Bill Text: TX HB2880 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Relating to the administration of the Texas Windstorm Insurance Association.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2023-03-14 - Referred to Insurance [HB2880 Detail]
Download: Texas-2023-HB2880-Introduced.html
By: Lozano | H.B. No. 2880 |
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relating to the administration of the Texas Windstorm Insurance | ||
Association. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter A, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.016 to read as follows: | ||
Sec. 2210.016. LEGISLATIVE LOBBYING. (a) The association | ||
may not use any money under its control to attempt to influence the | ||
passage or defeat of a legislative measure. | ||
(b) An employee or board member that violates Subsection (a) | ||
is subject to immediate termination and a fine of $10,000 to be | ||
deposited in the catastrophe reserve trust fund. | ||
(c) This section does not prohibit a member of the board of | ||
directors or an employee from using money under its control to | ||
provide public information or to provide information responsive to | ||
a request. | ||
SECTION 2. Subchapter B, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.063 to read as follows: | ||
Sec. 2210.063. LOCATION OF ASSOCIATION HEADQUARTERS. The | ||
headquarters of the association shall be located in a first tier | ||
coastal county or second tier coastal county. | ||
SECTION 3. Subchapter B, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.064 to read as follows: | ||
Sec. 2210.064. ASSOCIATION GENERAL MANAGER. (a) The | ||
general manager of the association is responsible and accountable | ||
to the commissioner and the board of directors. | ||
(b) The general manager is appointed by the commissioner in | ||
accordance with this section. | ||
(c) The commissioner may remove an existing general manager | ||
and appoint a new general manager at any time. | ||
(d) The general manager must have demonstrated knowledge of | ||
windstorm insurance, general business, or actuarial principles | ||
sufficient to make the success of the association probable. | ||
(e) A person may not serve as general manager of the | ||
association if the person or the person's spouse: | ||
(1) is employed by or participates in the management | ||
of a business entity or other organization: | ||
(A) operating in the property and casualty | ||
insurance industry in this state; | ||
(B) receiving money from the association, other | ||
than insurance claim payments; or | ||
(C) receiving money from association | ||
policyholders with respect to the policyholders' claims; | ||
(2) owns or controls, directly or indirectly, more | ||
than a 10 percent interest in a business entity or other | ||
organization: | ||
(A) operating in the property and casualty | ||
insurance industry in this state; | ||
(B) receiving money from the association, other | ||
than insurance claim payments; or | ||
(C) receiving money from association | ||
policyholders with respect to the policyholders' claims; | ||
(3) uses or receives a substantial amount of tangible | ||
goods, services, or money from the association, other than: | ||
(A) insurance claim payments; or | ||
(B) compensation or reimbursement authorized by | ||
law for the general manager's membership, attendance, or expenses. | ||
SECTION 4. Section 2210.0725(a), Insurance Code, is amended | ||
to read as follows: | ||
Sec. 2210.0725. PAYMENT FROM CLASS 1 ASSESSMENTS. (a) | ||
Losses in a catastrophe year not paid under Sections 2210.0715 and | ||
2210.072 shall be paid as provided by this section from Class 1 | ||
member assessments not to exceed $500 million plus an adjustment | ||
equal to the Consumer Price Index for that catastrophe year. | ||
SECTION 5. Section 2210.074(a), Insurance Code, is amended | ||
to read as follows: | ||
Sec. 2210.074. PAYMENT THROUGH CLASS 2 ASSESSMENTS. (a) | ||
Losses in a catastrophe year not paid under Sections 2210.0715, | ||
2210.072, 2210.0725, and 2210.073 shall be paid as provided by this | ||
section from Class 2 member assessments not to exceed $250 million | ||
plus an adjustment equal to the Consumer Price Index for that | ||
catastrophe year. | ||
SECTION 6. Section 2210.0742(a), Insurance Code, is amended | ||
to read as follows: | ||
Sec. 2210.0742. PAYMENT FROM CLASS 3 ASSESSMENTS. (a) | ||
Losses in a catastrophe year not paid under Sections 2210.0715, | ||
2210.072, 2210.0725, 2210.073, 2210.074, and 2210.0741 shall be | ||
paid as provided by this section from Class 3 member assessments not | ||
to exceed $250 million plus an adjustment equal to the Consumer | ||
Price Index for that catastrophe year. | ||
SECTION 7. Subchapter B-1, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.076 to read as follows: | ||
Sec. 2210.076. PAYMENT FROM ASSESSMENTS IN EXCESS OF | ||
REINSURANCE. (a) Losses in a catastrophe year not paid under | ||
Sections 2210.0715, 2210.072, 2210.0725, 2210.073, 2210.074, | ||
2210.0741, 2210.0742, 2210.4522, and 2210.453 shall be paid as | ||
provided by this section from member assessments. | ||
(b) The association, with the approval of the commissioner, | ||
shall notify each member of the amount of the member's assessment | ||
under this section. The proportion of the losses allocable to each | ||
insurer under this section shall be determined in the manner used to | ||
determine each insurer's participation in the association for the | ||
year under Section 2210.052. | ||
(c) A member of the association may not recoup an assessment | ||
paid under this section through a premium surcharge or tax credit. | ||
SECTION 8. Section 2210.102, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.102. COMPOSITION. (a) The board of directors is | ||
composed of nine members appointed by the commissioner in | ||
accordance with this section. | ||
(b) Three members must be property and casualty agents who | ||
are licensed under this code, are not captive agents, and | ||
reside [ |
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coastal counties. | ||
(c) Three members must, as of the date of the appointment, | ||
reside in the first tier coastal counties. Each of the following | ||
regions must be represented by a member residing in the region and | ||
appointed under this subsection: | ||
(1) the region consisting of Cameron, Kenedy, Kleberg, | ||
and Willacy Counties; | ||
(2) the region consisting of Aransas, Calhoun, Nueces, | ||
Refugio, and San Patricio Counties; and | ||
(3) the region consisting of Brazoria, Chambers, | ||
Galveston, Jefferson, and Matagorda Counties and any part of Harris | ||
County designated as a catastrophe area under Section 2210.005. | ||
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(d) Three members must reside in an area of this state that | ||
is located outside the first tier coastal counties[ |
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(d-1) One of the members appointed under Subsection (d) must | ||
be the public counsel of the Office of Public Insurance Counsel or | ||
their designated appointee. | ||
(e) All members must have demonstrated experience in | ||
insurance, general business, or actuarial principles and the | ||
member's area of expertise, if any, sufficient to make the success | ||
of the association probable. | ||
(f) No member may be an active employee of an insurer who is | ||
a member of the association. [ |
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(g) Members appointed to the board of directors under | ||
Subsections (c) and (d)[ |
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described by those subsections. A person may not be appointed to | ||
represent the general public under Subsection (c) or (d) if the | ||
person or the person's spouse: | ||
(1) is employed by or participates in the management | ||
of a business entity or other organization: | ||
(A) operating in the property and casualty | ||
insurance industry in this state; | ||
(B) receiving money from the association, other | ||
than insurance claim payments; or | ||
(C) receiving money from association | ||
policyholders with respect to the policyholders' claims; | ||
(2) owns or controls, directly or indirectly, more | ||
than a 10 percent interest in a business entity or other | ||
organization: | ||
(A) operating in the property and casualty | ||
insurance industry in this state; | ||
(B) receiving money from the association, other | ||
than insurance claim payments; or | ||
(C) receiving money from association | ||
policyholders with respect to the policyholders' claims; or | ||
(3) uses or receives a substantial amount of tangible | ||
goods, services, or money from the association, other than: | ||
(A) insurance claim payments; or | ||
(B) compensation or reimbursement authorized by | ||
law for the board members' membership, attendance, or expenses. | ||
SECTION 9. Section 2210.103, Insurance Code, is amended to | ||
read as follows: | ||
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. | ||
(c) A member of the board of directors may be removed by the | ||
commissioner with cause stated in writing and posted on the | ||
association's website. The commissioner shall appoint a | ||
replacement in accordance with Section 2210.102 for a member who | ||
leaves or is removed from the board of directors. | ||
(d) A member of the board of directors shall be removed by | ||
the commissioner if the board member fails to make a reasonable | ||
effort to attend the board meeting to set the annual rate, | ||
described by Section 2210.352. | ||
SECTION 10. Section 2210.105, Insurance Code, is amended by | ||
amending (d) and adding (b-2) to read as follows: | ||
(d) Except for an emergency meeting, a meeting of the board | ||
of directors shall be held at a location in a first tier coastal | ||
county or second tier coastal county [ |
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(b-2) A legislator or a legislator's designated | ||
representative may attend a meeting of the board of directors or the | ||
members of the association, including a closed meeting authorized | ||
by Subchapter D, Chapter 551, Government Code. | ||
SECTION 11. Subchapter G, Insurance Code, is amended by | ||
adding Section 2210.211 to read as follows: | ||
Sec. 2210.211. CERTAIN ADJUSTMENTS PROHIBITED. (a) The | ||
association may not automatically adjust the amount of coverage to | ||
be purchased by a policyholder. | ||
(b) The association may not require the use of any one | ||
replacement cost calculator. | ||
(c) The association may not adjust premiums, fees, or any | ||
other costs to policyholders for inflation without a vote by the | ||
board of directors. | ||
SECTION 12. Section 2210.352, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a) Not | ||
later than September [ |
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shall file with the department a proposed manual rate for all types | ||
and classes of risks written by the association. | ||
SECTION 13. Section 2210.453(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The association shall maintain total available loss | ||
funding in an amount not less than the probable maximum loss for the | ||
association for a catastrophe year with a probability of one in 50 | ||
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through the purchase of reinsurance or the use of alternative | ||
financing mechanisms, or both, to operate in addition to or in | ||
concert with the trust fund, public securities, financial | ||
instruments, and assessments authorized by this chapter. | ||
SECTION 14. Section 2210.453, Insurance Code, is amended by | ||
adding Subsections (b-1) and (b-2) to read as follows: | ||
(b-1) In determining the probable maximum loss under | ||
Subsection (b), the association: | ||
(1) may not consider the cost of providing loss | ||
adjustments; | ||
(2) shall, to the extent possible, contract with any | ||
disinterested third parties necessary to execute any catastrophe | ||
models that were executed in the preceding storm season; | ||
(3) shall, if the association is unable to contract | ||
for the execution of a catastrophe model described by Subdivision | ||
(2), contract with any disinterested third party necessary to | ||
execute a catastrophe model that is substantially similar to the | ||
model for which the association is unable to contract under | ||
Subdivision (2); | ||
(4) may contract with any disinterested third parties | ||
to execute catastrophe models in addition to the models required by | ||
Subdivisions (2) and (3); | ||
(5) shall provide to a third party executing a | ||
catastrophe model any information necessary to comply with this | ||
subsection; | ||
(6) may not use a combination of catastrophe models to | ||
determine the probable maximum loss; and | ||
(7) may use only the catastrophe model that produces | ||
the lowest probable maximum loss. | ||
(b-2) Any information produced in compliance with | ||
Subsection (b-1) shall be made publicly available on the Internet | ||
website of the association. | ||
(b-3) The amount of loss adjustment expense, as adopted by | ||
the board of directors for a catastrophe year and used for the | ||
association's rate indication for purposes of filing a rate under | ||
this Chapter, must be considered above the probable maximum loss. | ||
SECTION 15. Section 2210.618, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.618. EXEMPTION FROM TAXATION. (a) A public | ||
security issued under this subchapter, any transaction relating to | ||
the public security, and profits made from the sale of the public | ||
security are exempt from taxation by this state or by a municipality | ||
or other political subdivision of this state. | ||
(b) The association is not subject to any insurance premium | ||
tax or insurance maintenance tax or fee. | ||
SECTION 16. Section 2210.063, Insurance Code, as added by | ||
this Act, applies to the Texas Windstorm Insurance Association | ||
beginning on January 1, 2025. | ||
SECTION 17. This Act takes effect immediately if it | ||
receives a vote of two-thirds of all the members elected to each | ||
house, as provided by Section 39, Article III, Texas Constitution. | ||
If this Act does not receive the vote necessary for immediate | ||
effect, this Act takes effect September 1, 2023. |