Bill Text: TX HB998 | 2023-2024 | 88th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the provision of property owners' association insurance by the FAIR Plan Association in certain areas.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-05-19 - Effective on 9/1/23 [HB998 Detail]
Download: Texas-2023-HB998-Comm_Sub.html
Bill Title: Relating to the provision of property owners' association insurance by the FAIR Plan Association in certain areas.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-05-19 - Effective on 9/1/23 [HB998 Detail]
Download: Texas-2023-HB998-Comm_Sub.html
88R17239 SCL-D | |||
By: Paul | H.B. No. 998 | ||
Substitute the following for H.B. No. 998: | |||
By: Oliverson | C.S.H.B. No. 998 |
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relating to the provision of property owners' association insurance | ||
by the FAIR Plan Association in certain areas. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2211.001, Insurance Code, is amended by | ||
adding Subdivision (6-a) to read as follows: | ||
(6-a) "Property owners' association insurance" means | ||
property and liability insurance covering: | ||
(A) common areas and facilities of a homeowners' | ||
association; or | ||
(B) common elements of a condominium owners' | ||
association. | ||
SECTION 2. Section 2211.051, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2211.051. ESTABLISHMENT OF FAIR PLAN. (a) The | ||
commissioner may establish a Fair Access to Insurance Requirements | ||
Plan to deliver residential property insurance to residents of this | ||
state in underserved areas if the commissioner determines, after a | ||
public hearing, that: | ||
(1) in all or any part of the state, residential | ||
property insurance is not reasonably available in the voluntary | ||
market to a substantial number of insurable risks; or | ||
(2) at least 25 percent of the applicants to the | ||
residential property market assistance program who are qualified | ||
under that program's plan of operation have not been placed with an | ||
insurer in the preceding six months. | ||
(b) The commissioner may include in the plan established | ||
under Subsection (a) the delivery of property owners' association | ||
insurance in underserved areas as provided by Section 2211.1515 if | ||
the commissioner determines, after notice and a hearing, that in | ||
all or any part of the area designated under Section 2211.1515(a), | ||
property owners' association insurance is not reasonably available | ||
in the voluntary market to a substantial number of insurable risks. | ||
SECTION 3. Section 2211.054, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2211.054. CONTENTS OF PLAN OF OPERATION. The plan of | ||
operation must: | ||
(1) provide for a nonprofit association to issue | ||
residential property insurance and, if applicable, property | ||
owners' association insurance under this chapter and distribute the | ||
losses and expenses in writing that insurance in this state; | ||
(2) provide that all insurers that write residential | ||
property insurance shall participate in the association in | ||
accordance with Sections 2211.101(b) and (c); | ||
(3) provide that a participating insurer is entitled | ||
to receive credit in accordance with Section 2211.101(d); | ||
(4) provide for the immediate binding of eligible | ||
risks; | ||
(5) provide for the use of premium installment payment | ||
plans, adequate marketing, and service facilities; | ||
(6) provide for the establishment of reasonable | ||
service standards; | ||
(7) provide procedures for efficient, economical, | ||
fair, and nondiscriminatory administration of the association; | ||
(8) provide procedures for determining the net level | ||
of participation required for each insurer in the association; | ||
(9) provide for the use of deductibles and other | ||
underwriting devices; | ||
(10) provide for assessment of all members in amounts | ||
sufficient to operate the association; | ||
(11) establish maximum limits of liability to be | ||
placed through the program; | ||
(12) establish commissions to be paid to the insurance | ||
agents submitting applications; | ||
(13) provide that the association issue policies in | ||
the association's own name; | ||
(14) provide reasonable underwriting standards for | ||
determining insurability of a risk; | ||
(15) provide procedures for the association to assume | ||
and cede reinsurance; and | ||
(16) provide any other procedure or operational matter | ||
the governing committee or the commissioner considers necessary. | ||
SECTION 4. Subchapter D, Chapter 2211, Insurance Code, is | ||
amended by adding Section 2211.1515 to read as follows: | ||
Sec. 2211.1515. MANDATORY PROPERTY OWNERS' ASSOCIATION | ||
POLICIES IN CERTAIN AREAS. (a) This section applies only to the | ||
area designated by the commissioner by rule. In determining the | ||
boundaries of the area, the commissioner shall: | ||
(1) to the extent practicable, ensure the area is not | ||
more than 10 miles beyond the Texas Windstorm Insurance Association | ||
catastrophe area designated under Section 2210.005; and | ||
(2) follow geographical features. | ||
(b) If the commissioner makes the determination described | ||
by Section 2211.051(b), the association shall make property owners' | ||
association insurance available to each applicant in an underserved | ||
area of the area designated under Subsection (a) whose property is | ||
insurable in accordance with reasonable underwriting standards but | ||
who, after diligent efforts, is unable to obtain property owners' | ||
association insurance through the voluntary market, as evidenced by | ||
two declinations from insurers authorized to engage in the business | ||
of, and writing, property owners' association insurance in this | ||
state. | ||
(c) If the area designated under Subsection (a) changes | ||
after the association issues a policy under Subsection (b), the | ||
policy is valid until renewal regardless of whether the insured | ||
property is located in the area designated under Subsection (a) | ||
after the change. | ||
SECTION 5. Section 2211.153, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2211.153. INSPECTION BUREAU. The association, with | ||
the approval of the commissioner, shall designate one or more | ||
organizations as the inspection bureau. The inspection bureau | ||
shall: | ||
(1) make inspections to determine the condition of a | ||
property for which residential property insurance or property | ||
owners' association insurance is sought; and | ||
(2) perform other duties authorized by the association | ||
or the commissioner. | ||
SECTION 6. Section 2211.154(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) A person who has an insurable interest in real or | ||
tangible personal property at a fixed location in an underserved | ||
area and who, after diligent effort, is unable to obtain | ||
residential property insurance, or a homeowners' or condominium | ||
owners' association located in an underserved area as provided by | ||
Section 2211.1515 that, after diligent effort, is unable to obtain | ||
property owners' association insurance, as evidenced by two current | ||
declinations from insurers authorized to engage in the business of | ||
residential property insurance or property owners' association | ||
insurance, as applicable, in this state and actually writing | ||
residential property insurance or property owners' association | ||
insurance in this state, is entitled on application to the | ||
association to an inspection and evaluation of the property by | ||
representatives of the inspection bureau. | ||
SECTION 7. Section 2211.155, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2211.155. INSPECTION RESULTS; REINSPECTION. (a) If, | ||
after an inspection, the inspection bureau determines that | ||
[ |
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established in the plan of operation, the applicant must be | ||
informed in writing of that determination and the association shall | ||
issue a policy or binder. If the [ |
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meet the underwriting standards, the applicant must be informed in | ||
writing of the reason for the failure of the [ |
||
to meet the standards. | ||
(b) If, at any time, an applicant whose [ |
||
property did not meet the underwriting standards makes improvements | ||
to the property or the property's condition that the applicant | ||
believes are sufficient to make the property meet the standards, an | ||
inspection bureau representative shall reinspect the property on | ||
request. In any case, the applicant is eligible for one | ||
reinspection on or before the 60th day after the date of the initial | ||
inspection. | ||
(c) If, on reinspection, the [ |
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the underwriting standards, the applicant must be informed in | ||
writing of that fact and the association shall issue a policy or | ||
binder. | ||
SECTION 8. Section 2211.201, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2211.201. PURPOSE. The legislature finds that | ||
issuing public securities to provide a method to raise funds to | ||
provide residential property insurance and property owners' | ||
association insurance in this state through the association is to | ||
benefit the public and to further a public purpose. | ||
SECTION 9. Notwithstanding the changes in law made by this | ||
Act to Chapter 2211, Insurance Code, the Fair Access to Insurance | ||
Requirements Plan is not required to provide property owners' | ||
association insurance under that chapter until September 1, 2024. | ||
SECTION 10. This Act takes effect September 1, 2023. |