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A BILL TO BE ENTITLED
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AN ACT
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relating to a depopulation program for the Texas Windstorm |
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Insurance Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 2210, Insurance Code, is amended by |
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adding Subchapter O to read as follows: |
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SUBCHAPTER O. DEPOPULATION PROGRAM |
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Sec. 2210.701. DEPOPULATION PROGRAM. (a) The association |
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shall administer, subject to commissioner approval, a depopulation |
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program that encourages the transfer of association policies to |
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insurers through the voluntary market or assumption reinsurance. |
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(b) An insurer engaged in the business of property and |
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casualty insurance in this state may elect to participate in the |
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depopulation program. |
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(c) An eligible surplus lines insurer may elect to |
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participate in the depopulation program if the surplus lines |
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insurer has at least a minimum A7 rating from A. M. Best or a |
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comparable rating determined by the commissioner. The commissioner |
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by rule shall establish the manner in which an eligible surplus |
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lines insurer may participate in the depopulation program. The |
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rules must address the transmission of information to participating |
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surplus lines insurers or surplus lines agents under Section |
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2210.702(a) or 2210.703(a) and the manner in which compliance with |
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Section 981.004(a)(1) must be established. |
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Sec. 2210.702. VOLUNTARY MARKET DEPOPULATION. (a) The |
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association shall notify each insurer who elects to participate in |
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the depopulation program of the expiration of an association |
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policy. |
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(b) In the notice provided under Subsection (a), the |
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association shall provide necessary information for the insurer to |
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determine whether to issue a policy in the voluntary market to the |
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association policyholder. |
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(c) If an insurer elects to issue a policy to an association |
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policyholder under this section, the insurer is legally and |
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contractually responsible for the issued policy regardless of |
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whether the association continues to provide some services on the |
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policy. Except as specifically provided in an agreement between |
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the association and the insurer, the insurer shall administer the |
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policy and process, adjust, and pay claims in accordance with the |
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policy. |
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(d) If an insurer offers a policy to a policyholder under |
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this section that contains generally comparable coverage and |
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premiums to the association policy as determined by commissioner |
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rule, the association may not renew or issue a new association |
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policy to the policyholder. The commissioner by rule shall |
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establish, as a percentage, a reasonable difference in premium cost |
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that qualifies as comparable premiums for purposes of this |
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subsection. |
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Sec. 2210.703. ASSUMPTION REINSURANCE DEPOPULATION. (a) |
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The association shall make available to insurers who elect to |
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participate in the depopulation program association policy |
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information necessary for the insurers to determine whether to |
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reinsure a policy ceded to the insurer by the association. |
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(b) If an insurer elects to reinsure a policy under this |
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section, the reinsurance must be provided as assumption reinsurance |
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and the insurer is legally and contractually responsible for the |
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association policy ceded to the insurer on the effective date of the |
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reinsurance agreement regardless of whether the association |
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continues to provide some services on the policy. Except as |
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specifically provided in an agreement between the association and |
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the insurer, the insurer shall administer the policy and process, |
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adjust, and pay claims in accordance with the policy. |
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Sec. 2210.704. CONFIDENTIALITY OF INFORMATION. An insurer |
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may use information concerning a specific policy or insured |
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provided by the association under Sections 2210.702(a) and |
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2210.703(a) only for the purposes of this subchapter and may not use |
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or disclose the information for any other purpose. |
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SECTION 2. As soon as practicable after the effective date |
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of this Act, the board of directors of the Texas Windstorm Insurance |
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Association shall propose amendments to the plan of operation of |
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the association and the commissioner of insurance shall adopt rules |
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to implement Subchapter O, Chapter 2210, Insurance Code, as added |
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by this Act. |
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SECTION 3. This Act takes effect September 1, 2015. |