82R9885 AJA-D
	By: Smithee	H.B. No. 3024

	A BILL TO BE ENTITLED
	AN ACT
	relating to the Fair Access to Insurance Requirements (FAIR) Plan
	Association.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subchapter A, Chapter 541, Insurance Code, is
	amended by adding Section 541.0051 to read as follows:
	Sec. 541.0051.  EXEMPTION: FAIR PLAN. This chapter does not
	apply to the Fair Access to Insurance Requirements (FAIR) Plan
	Association or an action brought against the association by a
	person who is insured under Chapter 2211.
	SECTION 2.  Subchapter A, Chapter 542, Insurance Code, is
	amended by adding Section 542.0021 to read as follows:
	Sec. 542.0021.  EXEMPTION: FAIR PLAN. This chapter does not
	apply to the Fair Access to Insurance Requirements (FAIR) Plan
	Association or a claim made against the association by a person who
	is insured under Chapter 2211.
	SECTION 3.  Subchapter A, Chapter 2211, Insurance Code, is
	amended by adding Sections 2211.004 and 2211.005 to read as
	follows:
	Sec. 2211.004.  FAIR POLICYHOLDER AS ARBITRATOR OR JUDGE. A
	person who holds a policy issued by the association may not serve as
	an arbitrator or judge in an arbitration or judicial or
	administrative proceeding in which the association is a party.
	Sec. 2211.005.  EXEMPLARY DAMAGES; ATTORNEY'S FEES. (a) The
	association is not subject to exemplary damages or multiplied
	damages under any other law.
	(b)  The association may be required to pay another party's
	attorney's fees only as provided by this chapter.
	SECTION 4.  Section 2211.0521, Insurance Code, is amended by
	adding Subsections (c), (d), (e), and (f) to read as follows:
	(c)  The association is subject to Chapter 551, Government
	Code.
	(d)  Notice of a meeting of the association's governing
	committee must, not later than the seventh day before the date the
	meeting is scheduled, be conspicuously posted on the department's
	Internet website and on the association's Internet website. This
	subsection does not apply to a meeting subject to Section
	551.0411(b) or 551.045, Government Code.
	(e)  Meetings of the association's governing committee must
	be made readily accessible to the public by video or audio on the
	Internet.
	(f)  The association's governing committee shall allow a
	representative of the department to be present at meetings of the
	association's governing committee, physically or otherwise, at the
	department's option. This subsection applies to a closed meeting
	authorized by Subchapter D, Chapter 551, Government Code.
	SECTION 5.  Subchapter B, Chapter 2211, Insurance Code, is
	amended by adding Sections 2211.0522, 2211.0541, and 2211.0542 to
	read as follows:
	Sec. 2211.0522.  RECORDS OF ASSOCIATION. The association is
	subject to Chapter 552, Government Code.
	Sec. 2211.0541.  AGENT COMMISSIONS. The commissioner shall
	ensure that the agent commissions adopted under Section 2211.054
	are fair and reasonable with respect to the work performed by the
	agents and the prevailing compensation of agents in the private
	residential property insurance market.
	Sec. 2211.0542.  REINSURANCE. The association may recoup
	the costs of ceding reinsurance by imposing a pro rata premium
	surcharge on policies issued by the association.
	SECTION 6.  Subchapter D, Chapter 2211, Insurance Code, is
	amended by adding Sections 2211.158, 2211.159, 2211.160, 2211.161,
	and 2211.162 to read as follows:
	Sec. 2211.158.  FLOOD INSURANCE. (a) The association may
	not issue an insurance policy for initial or renewal coverage
	unless evidence is submitted to the association that the property
	to be covered under the policy is also covered by a flood insurance
	policy issued under the National Flood Insurance Program in an
	amount equal to or greater than the amount of coverage under the
	policy to be issued by the association. This section does not apply
	to property for which flood insurance is not available under the
	National Flood Insurance Program.
	(b)  An insurance agent who submits an application for a
	policy under this chapter shall offer flood insurance coverage
	required by this section to the prospective insured if that
	coverage is available.
	Sec. 2211.159.  COVERAGE LIMITS IN CERTAIN FLOOD ZONES. A
	policy issued by the association to cover property all or part of
	which is located in Zone A or Zone V, as defined by the Federal
	Emergency Management Agency, must contain coverage limits that are
	the same as any applicable coverage limits for flood insurance
	coverage provided under the National Flood Insurance Program.
	Sec. 2211.160.  REQUIRED POLICY PROVISION: EVIDENCE OF
	FLOOD INSURANCE. A policy issued by the association must require an
	insured to submit to the association evidence of coverage required
	by Section 2211.158(a) before the association will be required to
	pay the insured's claim under the policy.
	Sec. 2211.161.  REQUIRED POLICY PROVISIONS: DEADLINE FOR
	FILING CLAIM; NOTICE CONCERNING MANDATORY ARBITRATION. (a) A
	policy issued by the association must:
	(1)  require an insured to file a claim under the policy
	not later than the first anniversary of the date on which the damage
	or loss that is the basis of the claim occurs unless an extension is
	obtained from the commissioner under this section; and
	(2)  contain, in boldface type, a conspicuous notice
	concerning the mandatory arbitration of coverage and claim disputes
	under Subchapter H, including the deadline for requesting
	arbitration.
	(b)  The commissioner for good cause shown may extend the
	deadline for filing a claim prescribed by this section for up to 90
	days.
	Sec. 2211.162.  CLAIMS HANDLING. (a) Not later than the 30th
	day after the date a policyholder submits a claim, the association
	shall provide the policyholder a written appraisal of the damages
	that are the subject of the claim.
	(b)  On or before the 60th day after the date a policyholder
	receives an appraisal under Subsection (a), the policyholder may:
	(1)  contest the appraisal; or
	(2)  request a supplemental review or payment.
	(c)  The commissioner for good cause shown may extend a
	deadline prescribed by this section.
	(d)  Not later than the 30th day after the date a
	policyholder contests an appraisal or makes a request under
	Subsection (b), the association shall respond to the contest or
	request.
	SECTION 7.  Chapter 2211, Insurance Code, is amended by
	adding Subchapter H to read as follows:
	SUBCHAPTER H. ARBITRATION
	Sec. 2211.351.  ARBITRATION OF CLAIM DISPUTES REQUIRED. A
	dispute between the association and a person insured under this
	chapter relating to the payment of, the amount of, or the denial of
	a particular claim must be resolved through binding arbitration in
	accordance with this subchapter.
	Sec. 2211.352.  NOTICE OF CLAIM; DEMAND FOR ARBITRATION.
	(a)  Not later than the 30th day before the date an insured submits
	a demand for arbitration under this section, the insured must
	provide the association with a notice of claim that states the
	amount of damages or additional damages demanded by the insured and
	details each specific complaint of the insured.
	(b)  The insured may request arbitration under this section
	by submitting a written demand to the department not later than the
	second anniversary of the date on which the damage or loss that is
	the basis of the particular claim occurs. The commissioner by rule
	shall prescribe the method for filing a demand for arbitration
	under this section, which may allow or require submission by mail or
	the Internet or by a method of local submission in the county in
	which the loss that is the subject of the claim occurred.
	(c)  An arbitration under this section may not commence until
	the notice of claim required by this section has been given and the
	prescribed notice period has expired.
	(d)  The commissioner for good cause shown may extend the
	deadline for requesting arbitration under this section for up to 90
	days.
	Sec. 2211.353.  ARBITRATION PROCEDURES. (a) The
	commissioner by rule shall establish procedures for conducting an
	arbitration under this subchapter. The procedures must:
	(1)  be consistent with any applicable rules of the
	American Arbitration Association in effect on the date on which a
	policy under which a claim arbitrated under this subchapter was
	issued;
	(2)  provide for the parameters of mandatory and
	permissible discovery; and
	(3)  establish deadlines for various stages of the
	arbitration proceeding.
	(b)  Rules adopted under this section must contain
	provisions to ensure that awards under this subchapter are fair and
	to prevent unfair deviations in awards under this subchapter.
	(c)  A policyholder may be represented by an attorney in an
	arbitration conducted under this subchapter.
	(d)  An arbitrator conducting an arbitration under this
	subchapter shall issue scheduling orders for the arbitration in
	accordance with commissioner rules.
	Sec. 2211.354.  QUALIFICATION AND CERTIFICATION OF
	ARBITRATOR. (a) The commissioner by rule shall:
	(1)  require an arbitrator conducting an arbitration
	under this subchapter to be certified by the department;
	(2)  prescribe qualifications for being certified as an
	arbitrator under this section; and
	(3)  establish a procedure through which an arbitrator
	may become certified to conduct arbitrations under this subchapter.
	(b)  A member of the legislature or a person who holds a
	policy issued by the association may not be certified or serve as an
	arbitrator under this section.
	Sec. 2211.355.  LIST OF ARBITRATORS. The department shall
	make publicly available a list of the arbitrators certified to
	conduct arbitrations under this subchapter.
	Sec. 2211.356.  SELECTION OF ARBITRATOR. (a) The
	commissioner shall randomly assign a certified arbitrator to
	conduct an arbitration demanded under this subchapter.
	(b)  Subject to this subsection, on or before the 10th day
	after the date the commissioner notifies the insured or the
	association of the assigned arbitrator, the insured or the
	association may strike the assigned arbitrator. The insured and
	the association are each entitled to strike only one assigned
	arbitrator under this subsection.
	(c)  If an assigned arbitrator is struck under this section,
	the commissioner shall promptly assign another certified
	arbitrator.
	Sec. 2211.357.  COMPENSATION OF ARBITRATOR. (a) The
	commissioner shall adopt rules governing the compensation of a
	certified arbitrator for conducting an arbitration under this
	subchapter, including the amount of compensation, which party or
	parties are liable for the payment of the compensation, and other
	necessary billing and payment procedures.
	(b)  The commissioner shall approve all final requests for
	compensation by an arbitrator who conducts an arbitration under
	this subchapter.
	Sec. 2211.358.  SETTLEMENT OFFERS. (a) Not later than the
	30th day before the date an arbitration proceeding under this
	subchapter is scheduled to commence, the association and the
	insured must each submit a settlement offer to the department. The
	arbitrator assigned to conduct the arbitration may not be informed
	of or consider the content of the settlement offers.
	(b)  If the arbitrator's award is at least 10 percent greater
	than the settlement amount offered by the association under this
	section, the insured is entitled to the insured's reasonable and
	necessary attorney's fees in connection with the arbitration. The
	commissioner by rule shall adopt guidelines for an arbitrator to
	consider in awarding attorney's fees under this subsection.
	(c)  An arbitrator may award interest on the amount otherwise
	awarded to pay the insured's claim at a rate of six percent
	annually, computed from the 30th day after the date the association
	received the required notice of the claim until the date the claim
	is paid.
	Sec. 2211.359.  APPLICABILITY OF CERTAIN OTHER LAW TO
	ARBITRATION.  Except to the extent of any conflict with this
	subchapter, Chapter 171, Civil Practice and Remedies Code, applies
	to an arbitration conducted under this subchapter.
	Sec. 2211.360.  ADDITIONAL RULES.  In addition to the rules
	otherwise required by this subchapter, the commissioner may adopt
	any other rules necessary to implement this subchapter.
	SECTION 8.  (a) The changes in law made by Sections 541.0051
	and 542.0021, Insurance Code, as added by this Act, apply only to
	conduct of the Fair Access to Insurance Requirements (FAIR) Plan
	Association that occurs on or after the effective date of this Act.
	Conduct of the association that occurs before the effective date of
	this Act is governed by the law in effect immediately before the
	effective date of this Act, and that law is continued in effect for
	that purpose.
	(b)  Section 2211.004, Insurance Code, as added by this Act,
	applies to an arbitration or judicial or administrative proceeding
	commenced on or after the effective date of this Act.
	(c)  Section 2211.005, Insurance Code, as added by this Act,
	applies to a cause of action that is not to recover the amount of a
	claim under an insurance policy issued under Chapter 2211,
	Insurance Code, that accrues on or after the effective date of this
	Act. With respect to a claim under an insurance policy issued under
	Chapter 2211, Insurance Code, Section 2211.005, Insurance Code, as
	added by this Act, applies only to a claim under a policy delivered,
	issued for delivery, or renewed on or after the effective date of
	this Act.
	(d)  Subchapter D, Chapter 2211, Insurance Code, as amended
	by this Act, and Subchapter H, Chapter 2211, Insurance Code, as
	added by this Act, apply only to an insurance policy delivered,
	issued for delivery, or renewed on or after January 1, 2012, and a
	claim under that policy. A policy delivered, issued for delivery,
	or renewed before January 1, 2012, and a claim under that policy are
	governed by the law in effect immediately before the effective date
	of this Act, and that law is continued in effect for that purpose.
	SECTION 9.  This Act takes effect September 1, 2011.