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
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the administration of the Texas Windstorm Insurance
  Association.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter 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 [representatives of the insurance industry who actively
  write and renew windstorm and hail insurance] in the first tier
  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.
         [(c-1)One of the members appointed under Subsection (c)
  must be a property and casualty agent who is licensed under this
  code and is not a captive agent.]
         (d)  Three members must reside in an area of this state that
  is located outside the first tier coastal counties[more than 100
  miles from the Texas coastline].
         (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. [Insurers who are members of the
  association shall nominate, from among those members, persons to
  fill any vacancy in the three board of director seats reserved for
  representatives of the insurance industry.  The board of directors
  shall solicit nominations from the members and submit the
  nominations to the commissioner.  The nominee slate submitted to
  the commissioner under this subsection must include at least three
  more names than the number of vacancies.  The commissioner may
  appoint replacement insurance industry representatives from the
  nominee slate.]
         (g)  Members appointed to the board of directors under
  Subsections (c) and (d)[, other than the member appointed under
  Subsection (c-1),] must represent the general public in the regions
  described by those subsections. A person may not be appointed to
  represent the general public under Subsection (c) or (d) if the
  person or the person's spouse:
               (1)  is employed by or participates in the management
  of a business entity or other organization:
                     (A)  operating in the property and casualty
  insurance industry in this state;
                     (B)  receiving money from the association, other
  than insurance claim payments; or
                     (C)  receiving money from association
  policyholders with respect to the policyholders' claims;
               (2)  owns or controls, directly or indirectly, more
  than a 10 percent interest in a business entity or other
  organization:
                     (A)  operating in the property and casualty
  insurance industry in this state;
                     (B)  receiving money from the association, other
  than insurance claim payments; or
                     (C)  receiving money from association
  policyholders with respect to the policyholders' claims; or
               (3)  uses or receives a substantial amount of tangible
  goods, services, or money from the association, other than:
                     (A)  insurance claim payments; or
                     (B)  compensation or reimbursement authorized by
  law for the board members' membership, attendance, or expenses.
         SECTION 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 [as determined by the board of
  directors].
         (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 [August] 15 of each year, the association
  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 
  [100]. If necessary, the required funding level shall be achieved
  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.
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