2) recommend adoption of the proposal with modifications;

(3) recommend rejection of the proposal; or

(4) suspend consideration of the proposal and request additional evaluation and study of the proposal.

(m) The advisory committee shall submit its recommendation on each proposal to the commissioner. The commissioner shall notify the advisory committee of the acceptance or rejection of each recommendation not later than the 30th day after the date of receipt by the commissioner. Acceptance of a recommendation by the commissioner means that the commissioner will consider adoption of that recommendation at a rulemaking hearing. Before adopting a recommendation, the commissioner must determine that the proposal, if adopted, will not weaken the integrity or diminish the effectiveness of a procedure.

Revised Law

Sec. 2210.308. RULES. In addition to any other rulemaking authority granted under this chapter, the commissioner may adopt rules as necessary to implement this subchapter. (V.T.I.C. Art. 21.49, Sec. 6C(n).)

Source Law

(n) In addition to any other rulemaking authority granted under this article, the commissioner may adopt rules as necessary to implement this section.

[Sections 2210.309-2210.350 reserved for expansion]

SUBCHAPTER H. RATES

Revised Law

Sec. 2210.351. ASSOCIATION FILINGS. (a) The association must file with the department each manual of classifications, rules, rates, including condition charges, and each rating plan, and each modification of those items that the association proposes to use.

(b) A filing under this section must indicate the character and the extent of the coverage contemplated and must be accompanied by the policy and endorsement forms proposed to be used. The forms may be designed specifically for use by the association without regard to other forms filed with, approved by, or prescribed by the department for use in this state.

(c) As soon as reasonably possible after the filing has been made, the commissioner in writing shall approve, modify, or disapprove the filing. A filing is considered approved unless modified or disapproved on or before the 30th day after the date of the filing.

(d) If at any time the commissioner determines that a filing approved under Subsection (c) no longer meets the requirements of this chapter, the commissioner may, after a hearing held on at least 20 days' notice to the association that specifies the matters to be considered at the hearing, issue an order withdrawing approval of the filing. The order must specify in what respects the commissioner determines that the filing no longer meets the requirements of this chapter. An order issued under this subsection may not take effect before the 30th day after the date of issuance of the order.

(e) The department shall value the loss and loss adjustment expense data to be used for a filing not earlier than March 31 of the year before the year in which the filing is to be made. (V.T.I.C. Art. 21.49, Secs. 8(a) (part), (c), (d), (h)(15).)

Source Law

Sec. 8. (a) The Association shall file with the Commissioner every manual of classifications, rules, rates which shall include condition charges, every rating plan, and every modification of any of the foregoing which it proposes to use. Every such filing shall indicate the character and the extent of the coverage contemplated and shall be accompanied by the policies and endorsements forms proposed to be used, which said forms and endorsements may be designed specifically for use by the Association and without regard to other forms filed with, approved by, or promulgated by the Board for use in this State. …

(c) Any filing made by the Association pursuant hereto shall be submitted to the Board and as soon as reasonably possible after the filing has been made the Board shall, in writing, approve, modify, or disapprove the same; provided that any filing shall be determined approved unless modified or disapproved within 30 days after date of filing.

(d) If at any time the Board finds that a filing so approved no longer meets the requirements of this Act, it may, after a hearing held on not less than 20 days' notice to the Association specifying the matters to be considered at such hearing, issue an order withdrawing its approval thereof. Said order shall specify in what respects the Board finds that such filing no longer meets the requirements of this Act and shall be effective not less than 30 days after its issuance.

[(h)]

(15) Not earlier than March 31 of the year before the year in which a filing is to be made, the department shall value the loss and loss adjustment expense data to be used for the filing.

Revisor's Note

Section 8(a), V.T.I.C. Article 21.49, refers to certain filings made "with the Commissioner." Section 8(c), V.T.I.C. Article 21.49, refers to the submission of those filings "to the Board," meaning the State Board of Insurance, and requires "the Board" to "approve, modify, or disapprove the same." For the reason stated in Revisor's Note (3) to Section 2210.003, the commissioner of insurance and the Texas Department of Insurance have the authority formerly granted to the board. The revised law substitutes references to filings made with the department and approval of those filings by the commissioner to accurately reflect the organizational structure of the department and the authority of the commissioner and department.

Revised Law

Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a) Not later than August 15 of each year, the association shall file with the department for approval by the commissioner a proposed manual rate for all types and classes of risks written by the association. Chapter 40 does not apply to:

(1) a filing made under this subsection; or

(2) a department action with respect to the filing.

(b) Before approving, disapproving, or modifying a filing, the commissioner shall provide all interested persons a reasonable opportunity to:

(1) review the filing;

(2) obtain copies of the filing on payment of any legally required copying cost; and

(3) submit to the commissioner written comments or information related to the filing.

(c) The commissioner shall schedule an open meeting not later than the 45th day after the date the department receives a filing at which interested persons may present written or oral comments relating to the filing.

(d) An open meeting under Subsection (c) is subject to Chapter 551, Government Code, but is not a contested case hearing under Chapter 2001, Government Code.

(e) The department shall file with the secretary of state for publication in the Texas Register notice that a filing has been made under Subsection (a) not later than the seventh day after the date the department receives the filing. The notice must include information relating to:

(1) the availability of the filing for public inspection at the department during regular business hours and the procedures for obtaining copies of the filing;

(2) procedures for making written comments related to the filing; and

(3) the time, place, and date of the open meeting scheduled under Subsection (c) at which interested persons may present written or oral comments relating to the filing.

(f) After the conclusion of the open meeting, the commissioner shall approve, disapprove, or modify the filing in writing not later than November 15 of the year in which the filing was made. If the filing is not approved, disapproved, or modified on or before that date, the filing is considered approved.

(g) If the commissioner disapproves a filing, the commissioner shall state in writing the reasons for the disapproval and the criteria the association is required to meet to obtain approval. (V.T.I.C. Art. 21.49, Secs. 8(h)(2), (3), (4), (5), (6) (part).)

Source Law

(2) Not later than August 15 of each year, the Association shall file with the department for approval by the commissioner a proposed manual rate for all types and classes of risks written by the Association. Chapter 40 of this code does not apply to a filing made under this subsection or a department action with respect to the filing.

(3) Before approving or disapproving a filing, or modifying a filing, the commissioner shall provide all interested persons a reasonable opportunity to review the filing, obtain copies of the filing on payment of any legally required copying cost, and submit to the commissioner written comments or information related to the filing.

(4) The commissioner shall schedule an open meeting not later than the 45th day after the date on which the department receives the filing at which interested persons may present written or oral comments relating to the filing. An open meeting under this subdivision is subject to Chapter 551, Government Code, but is not a contested case hearing under Chapter 2001, Government Code.

(5) The department shall file with the Texas Register notice that a filing has been made under Subdivision (2) of this subsection not later than the seventh day after the date the filing is received by the department. The notice must include information relating to:

(A) the availability of the filing for public inspection at the department during regular business hours and the procedures for obtaining copies of the filing;

(B) procedures for making written comments related to the filing; and

(C) the time, place, and date of the open meeting scheduled under Subdivision (4) of this subsection at which an interested person may submit either written or oral comments relating to the filing.

(6) After the conclusion of the open meeting, the commissioner shall approve or disapprove or modify the filing in writing on or before November 15 of the year in which the filing is made or the filing is deemed approved. If the commissioner disapproves a filing, the commissioner shall state in writing the reasons for the disapproval and the criteria to be met by the Association to obtain approval… .

Revisor's Note

Section 8(h)(5), V.T.I.C. Article 21.49, refers to making a filing "with the Texas Register." Under Section 2002.016, Government Code, information to be published in the Texas Register is filed with the secretary of state for publication in the Texas Register. The revised law is drafted accordingly.

Revised Law

Sec. 2210.353. MANUAL RATE FILINGS: AMENDED FILING. (a) Not later than the 30th day after the date the association receives the commissioner's written disapproval under Section 2210.352(f), the association may file with the commissioner an amended filing that conforms to all criteria stated in that written disapproval.

(b) Not later than the 30th day after the date an amended filing made under Subsection (a) is received, the commissioner shall approve the amended filing with or without modifications or disapprove the amended filing. If the filing is not modified or disapproved on or before the 30th day after the date of receipt, the filing is considered approved without modification.

(c) Before approving or disapproving an amended filing, the commissioner shall, in the manner provided by Section 2210.352(b), provide all interested persons a reasonable opportunity to:

(1) review the amended filing;

(2) obtain copies of the amended filing on payment of any legally required copying cost; and

(3) submit to the commissioner written comments or information related to the amended filing.

(d) The commissioner may, in the manner provided by Sections 2210.352(c) and (d), hold a hearing regarding an amended filing not later than the 20th day after the date the department receives the amended filing.

(e) Not later than the 10th day after the date the hearing is concluded, the commissioner shall approve or disapprove the amended filing.

(f) The requirements imposed under Subsection (a) and under Sections 2210.352(e), (f), and (g) apply to a hearing conducted under this section and the commissioner's decision resulting from that hearing. (V.T.I.C. Art. 21.49, Secs. 8(h)(6) (part), (7).)

Source Law

(6) … The Association may file with the commissioner, not later than 30 days after the date on which the Association receives the commissioner's written disapproval, an amended filing bringing the filing into conformity with all criteria stated in the commissioner's written disapproval.

(7) Before approving or disapproving an amended filing, the commissioner shall provide all interested persons a reasonable opportunity to review the amended filing, obtain copies of the amended filing on payment of any legally required copying cost, and submit to the commissioner written comments or information related to the amended filing in the manner provided by Subdivision (3) of this subsection, and may hold a hearing not later than the 20th day after the date on which the department receives the amended filing in the manner provided by Subdivision (4) of this subsection. Not later than the 10th day after the date on which the hearing on the amended filing is concluded, the commissioner shall approve or disapprove the amended filing. Within 30 days after the amended filing is received, the commissioner shall approve without changes, approve as modified by the commissioner, or disapprove an amended filing or it is deemed approved. The requirements imposed under Subdivisions (5) and (6) of this subsection apply to a hearing conducted under this subdivision.

Revised Law

Sec. 2210.354. MANUAL RATE FILINGS: ADDITIONAL SUPPORTING INFORMATION. (a) In conjunction with the review of a filing under Section 2210.352 or 2210.353:

(1) the commissioner may request the association to provide additional supporting information relating to the filing; and

(2) any interested person may file a written request with the commissioner for additional supporting information relating to the filing.

(b) A request under this section must be reasonable and must be directly related to the filing.

(c) The commissioner shall submit to the association all requests for additional supporting information made under this section for the commissioner's use and the use of any interested person.

(d) Unless a different period is requested by the association and approved by the commissioner, the association shall provide the information to the commissioner not later than the fifth day after the date the written request for additional supporting information is delivered to the association. The department shall notify an interested person who has requested additional information of the availability of the information not later than one business day after the date the commissioner receives the information from the association. (V.T.I.C. Art. 21.49, Sec. 8(h)(8).)

Source Law

(8) In conjunction with the review of a filing or amended filing, the commissioner may request the Association to provide additional supporting information relating to the filing or amended filing, and any interested person may file a written request with the commissioner for additional supporting information relating to the filing or amended filing. A request under this subdivision must be reasonable and must be directly related to the filing or amended filing. The commissioner shall submit to the Association all requests for additional supporting information made under this subdivision for the commissioner's use and the use of any interested person. Unless a different period is requested by the Association and approved by the commissioner, the Association shall provide the information to the commissioner not later than the fifth day after the date on which the written request for additional supporting information is delivered to the Association. The department shall notify an interested person who has requested additional information of the availability of the information not later than one business day after the date on which the commissioner receives the information from the Association.

Revised Law

Sec. 2210.355. GENERAL RATE REQUIREMENTS; RATE STANDARDS. (a) Rates for coverage under this chapter must be made in accordance with this section.

(b) In adopting rates under this chapter, the following must be considered:

(1) the past and prospective loss experience within and outside this state of hazards for which insurance is made available through the plan of operation, if any;

(2) expenses of operation, including acquisition costs;

(3) a reasonable margin for profit and contingencies; and

(4) all other relevant factors, within and outside this state.

(d) For the establishment of rates and minimum premiums, the risks may be grouped by classification.

(e) Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in those risks on the basis of any or all of the factors described by Subsection (b). The classification rates may include rules for classification of risks insured under this chapter and rate modifications to those classifications.

(f) Each provision regarding a rate, classification, standard, or premium must be made without prejudice to, or prohibition of, provision by the association for consent rates on individual risks if the rate and risk are acceptable to the association, and are analogous to the rate provided for under Article 5.26(a). This subsection applies regardless of whether such a risk would otherwise be subject to or the subject of a rate classification provision or eligibility provision.

(g) A commission paid to an agent must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory. (V.T.I.C. Art. 21.49, Sec. 8(e).)

Source Law

(e) All rates shall be made in accordance with the following provisions:

(1) Due consideration shall be given to the past and prospective loss experience within and outside the State of hazards for which insurance is made available through the plan of operation, if any, to expenses of operation including acquisition costs, to a reasonable margin for profit and contingencies, and to all other relevant factors, within and outside the State.

(2) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in such risks on the basis of any or all of the factors mentioned in the preceding paragraph. Such rates may include rules for classification of risks insured hereunder and rate modifications thereof. All such provisions, however, as respects rates, classifications, standards and premiums shall be without prejudice to or prohibition of provision by the Association for consent rates on individual risks if the rate and risk are acceptable to the Association and as is similarly provided for, or as is provided for, in Article 5.26(a), Texas Insurance Code, and this provision or exception on consent rates is irrespective of whether or not any such risk would otherwise be subject to or the subject of a provision of rate classification or eligibility.

(3) Rates shall be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory as to any class of insurer.

(4) Commissions paid to agents shall be reasonable, adequate, not unfairly discriminatory and nonconfiscatory.

Revisor's Note

Section 8(e)(2), V.T.I.C. Article 21.49, refers to certain provisions relating to consent rates analogous to provisions contained in Section (a), V.T.I.C. Article 5.26. Section (i), V.T.I.C. Article 5.26, as added by Chapter 242, Acts of the 72nd Legislature, Regular Session, 1991, provided that rate requirements for residential property insurance under Article 5.26 were superseded by the flexible rating program adopted under V.T.I.C. Article 5.101, and that rate requirements for commercial property insurance under Article 5.26 were superseded by V.T.I.C. Article 5.13-2. Article 5.26, as amended by Section 21.15, Chapter 206, Acts of the 78th Legislature, Regular Session, 2003, provides that "rates for all lines of insurance subject to this subchapter are determined as provided by Article 5.13-2 of this code." As a result, Section (a), V.T.I.C. Article 5.26, is no longer generally applicable to the setting of rates. However, Section (a) contains provisions applicable to the establishment of consent rates, and it is therefore appropriate to retain the reference to that section. The revised law is drafted accordingly.

Revised Law

Sec. 2210.356. UNIFORM RATE REQUIREMENTS; INFORMATION USED IN DEVELOPING RATES. (a) Each rate approved by the commissioner in accordance with this subchapter must be uniform throughout the first tier coastal counties.

(b) The catastrophe element used to develop rates under this subchapter applicable to risks written by the association must be uniform throughout the seacoast territory. The catastrophe element of the rates must be developed using:

(1) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the association, for covered property located in the seacoast territory, using not less than the most recent 30 years of experience available; and

(2) 100 percent of both the loss experience and related premium income for the association for covered property, using not less than the most recent 30 years of experience available.

(1) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the association, for covered property located in the catastrophe area of the seacoast territory, using the most recent 10 years of experience available; and

(2) 100 percent of both the loss experience and related premium income for the association for covered property, using the most recent 10 years of experience available.

(d) The noncatastrophe element of the commercial rates must be developed using 100 percent of both the loss experience and related premium income for the association for covered property, using the most recent 10 years of experience available. (V.T.I.C. Art. 21.49, Secs. 8(h)(1), (11), (12), (13).)

Source Law

(h)(1) Each rate established by the commissioner in accordance with this section must be uniform throughout the first tier of coastal counties.

(11) The catastrophe element used to develop rates under this Act applicable to risks written by the Association shall be uniform throughout the seacoast territory. The catastrophe element of the rates must be developed using:

(A) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the Association, for covered property located in the seacoast territory using not less than the most recent 30 years of experience available; and

(B) 100 percent of both the loss experience and related premium income for the Association for covered property using not less than the most recent 30 years of experience available.

(12) The noncatastrophe element of the noncommercial rates must be developed using:

(A) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the Association, for covered property located in the catastrophe area of the seacoast territory using the most recent 10 years of experience available; and

(B) 100 percent of both the loss experience and related premium income for the Association for covered property using the most recent 10 years of experience available.

(13) The noncatastrophe element of the commercial rates must be developed using 100 percent of both the loss experience and related premium income for the Association for covered property using the most recent 10 years of experience available.

Revisor's Note

Section 8(h)(1), V.T.I.C. Article 21.49, refers to rates "established by the commissioner." The revised law substitutes "approved by the commissioner" for "established by the commissioner" because under Section 8(c), V.T.I.C. Article 21.49, revised as Section 2210.351(c), the commissioner of insurance reviews and may approve rates filed by the association.

Revised Law

Sec. 2210.357. RATE CLASSIFICATIONS. All premiums written and losses paid under this chapter, as appropriate, must be included in applicable classifications for general ratemaking purposes. (V.T.I.C. Art. 21.49, Sec. 8(g).)

Source Law

(g) All premiums written and losses paid under this Act as appropriate shall be included in applicable classifications for general rate making purposes.

Revised Law

Sec. 2210.358. EXPERIENCE DATA. (a) Not later than June 1 of each year, the department shall provide to the association and other interested persons the experience data to be used in establishing the rates under this subchapter in that year.

(b) On request from the department, an insurer shall provide the data to the department or the department may obtain the data from a designated statistical agent, as defined by Section 38.201. (V.T.I.C. Art. 21.49, Sec. 8(h)(16).)

Source Law

(16) Not later than June 1 of each year, the department shall provide the experience data to be used in establishing the rates under this subsection in that year to the Association and other interested persons. On request from the department, an insurer shall provide the data to the department or the department may obtain the data from a designated statistical agent, as defined by Section 38.201 of this code.

Revised Law

Sec. 2210.359. LIMITATION ON CERTAIN RATE CHANGES. (a) A rate approved by the commissioner under this subchapter may not reflect an average rate change that is more than 10 percent higher or lower than the rate for commercial windstorm and hail insurance or 10 percent higher or lower than the rate for noncommercial windstorm and hail insurance in effect on the date the filing is made. The rate may not reflect a rate change for an individual rating class that is 15 percent higher or lower than the rate for that individual rating class in effect on the date the filing is made.

(b) The commissioner may, after notice and hearing, suspend this section on a finding that a catastrophe loss or series of occurrences resulting in losses in the catastrophe area justify a need to ensure:

(1) rate adequacy in the catastrophe area; and

(2) availability of insurance outside the catastrophe area. (V.T.I.C. Art. 21.49, Sec. 8(h)(9).)

Source Law

(9) A rate established and authorized by the commissioner under this subsection may not reflect an average rate change that is more than 10 percent higher or lower than the rate for commercial or 10 percent higher or lower than the rate for noncommercial windstorm and hail insurance in effect on the date the filing is made. The rate may not reflect a rate change for an individual rating class that is 15 percent higher or lower than the rate for that individual class in effect on the date the filing is made. The commissioner may, after notice and hearing, suspend this subdivision upon a finding that a catastrophe loss or series of occurrences resulting in losses in the catastrophe area justify a need to assure rate adequacy in the catastrophe area and also justify a need to assure availability of insurance outside the catastrophe area.

Revisor's Note

Section 8(h)(9), V.T.I.C. Article 21.49, refers to rates "established and authorized by the commissioner." The revised law substitutes "approved by the commissioner" for "established and authorized by the commissioner" for the reason stated in the revisor's note to Section 2210.356.

Revised Law

Sec. 2210.360. USE OF CERTAIN SURCHARGES IN DEVELOPING RATES. Surcharges previously collected and used in the development of current rates may not be excluded from future rate development if those surcharges were collected during the experience period considered by the commissioner. (V.T.I.C. Art. 21.49, Sec. 8(h)(14).)

Source Law

(14) Surcharges collected in the past and used in the development of current rates may not be excluded from future rate development as long as those surcharges were collected during the experience period considered by the commissioner.

Revised Law

Sec. 2210.361. ASSOCIATION RECOMMENDATIONS REGARDING REDUCTIONS IN COVERAGES OR INCREASES IN DEDUCTIBLES. (a) The association may make recommendations to the commissioner that would result in a reduction of coverages or an increase in an applicable deductible if the resultant reduction in coverages or increase in deductibles is accompanied by proposed rate credits.

(b) After notice and hearing, the commissioner may accept, modify, or reject a recommendation made by the association under this section. Chapter 40 does not apply to an action taken under this section. (V.T.I.C. Art. 21.49, Sec. 8(a) (part).)

Source Law

(a) … The Association may make recommendations to the Commissioner that would result in a reduction of coverages or an increase in an applicable deductible if any resultant reduction in coverages or increase in deductibles is accompanied by proposed rate credits. After notice and hearing, the Commissioner may accept, modify, or reject a recommendation made by the Association under this subsection. Article 1.33B of this code does not apply to an action taken under this subsection.

Revised Law

Sec. 2210.362. IMPLIED CONSENT BY APPLICANT FOR INSURANCE COVERAGE. For purposes of this chapter, an applicant for insurance coverage is considered to have consented to the appropriate rates and classifications authorized by this chapter regardless of any other rates or classifications. (V.T.I.C. Art. 21.49, Sec. 8(f).)

Source Law

(f) For the purpose of this Act the applicant under Section 6(a) hereof shall be considered to have consented to the appropriate rates and classifications authorized by this Act irrespective of any and all other rates or classifications.

Revised Law

Sec. 2210.363. EFFECT ON RATES OF CERTAIN OTHER INSURANCE COVERAGE. The commissioner may provide for an appropriate premium rate or reduction in premium rate if flood or rising water insurance coverage exists and is maintained on a risk insured by the association. (V.T.I.C. Art. 21.49, Sec. 8(h)(10).)

Source Law

(10) If valid flood or rising water insurance coverage exists and is maintained on any risk being insured in the pool, the commissioner may provide for a rate and reduction in rate of premium as may be appropriate.

Revisor's Note

(1) Section 8(h)(10), V.T.I.C. Article 21.49, refers to "valid" flood or rising water insurance. The revised law omits the reference to "valid" as unnecessary because the word does not add to the clear meaning of the law. Flood insurance that is not effective or does not provide coverage is not "insurance."

(2) Section 8(h)(10), V.T.I.C. Article 21.49, refers to "any risk being insured in the pool." The revised law substitutes "association" for "pool" for the reason stated in Revisor's Note (1) to Section 2210.051.

[Sections 2210.364-2210.400 reserved for expansion]

SUBCHAPTER I. RATE ROLLBACK

Revised Law

Sec. 2210.401. RATE ROLLBACK FOR CERTAIN RESIDENTIAL CONSTRUCTION. (a) This section applies only to insurance coverage issued by the association to cover new residential construction, excluding an addition or repair to an existing structure, built to the standards of a new building code.

(b) The commissioner shall hold a rulemaking hearing under Chapter 2001, Government Code, to determine the percentage of equitable across-the-board reductions in insurance rates required for Texas windstorm and hail insurance coverage written by the association.

(c) Not later than the 180th day after the date a building code is implemented, the commissioner shall issue an order mandating the appropriate rate reductions.

(d) The commissioner shall require a six percent across-the-board reduction if, before the 181st day after the date a new building code is implemented:

(1) the commissioner has not issued an order establishing rate reductions for Texas windstorm and hail insurance on new residential construction built to the standards of a new building code; or

(2) the order has not become final because of judicial intervention or any other reason.

(e) Notwithstanding Chapter 40, a hearing under this section shall be held before the commissioner or the commissioner's designee. (V.T.I.C. Art. 21.49, Sec. 8E, as added Acts 75th Leg., R.S., Ch. 1000.)

Source Law

Sec. 8E. (a) This section applies only to policies or coverages that are issued by the association to cover new residential construction, excluding additions or repairs to existing structures, built to the standards of a new building code.

(c) Not later than the 180th day after the date a building code is implemented, the commissioner shall issue an order mandating the appropriate rate reductions.

(d) If, before the 181st day after the date a new building code is implemented, the commissioner has not issued an order establishing rate reductions for Texas windstorm and hail insurance on new residential construction built to the standards of a new building code, or the order has not become final because of judicial intervention or any other reason, the commissioner shall require a six percent across-the-board reduction.

(e) Notwithstanding Article 1.33B of this code, a hearing under this section shall be held before the commissioner or the commissioner's designee.

Revisor's Note

Section 8E(a), V.T.I.C. Article 21.49, refers to "policies or coverages." The revised law substitutes "insurance coverage" for the reference to "policies or coverages" because, in context, a "policy" is included within the meaning of "insurance coverage."

[Sections 2210.402-2210.450 reserved for expansion]

SUBCHAPTER J. CATASTROPHE RESERVE TRUST FUND AND REINSURANCE PROGRAM

Revised Law

Sec. 2210.451. DEFINITION. In this subchapter, "trust fund" means the catastrophe reserve trust fund. (V.T.I.C. Art. 21.49, Sec. 8(i)(1) (part).)

Source Law

(i)(1) [The commissioner shall adopt rules under which the association members relinquish their net equity … by making payments to] a fund known as the catastrophe reserve trust fund … .

Revised Law

Sec. 2210.452. ESTABLISHMENT AND USE OF TRUST FUND. (a) The commissioner shall adopt rules under which association members relinquish their net equity on an annual basis as provided by those rules by making payments to the catastrophe reserve trust fund. The trust fund may be used only to fund:

(1) the obligations of the trust fund under Section 2210.058(a); and

(2) the mitigation and preparedness plan established under Section 2210.454 to reduce the potential for payments by association members that give rise to tax credits in the event of loss.

(b) All money, including investment income, deposited in the trust fund constitutes state funds until disbursed as provided by this chapter and commissioner rules. The comptroller shall hold the money outside the state treasury on behalf of, and with legal title in, the department. The department shall keep and maintain the trust fund in accordance with this chapter and commissioner rules. The comptroller, as custodian of the trust fund, shall administer the trust fund strictly and solely as provided by this chapter and commissioner rules.

(c) At the end of each calendar year or policy year, the association shall pay the net equity of a member, including all premium and other revenue of the association in excess of incurred losses and operating expenses, to the trust fund or a reinsurance program approved by the commissioner.

(d) The commissioner by rule shall establish the procedure relating to the disbursement of money from the trust fund to policyholders in the event of an occurrence or series of occurrences within a catastrophe area that results in a disbursement under Section 2210.058(a).

(e) The trust fund may be terminated only by law. On termination of the trust fund, all assets of the trust fund revert to the state to provide funding for the mitigation and preparedness plan established under Section 2210.454. (V.T.I.C. Art. 21.49, Secs. 8(i)(1) (part), (2), (3), (4).)

Source Law

(i)(1) The commissioner shall adopt rules under which the association members relinquish their net equity on an annual basis as provided by those rules by making payments to … to fund the obligations of that fund under Section 19(a) of this Act and to fund the mitigation and preparedness plan established under this subsection to reduce the potential for payments by members of the association giving rise to tax credits in the event of loss or losses. Until disbursements are made as provided by this Act and rules adopted by the commissioner, all money, including investment income, deposited in the catastrophe reserve trust fund are state funds to be held by the comptroller outside the state treasury on behalf of, and with legal title in, the department. The fund may be terminated only by law. On termination of the fund, all assets of the fund revert to the state to be used to provide funding for the annual loss mitigation and preparedness plan developed and implemented by the commissioner under Subdivision (5) of this subsection.

(2) The catastrophe reserve trust fund shall be kept and maintained by the Texas Department of Insurance pursuant to this Act and rules adopted by the commissioner. The comptroller, as custodian, shall administer the funds strictly and solely as provided by this Act and the commissioner's rules.

(3) At the end of either each calendar year or policy year, the association shall pay the net equity of a member, including all premium and other revenue of the association in excess of incurred losses and operating expenses to the catastrophe reserve trust fund or a reinsurance program approved by the commissioner.

(4) The commissioner's rules shall establish the procedure relating to the disbursement of money from the catastrophe reserve trust fund to policyholders in the event of an occurrence or series of occurrences within the defined catastrophe area that results in a disbursement under Section 19(a) of this Act.

Revised Law

Sec. 2210.453. REINSURANCE PROGRAM. (a) The association shall:

(1) make payments into the trust fund; or

(2) establish a reinsurance program approved by the department.

(b) With the approval of the department, the association may establish a reinsurance program that operates in addition to or in concert with the trust fund. (V.T.I.C. Art. 21.49, Sec. 8(h)(17).)

Source Law

(17) The association shall either establish a reinsurance program approved by the Texas Department of Insurance or make payments into the catastrophe reserve trust fund established under Subsection (i) of this section. With the approval of the Texas Department of Insurance, the association may establish a reinsurance program that operates in addition to or in concert with the catastrophe reserve trust fund established under Subsection (i) of this section.

Revised Law

Sec. 2210.454. MITIGATION AND PREPAREDNESS PLAN. (a) The commissioner shall annually develop and implement a mitigation and preparedness plan.

(b) Each state fiscal year, the department may fund the mitigation and preparedness plan using the investment income of the trust fund in an amount not less than $1 million and not more than 10 percent of the investment income of the prior fiscal year. From that amount and as part of that plan, the department may use in each fiscal year $1 million for the windstorm inspection program established under Section 2210.251.

(c) The mitigation and preparedness plan must provide for actions to be taken in the seacoast territory by the commissioner, or by a local government, state agency, educational institution, or nonprofit organization designated by the commissioner in the plan, to implement programs to:

(1) improve preparedness for windstorm and hail catastrophes;

(2) reduce potential losses in the event of such a catastrophe; and

(3) provide research into the means to:

(A) reduce those losses;

(B) educate or inform the public in determining the appropriateness of particular upgrades to structures; or

(d) Money in excess of $1 million may not be used under this section if the commissioner determines that an expenditure of investment income from the trust fund would jeopardize the actuarial soundness of the fund or materially impair the ability of the fund to serve the state purposes for which the fund was established. (V.T.I.C. Art. 21.49, Sec. 8(i)(5).)

Source Law

(5) Each state fiscal year, beginning with fiscal year 2002, the department may use from the investment income of the fund an amount equal to not less than $1 million and not more than 10 percent of the investment income of the prior fiscal year to provide funding for an annual mitigation and preparedness plan to be developed and implemented each year by the commissioner. From that amount and as part of that plan, the department may use in each fiscal year $1 million for the windstorm inspection program established under Section 6A of this Act. The mitigation and preparedness plan shall provide for steps to be taken in the seacoast territory by the commissioner or by a local government, state agency, educational institution, or nonprofit organization designated by the commissioner in the plan, to implement programs intended to improve preparedness for windstorm and hail catastrophes, reduce potential losses in the event of such a catastrophe, provide research into the means to reduce those losses, educate or inform the public in determining the appropriateness of particular upgrades to structures, or protect infrastructure from potential damage from those catastrophes. Money in excess of $1 million is not available for use under this subsection if the commissioner determines that an expenditure of investment income from the fund would jeopardize the actuarial soundness of the fund or materially impair the ability of the fund to serve the state purposes for which it was established.

Revisor's Note

Section 8(i)(5), V.T.I.C. Article 21.49, refers to funding for the mitigation and preparedness plan "beginning with fiscal year 2002." State fiscal year 2002 expired August 31, 2002. The revised law omits the reference as executed.

[Sections 2210.455-2210.500 reserved for expansion]

SUBCHAPTER K. LIABILITY LIMITS

Revised Law

Sec. 2210.501. MAXIMUM LIABILITY LIMITS. (a) The board of directors shall propose the maximum liability limits under a windstorm and hail insurance policy issued by the association under this chapter. The maximum liability limits must be approved by the commissioner.

(b) Subject to Section 2210.502, the maximum liability limits for coverage on a single insurable property may not be less than:

(1) $350,000 for:

(A) a dwelling, including an individually owned townhouse unit; and

(B) the corporeal movable property located in or about the dwelling and, as an extension of coverage, away from those premises, as provided under the policy;

(2) $2,192,000 for a building, and the corporeal movable property located in the building, if the building is:

(A) owned by, and at least 75 percent of which is occupied by, a governmental entity; or

(B) not owned by, but is wholly and exclusively occupied by, a governmental entity;

(3) $125,000 for individually owned corporeal movable property located in an apartment unit, residential condominium unit, or townhouse unit that is occupied by the owner of that property and, as an extension of coverage, away from those premises, as provided under the policy; and

(4) $1,500,000 for:

(A) a structure other than a dwelling or a public building; and

(B) the corporeal movable property located in that structure and, as an extension of coverage, away from those premises, as provided under the policy.

(c) Maximum liability limits for insurable property not described by Subsection (b) are established by the plan of operation. (V.T.I.C. Art. 21.49, Secs. 8D(a), (c).)

Source Law

Sec. 8D. (a) The maximum limits of liability under a policy of windstorm and hail insurance issued by the Association under this Act shall be proposed by the board of directors of the Association and must be approved by the Commissioner. The maximum limits of liability for coverage on any one insurable property may not be less than:

(1) $350,000 for a dwelling, including an individually owned townhouse unit, and the corporeal movable property located in or about the dwelling, and as an extension of coverage, away from those premises, as provided under the policy;

(2) $2,192,000 for a building and the corporeal movable property located in the building that is owned by, and at least 75 percent of which is occupied by, a governmental entity, or that is not owned by, but is wholly and exclusively occupied by, a governmental entity;

(3) $125,000 for individually owned corporeal movable property located in an apartment unit, residential condominium unit, or townhouse unit that is occupied by the owner of that property, and as an extension of coverage, away from those premises, as provided under the policy; and

(4) $1,500,000 for a structure other than a dwelling or a public building and the corporeal movable property located in that structure and, as an extension of coverage, away from those premises, as provided under the policy.

(c) Liability limits for insurable property that is not covered under Subsection (a) of this section shall be established by the plan of operation.

Revisor's Note

Section 8D(a), V.T.I.C. Article 21.49, establishes certain maximum limits for liability insurance on windstorm and hail insurance issued by the Texas Windstorm Insurance Association. Section 8D(d), V.T.I.C. Article 21.49, revised in this chapter in Section 2210.502, authorizes modification of those limits under certain circumstances. The revised law adds a cross-reference to Section 2210.502 for the convenience of the reader.

Revised Law

Sec. 2210.502. ADJUSTMENTS TO MAXIMUM LIABILITY LIMITS. (a) Not later than September 30 of each year, the board of directors shall propose inflation adjustments to the maximum liability limits imposed under Section 2210.501 in increments of $1,000, rounded to the nearest $1,000, considering the limits imposed by Section 2210.501(b), at a rate that reflects any change in the BOECKH Index. If the BOECKH Index ceases to exist, the board of directors shall propose the adjustments in the same manner based on another index that the board of directors determines accurately reflects changes in the cost of construction or residential values in the catastrophe area.

(b) An adjustment to the maximum liability limits that is approved by the commissioner applies to each windstorm and hail insurance policy delivered, issued for delivery, or renewed on or after January 1 of the year following the date of the approval. The indexing of the limits shall adjust for changes occurring on and after January 1, 1997.

(c) The board of directors may propose additional increases in the maximum liability limits as the board determines necessary to implement the purposes of this chapter.

(d) Notwithstanding Section 2210.501(b), the maximum liability limit imposed under Section 2210.501(b)(2) is frozen, and the indexing and adjustments provided by this section do not apply to that limit, until the limit imposed on a structure subject to Section 2210.501(b)(4) and the corporeal property located in that structure reaches or exceeds $2,192,000, at which time the limit imposed under Section 2210.501(b)(2) shall be indexed and adjusted as provided for a risk under Section 2210.501(b)(4). (V.T.I.C. Art. 21.49, Secs. 8D(b), (d), (e).)

Source Law

(b) Notwithstanding Subsection (a) of this section, the liability limit imposed under Subsection (a)(2) of this section is frozen, and the indexing and adjustments provided by this section do not apply to that liability limit, until the liability limit imposed on a structure subject to Subsection (a)(4) of this section and the corporeal property located in that structure reaches or exceeds $2,192,000, at which time the liability limit shall be indexed and adjusted as provided for a risk under Subsection (a)(4) of this section.

(d) Not later than September 30 of each year, the board of directors of the Association shall propose adjustments to the liability limits for inflation. The proposed adjustments shall be made in increments of $1,000, rounded to the nearest $1,000, considering the limits set by Subsection (a) of this section, at a rate that reflects any change in the BOECKH Index. If the BOECKH Index ceases to exist, the board of directors of the Association shall propose adjustments to the nearest $1,000 in round numbers to the liability limits for inflation based on any other index that the board determines accurately reflects changes in the cost of construction or residential values in the catastrophe area. An adjustment to the liability limits that is approved by the Commissioner applies to each policy of windstorm and hail insurance delivered, issued for delivery, or renewed on or after January 1 of the year following the approval by the Commissioner of the adjustment to the liability limits. The indexing of the liability limits shall adjust for changes occurring on and after January 1, 1997.

(e) The board of directors of the Association may propose additional increases in the liability limits as it determines necessary to implement the purposes of this Act.

Revised Law

Sec. 2210.503. FILING OF PROPOSED ADJUSTMENTS WITH COMMISSIONER. Not later than the 10th day after the date a proposed adjustment to the maximum liability limits is determined under Sections 2210.501(a) or (b) or Section 2210.502, the association shall file the proposed adjustments with the commissioner in writing. The filing must include:

(1) a statement of the proposed adjusted limits;

(2) a statement of the limits in effect immediately preceding the effective date of the proposed adjustment;

(3) a brief summary of the changes to the BOECKH Index or other index on which the proposed adjustments are based; and

(4) a brief summary of the computations used in determining the proposed adjustments. (V.T.I.C. Art. 21.49, Sec. 8D(f).)

Source Law

(f) Not later than the 10th day after the date on which the proposed adjustment to the liability limits is determined under Subsection (a), (b), (d), or (e) of this section, the Association shall file its proposed adjustments with the Commissioner in writing. The filing must include:

(1) a statement of the proposed adjusted liability limits;

(2) a statement of the liability limits in effect immediately preceding the effective date of the proposed adjustment;

(3) a brief summary of the changes to the BOECKH Index or other index on which the proposed adjustments are based; and

(4) a brief summary of the computations used in determining the proposed adjustments.

Revised Law

Sec. 2210.504. COMMISSIONER ACTION ON PROPOSED ADJUSTMENTS. (a) Not later than the 60th day after the date of receipt of a filing under Section 2210.503, and after notice and hearing, the commissioner by order shall approve, disapprove, or modify the proposed adjustment to the maximum liability limits.

(b) Notwithstanding Subsection (a) and Sections 2210.501(c), 2210.502(a)-(c), and 2210.503, the commissioner may not approve adjustments of maximum liability limits to amounts lower than the amounts prescribed under Section 2210.501(b). (V.T.I.C. Art. 21.49, Secs. 8D(g), (h).)

Source Law

(g) Not later than the 60th day after the date of receipt of the filing made under Subsection (f) of this section, and after notice and hearing, the Commissioner by order shall approve, disapprove, or modify the proposed adjustments to the liability limits.

(h) Notwithstanding Subsections (c)-(g) of this section, the Commissioner may not approve adjustments of liability limits to amounts lower than the amounts prescribed under Subsection (a) of this section.

Revised Law

Sec. 2210.505. REINSURED EXCESS LIMITS. (a) Notwithstanding any other law, the association may issue a windstorm and hail insurance policy that includes coverage for an amount in excess of a maximum liability limit established under Sections 2210.501-2210.504 if the association first obtains from a reinsurer approved by the commissioner reinsurance for the full amount of policy exposure above that limit.

(b) The premium charged by the association for the excess coverage must equal the amount of the reinsurance premium charged to the association by the reinsurer, plus any payment to the association that is approved by the commissioner.

(c) The commissioner shall adopt rules as necessary to implement this section. (V.T.I.C. Art. 21.49, Secs. 8E(a), (b), (c), as added Acts 75th Leg., R.S., Ch. 642.)

Source Law

Sec. 8E. (a) Notwithstanding any other law, the Association may issue a policy of windstorm and hail insurance that includes coverage for an amount in excess of a liability limit proposed by the Association and approved by the Commissioner under Section 8D of this Act if the Association first obtains, from a reinsurer approved by the Commissioner, reinsurance for the full amount of policy exposure above the limits approved by the Commissioner for any given type of risk.

(b) The premium charged by the Association for the excess coverage shall be equal to the amount of the reinsurance premium charged to the Association by the reinsurer, plus any payment to the Association that is approved by the Commissioner.

(c) The Commissioner shall adopt rules as necessary to implement this section. The Association may not issue excess coverage under this section until those rules are adopted.

Revisor's Note

Section 8E(c), V.T.I.C. Article 21.49, requires the commissioner of insurance to adopt rules, and provides that the Texas Windstorm Insurance Association may not issue excess coverage "until those rules are adopted." The revised law omits as executed the provision that the association may not issue excess coverage until the adoption of the applicable rules because those rules have been adopted.

Revised Law

Sec. 2210.506. EXCEPTION FROM CERTAIN ADMINISTRATIVE PROCEDURES. Chapter 40 does not apply to an action taken under this subchapter. (V.T.I.C. Art. 21.49, Secs. 8D(i), 8E(d), as added Acts 75th Leg., R.S., Ch. 642.)

Source Law

[Sec. 8D]

(i) Article 1.33B of this code does not apply to an action taken under this section.

[Sec. 8E]

(d) Article 1.33B of this code does not apply to an action taken under this section.

[Sections 2210.507-2210.550 reserved for expansion]

SUBCHAPTER L. APPEALS AND OTHER ACTIONS

Revised Law

Sec. 2210.551. APPEALS. (a) This section applies to:

(1) a person insured under this chapter or an authorized representative of the person; or

(2) an affected insurer.

(b) A person or entity described by Subsection (a) 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.

(c) If the association is aggrieved by the action of the commissioner with respect to a ruling, order, or determination of the commissioner, the association may, not later than the 30th day after the date of the action, make a written request to the commissioner for a hearing on the action.

(d) On 10 days' written notice of the time and place of the hearing, the commissioner shall conduct a hearing on the association's request or the appeal from an act, ruling, or decision of the association, not later than the 30th day after the date of receipt of the request or appeal.

(e) A hearing on an act, ruling, or decision of the association relating to the payment of, the amount of, or the denial of a particular claim shall be held, at the request of the claimant, in the county in which the insured property is located or in Travis County.

(f) Not later than the 30th day after the date of the hearing, the commissioner shall affirm, reverse, or modify the commissioner's previous action or the act, ruling, or decision appealed to the commissioner. Pending the hearing and decision, the commissioner may suspend or postpone the effective date of the previous action or of the act, ruling, or decision appealed to the commissioner.

(g) The association, or the person or entity aggrieved by the order or decision of the commissioner, may appeal to a district court in the county in which the covered property is located or a district court in Travis County.

(h) An action brought under this section is subject to the procedures established under Subchapter D, Chapter 36. (V.T.I.C. Art. 21.49, Sec. 9.)

Source Law

Sec. 9. Any person insured pursuant to this Act, or his duly authorized representative, or any affected insurer who may be aggrieved by an act, ruling or decision of the Association, may, within 30 days after such act, ruling or decision, appeal to the commissioner. In the event the Association is aggrieved by the action of the commissioner with respect to any ruling, order, or determination of the commissioner, it may, within 30 days after such action, make a written request to the commissioner, for a hearing thereon. The commissioner shall hear the Association, or the appeal from an act, ruling or decision of the Association, within 30 days after receipt of such request or appeal and shall give not less than 10 days' written notice of the time and place of hearing to the Association making such request or the person, or his duly authorized representative, appealing from the act, ruling or decision of the Association. A hearing on an act, ruling or decision of the Association relating to the payment of, the amount of, or the denial of a particular claim shall be held, at the request of the claimant, in either the county in which the covered property is located or Travis County. Within 30 days after the hearing, the commissioner shall affirm, reverse or modify its previous action or the act, ruling or decision appealed to the commissioner. Pending such hearing and decision thereon, the commissioner may suspend or postpone the effective date of its previous rule or of the act, ruling or decision appealed to the commissioner. The Association, or the person aggrieved by any order or decision of the commissioner, may thereafter appeal to either a District Court of Travis County, Texas, or a District Court in the county in which the covered property is located. An action brought under this section is subject to the procedures established under Article 1.04 of this code.

Revised Law

Sec. 2210.552. CLAIM DISPUTES; VENUE. (a) Except as provided by Sections 2210.007 and 2210.106, a person insured under this chapter who is aggrieved by an act, ruling, or decision of the association relating to the payment of, the amount of, or the denial of a claim may:

(1) bring an action against the association, including an action under Chapter 541; or

(2) appeal the act, ruling, or decision under Section 2210.551.

(b) A person may not proceed under both Section 2210.551 and this section for the same act, ruling, or decision.

(c) Except as provided by Subsection (d), venue in an action brought under this section, including an action under Chapter 541, against the association is in the county in which the insured property is located or in a district court in Travis County.

(d) Venue in an action, including an action under Chapter 541, brought under this section in which the claimant joins the department as a party to the action is only in a district court in Travis County. (V.T.I.C. Art. 21.49, Sec. 9A.)

Source Law

Sec. 9A. (a) Except as provided by Section 10 of this Article, any person insured under this Act who is aggrieved by an act, ruling, or decision of the Association relating to the payment of, the amount of, or the denial of a claim may elect to bring an action, including an action under Article 21.21 of this code, against the Association in a court of competent jurisdiction or to appeal the act, ruling, or decision under Section 9 of this Article. A person may not proceed under both Section 9 of this Article and this section for the same act, ruling, or decision.

(b) Except as otherwise provided by this subsection, venue in a proceeding action against the Association under this section, including an action under Article 21.21 of this code, is in the county in which the covered property is located or in a District Court of Travis County. Venue is only in the District Court of Travis County if the claimant joins the State Board of Insurance as a party to the action.

Revisor's Note

(1) Section 9A(a), V.T.I.C. Article 21.49, refers to an action brought "in a court of competent jurisdiction." The revised law omits the quoted language as unnecessary because an action may only be brought in a court, and the general laws of civil jurisdiction determine which courts have jurisdiction over the matter. For example, see Sections 24.007-24.0011, Government Code, for the general jurisdiction of district courts.

(2) Sections 9A(a) and (b), V.T.I.C. Article 21.49, refer to V.T.I.C. Article 21.21. That article was revised in various places in this code. The relevant provisions were revised as Chapter 541 of this code, and the revised law is drafted accordingly.

Revisor's Note

(End of Chapter)

(1) Section 13, V.T.I.C. Article 21.49, refers to the effective date of the legislation that enacted the article. The revised law omits the reference as executed. The omitted law reads:

Sec. 13. This Act shall become effective from and after passage.

(2) Section 14, V.T.I.C. Article 21.49, repeals all laws in conflict with that article. The revised law omits the provision as executed. The omitted law reads:

Sec. 14. All laws or parts of laws in conflict herewith are hereby repealed to the extent necessary to accomplish the purposes of this Act.

(3) Section 15, V.T.I.C. Article 21.49, provides that the article is severable. The revised law omits the reference to severability because the reference is unnecessary. Section 311.032, Government Code (Code Construction Act), and Section 312.013, Government Code, state that a provision of a statute is severable from each other provision of the statute that can be given effect. Those statutes apply to the revised law. The omitted law reads:

Sec. 15. If any provision of this Act or the application thereof to any person or circumstance is held to be invalid, such invalidity shall not affect other provisions or applications of this Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable.

(4) Section 17, V.T.I.C. Article 21.49, codifies Article 21.49 as an article of the Texas Insurance Code of 1951. The revised law omits the provision as executed. The omitted law reads:

Sec. 17. This Act is hereby codified as Article 21.49 of the Texas Insurance Code.


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