Bill Text: TX SB1089 | 2013-2014 | 83rd Legislature | Introduced

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Bill Title: Relating to the operation of the Texas Windstorm Insurance Association and to catastrophe preparedness in the seacoast territories of this state.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2013-03-26 - Left pending in committee [SB1089 Detail]

Download: Texas-2013-SB1089-Introduced.html

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83R3188 TJS/AJA/PMO/MEW-F
By: Hinojosa S.B. No. 1089

A BILL TO BE ENTITLED
AN ACT
relating to the operation of the Texas Windstorm Insurance
Association and to catastrophe preparedness in the seacoast
territories of this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PAYMENT OF INSURED LOSSES OF THE TEXAS WINDSTORM
INSURANCE ASSOCIATION; FUNDING THE CATASTROPHE RESERVE TRUST FUND
SECTION 1.01. (a) Subchapter B-1, Chapter 2210, Insurance
Code, is amended by adding Section 2210.076 to read as follows:
Sec. 2210.076. TERMINATION OF PUBLIC SECURITIES PROGRAM;
EXPIRATION OF SUBCHAPTER. (a) Notwithstanding any other law, public
securities described by this subchapter may not be issued on or
after September 1, 2013.
(b) This subchapter expires September 1, 2027.
(b) Notwithstanding Section 2210.076, Insurance Code, as
added by this section, Subchapter B-1, Chapter 2210, Insurance
Code, is continued in effect on and after September 1, 2027, only to
the extent necessary to avoid the impairment of a public security
obligation under Chapter 2210, Insurance Code, if any, that exists
on or after that date.
SECTION 1.02. (a) Subchapter M, Chapter 2210, Insurance
Code, is amended by adding Section 2210.621 to read as follows:
Sec. 2210.621. TERMINATION OF PUBLIC SECURITIES PROGRAM;
EXPIRATION OF SUBCHAPTER. (a) Notwithstanding any other law, public
securities described by this subchapter may not be issued on or
after September 1, 2013.
(b) This subchapter expires September 1, 2027.
(b) Notwithstanding Section 2210.621, Insurance Code, as
added by this section, Subchapter M, Chapter 2210, Insurance Code,
is continued in effect on and after September 1, 2027, only to the
extent necessary to avoid the impairment of a public security
obligation under Chapter 2210, Insurance Code, if any, that exists
on or after that date.
SECTION 1.03. Chapter 2210, Insurance Code, is amended by
adding Subchapter B-2 to read as follows:
SUBCHAPTER B-2. PAYMENT OF LOSSES
Sec. 2210.081. DEFINITION. In this subchapter, "insurer"
means a property and casualty insurer authorized to engage in the
business of property and casualty insurance in this state and an
affiliate of such an insurer, as described by Section 823.003,
including an affiliate that is not authorized to engage in the
business of property and casualty insurance in this state. The term
includes a county mutual insurance company, a Lloyd's plan, and a
reciprocal or interinsurance exchange but does not include an
entity described by Section 2210.006(b).
Sec. 2210.082. PAYMENT OF EXCESS LOSSES; PAYMENT FROM
RESERVES AND TRUST FUND. (a) If, on or after September 1, 2013, an
occurrence or series of occurrences in a catastrophe area results
in insured losses and operating expenses of the association in
excess of premium and other revenue of the association, the excess
losses and operating expenses shall be paid as provided by this
subchapter.
(b) The association shall pay losses in excess of premium
and other revenue of the association from available reserves of the
association and available amounts in the catastrophe reserve trust
fund.
(c) Losses not paid under Subsection (b) shall be paid from
the proceeds of public securities issued in accordance with this
subchapter and Subchapter M-1 and insurer assessments assessed in
accordance with this subchapter after the occurrence or series of
occurrences that results in the losses.
Sec. 2210.083. PAYMENT FROM CLASS A PUBLIC SECURITIES AND
INSURER ASSESSMENT. (a) On or after the date of an occurrence or
series of occurrences that results in insured losses, any losses
the association determines cannot be paid from available reserves
or available amounts in the catastrophe reserve trust fund as
provided by Section 2210.082(b) shall be paid as provided by this
section from:
(1) the proceeds of Class A public securities
authorized to be issued in accordance with Subchapter M-1; and
(2) an assessment against all insurers that provide
property insurance in this state in accordance with this section.
(b) Public securities issued as described by this section:
(1) shall be issued as necessary in a principal amount
not to exceed $1 billion, whether for a single occurrence or a
series of occurrences, and outstanding public securities may not
exceed a principal amount of $1 billion at any one time, regardless
of the calendar year or years in which outstanding public
securities were issued;
(2) subject to the $1 billion maximum described by
Subdivision (1), may be issued, in one or more issuances or
tranches; and
(3) must be repaid in the manner and from the sources
prescribed by Subchapter M-1 within a period not to exceed 10 years,
and may be repaid sooner if the board of directors elects to do so
and the commissioner approves.
(c) If public securities are issued as described by this
section, the department shall assess each insurer that provides
property insurance in this state in accordance with this section.
(d) The total amount of an assessment under this section
must equal one-half of the principal amount of the public
securities issued under this section, and each insurer's share of
the assessment must be based on the insurer's proportionate share
of the total extended coverage and other allied lines premium
received by all insurers for property insurance in this state in the
calendar year preceding the year in which the assessment is made.
(e) The proceeds of an assessment under this section shall
be deposited in the catastrophe reserve trust fund.
(f) The commissioner shall adopt rules to implement the
assessment of insurers under this section.
Sec. 2210.084. PAYMENT FROM CLASS B PUBLIC SECURITIES AND
INSURER ASSESSMENT. (a) On or after the date of an occurrence or
series of occurrences that results in insured losses, any losses
the association determines cannot be paid in the manner provided by
Sections 2210.082 and 2210.083 shall be paid as provided by this
section from:
(1) the proceeds of Class B public securities
authorized to be issued in accordance with Subchapter M-1; and
(2) an assessment against all insurers that provide
property insurance in this state in accordance with this section.
(b) Public securities described by Subsection (a):
(1) shall be issued as necessary in a principal amount
not to exceed $900 million, whether for a single occurrence or a
series of occurrences, and outstanding public securities may not
exceed a principal amount of $900 million at any one time,
regardless of the calendar year or years in which outstanding
public securities were issued;
(2) subject to the $900 million maximum described by
Subdivision (1), may be issued, in one or more issuances or
tranches; and
(3) must be repaid in the manner and from the sources
prescribed by Subchapter M-1 within a period not to exceed 10 years,
and may be repaid sooner if the board of directors elects to do so
and the commissioner approves.
(c) If public securities are issued as described by this
section, the department shall assess each insurer that provides
property insurance in this state in accordance with this section.
(d) The total amount of an assessment under this section
must be equal to the principal amount of the public securities
issued under this section, and each insurer's share of the
assessment must be based on the insurer's proportionate share of
the total extended coverage and other allied lines premium received
by all insurers for property insurance in this state in the calendar
year preceding the year in which the assessment is made.
(e) The proceeds of an assessment under this section shall
be deposited in the catastrophe reserve trust fund.
(f) The commissioner shall adopt rules to implement the
assessment of insurers under this section.
Sec. 2210.085. PAYMENT FROM CLASS C PUBLIC SECURITIES. (a)
On or after the date of an occurrence or series of occurrences that
results in insured losses, any losses the association determines
cannot be paid in the manner provided by Sections 2210.082,
2210.083, and 2210.084 shall be paid as provided by this section
from the proceeds of Class C public securities authorized to be
issued in accordance with Subchapter M-1.
(b) Public securities described by Subsection (a):
(1) shall be issued as necessary in a principal amount
not to exceed $2.75 billion, whether for a single occurrence or a
series of occurrences, and outstanding public securities may not
exceed a principal amount of $2.75 billion at any one time,
regardless of the calendar year or years in which outstanding
public securities were issued;
(2) subject to the $2.75 billion maximum described by
Subdivision (1), may be issued, in one or more issuances or
tranches; and
(3) must be repaid in the manner and from the sources
prescribed by Subchapter M-1 within a period not to exceed 14 years,
and may be repaid sooner if the board of directors elects to do so
and the commissioner approves.
Sec. 2210.086. PAYMENT FROM CLASS D PUBLIC SECURITIES. (a)
On or after the date of an occurrence or series of occurrences that
results in insured losses, any losses the association determines
cannot be paid in the manner provided by Sections 2210.082,
2210.083, 2210.084, and 2210.085 shall be paid as provided by this
section from the proceeds of Class D public securities authorized
to be issued in accordance with Subchapter M-1.
(b) Public securities described by Subsection (a):
(1) shall be issued as necessary in a principal amount
and with terms and maturities necessary to pay insured losses
described by Subsection (a) as determined under Section 2210.629;
and
(2) must be repaid in the manner and from the sources
prescribed by Subchapter M-1.
Sec. 2210.087. AUTHORIZATION TO ENTER INTO FINANCING
ARRANGEMENTS. The association may borrow from, or enter into other
financing arrangements with, any market source, under which the
market source makes interest-bearing loans or other financial
instruments available to the association to enable the association
to pay losses under this subchapter or to obtain public securities
under this subchapter. For purposes of this section, "financial
instruments" includes commercial paper.
Sec. 2210.088. REINSURANCE. (a) Before an occurrence or
series of occurrences described by this subchapter, an insurer may
purchase reinsurance to cover an assessment for which the insurer
would otherwise be liable under this subchapter.
(b) An insurer that elects to purchase reinsurance must
notify the board of directors of the election in the form and manner
prescribed by the association. If an insurer does not elect to
purchase reinsurance under this section, the insurer remains liable
for any assessment imposed under this subchapter.
SECTION 1.04. Section 2210.451, Insurance Code, is amended
to read as follows:
Sec. 2210.451. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "Insurer" means a property and casualty insurer
authorized to engage in the business of property and casualty
insurance in this state and an affiliate of such an insurer, as
described by Section 823.003, including an affiliate that is not
authorized to engage in the business of property and casualty
insurance in this state. The term includes a county mutual
insurance company, a Lloyd's plan, and a reciprocal or
interinsurance exchange but does not include an entity described by
Section 2210.006(b).
(2) "Trust [, "trust] fund" means the catastrophe
reserve trust fund.
SECTION 1.05. Sections 2210.452(a), (c), and (d), Insurance
Code, are amended to read as follows:
(a) The commissioner shall adopt rules under which the
association makes payments to the catastrophe reserve trust
fund. The trust fund may be used only to fund the obligations of
the trust fund under Subchapters [Subchapter] B-1 and B-2.
(c) Following [At the end of] each calendar year [or policy
year], the association shall pay [use] the total net gain from
operations of the association in that year, including all premium
and other revenue of the association in excess of incurred losses,
operating expenses, public security obligations, and public
security administrative expenses, to [make payments to] the trust
fund except as provided by this subsection. If at the end of the
calendar year the available balance in the trust fund is greater
than or equal to 1.5 percent of the association's direct exposure,
as determined under Section 2210.456, the association for that year
shall pay to the trust fund an amount equal to at least three-tenths
of one percent of the association's total exposure, as determined
under Section 2210.456, and may use any net gain remaining after
that payment[,] to procure reinsurance[,] or to make additional
payments to the trust fund [and to procure reinsurance].
(d) The commissioner by rule shall establish the procedure
relating to the disbursement of money from the trust fund to
policyholders in the event of an occurrence or series of
occurrences within a catastrophe area that results in a
disbursement under Subchapters [Subchapter] B-1 and B-2.
SECTION 1.06. Subchapter J, Chapter 2210, Insurance Code,
is amended by adding Section 2210.456 to read as follows:
Sec. 2210.456. CONTINGENT ADDITIONAL FUNDING; PREMIUM
SURCHARGE AND INSURER ASSESSMENT. (a) Not later than January 31 of
each year, the association shall submit to the commissioner in a
form and manner, and using a method or formula determined by the
commissioner by rule, a statement that reports:
(1) the association's total exposure for the previous
calendar year;
(2) the association's direct exposure for the previous
calendar year; and
(3) the current balance in the trust fund available to
pay any losses under Subchapter B-2.
(b) In a calendar year in which the commissioner determines
based on information reported in the statement required by
Subsection (a) that the available balance in the trust fund is less
than 1.5 percent of the association's total exposure for the
previous calendar year, or in which any class of public security
issued under Subchapter M-1 remains outstanding in any amount, the
department, in accordance with this section, shall:
(1) assess each insurer that provides property
insurance in this state; and
(2) assess a premium surcharge on each policyholder of
a policy that covers insured property in a first tier coastal
county.
(c) The total amount of the insurer assessment under
Subsection (b) in a calendar year must equal 0.15 percent of the
association's direct exposure for the previous calendar year, as
reported in the statement required by Subsection (a), and each
insurer's assessment must be based on the insurer's proportionate
share of the total extended coverage and other allied lines premium
received by all insurers for property insurance in this state in the
previous calendar year. An insurer may not recoup an assessment
paid under this section through a premium surcharge or tax credit.
(d) The premium surcharge described by Subsection (b) must
equal 3.9 percent of premium and shall be assessed on each
policyholder of a policy that covers insured property that is
located in a first tier coastal county, including an automobile
principally garaged in a first tier coastal county. The premium
surcharge shall be assessed on each Texas windstorm and hail
insurance policy and each property and casualty insurance policy,
including an automobile insurance policy, issued for an automobile
or other property located in the first tier coastal county. The
premium surcharge applies to:
(1) all policies written under the following lines of
insurance:
(A) fire and allied lines;
(B) farm and ranch owners;
(C) residential property insurance;
(D) private passenger automobile liability and
physical damage insurance; and
(E) commercial automobile liability and physical
damage insurance; and
(2) the property insurance portion of a commercial
multiple peril insurance policy.
(e) A premium surcharge under this section is a separate
charge in addition to the premiums collected and is not subject to
premium tax or commissions. Failure by a policyholder to pay the
surcharge constitutes failure to pay premium for purposes of policy
cancellation.
(f) The proceeds of an insurer assessment or premium
surcharge under this section shall be deposited in the catastrophe
reserve trust fund.
(g) The commissioner shall adopt rules to implement the
assessment of insurers and policyholders under this section.
SECTION 1.07. Chapter 2210, Insurance Code, is amended by
adding Subchapter M-1 to read as follows:
SUBCHAPTER M-1. PUBLIC SECURITIES PROGRAM
Sec. 2210.625. FINDINGS AND PURPOSE. The legislature finds
that authorizing the issuance of public securities to raise funds
to provide windstorm and hail insurance through the association is
for the benefit of the public and in furtherance of a public
purpose.
Sec. 2210.626. DEFINITIONS. In this subchapter:
(1) "Authority" means the Texas Public Finance
Authority.
(2) "Board" means the board of directors of the
authority.
(3) "Class A public securities" means public
securities authorized to be issued as described by Section
2210.083.
(4) "Class B public securities" means public
securities authorized to be issued as described by Section
2210.084.
(5) "Class B public security trust fund" means the
dedicated trust fund established by the board and held by the Texas
Treasury Safekeeping Trust Company into which premium surcharges
collected under Section 2210.637 for the purpose of repaying Class
B public securities are deposited.
(6) "Class C public securities" means public
securities authorized to be issued as described by Section
2210.085.
(7) "Class C public security trust fund" means the
dedicated trust fund established by the board and held by the Texas
Treasury Safekeeping Trust Company into which premium surcharges
collected under Section 2210.638 for the purpose of repaying Class
C public securities are deposited.
(8) "Class D public securities" means public
securities authorized to be issued as described by Section
2210.086.
(9) "Class D public security trust fund" means the
dedicated trust fund established by the board and held by the Texas
Treasury Safekeeping Trust Company into which money received from
any source for the purpose of repaying Class D public securities is
deposited.
(10) "Credit agreement" has the meaning assigned by
Chapter 1371, Government Code.
(11) "Insurer" means a property and casualty insurer
authorized to engage in the business of property and casualty
insurance in this state and an affiliate of such an insurer, as
described by Section 823.003, including an affiliate that is not
authorized to engage in the business of property and casualty
insurance in this state. The term includes a county mutual
insurance company, a Lloyd's plan, and a reciprocal or
interinsurance exchange but does not include an entity described by
Section 2210.006(b).
(12) "Public security" means a debt instrument or
other public security issued by the authority.
(13) "Public security administrative expenses" means
expenses incurred to administer public securities issued under this
subchapter, including fees for credit enhancement, paying agents,
trustees, and attorneys, and for other professional services.
(14) "Public security obligations" means the
principal of a public security and any premium and interest on a
public security issued under this subchapter, together with any
amount owed under a related credit agreement.
(15) "Public security obligation revenue fund" means
the dedicated trust fund established by the association and held by
the Texas Treasury Safekeeping Trust Company outside the state
treasury under this subchapter.
Sec. 2210.627. APPLICABILITY OF OTHER LAWS. (a) The board
shall issue the public securities described by Section 2210.628 in
accordance with and subject to the requirements of Chapter 1232,
Government Code, other than Section 1232.108 of that chapter, and
in accordance with and subject to other provisions of Title 9,
Government Code, that apply to issuance of a public security by a
state agency. In the event of a conflict, this subchapter controls.
(b) A purpose for which public securities are issued under
this chapter constitutes an eligible project for purposes of
Chapter 1371, Government Code.
Sec. 2210.628. ISSUANCE OF PUBLIC SECURITIES AUTHORIZED.
(a) At the request of the association and with the approval of the
commissioner, the authority shall issue Class A, Class B, Class C,
or Class D public securities. The association shall submit to the
commissioner a cost-benefit analysis of various financing methods
and funding structures when requesting the issuance of public
securities under this subsection.
(b) The association shall specify in the association's
request to the board the maximum principal amount of the public
securities and the maximum term of the public securities.
(c) The principal amount determined by the association
under Subsection (b) may be increased to include an amount
sufficient to:
(1) pay the costs related to issuance of the public
securities;
(2) provide a public security reserve fund;
(3) capitalize interest for the period determined
necessary by the association, not to exceed two years; and
(4) provide the amount of debt service coverage for
public securities determined by the association, in consultation
with the authority, to be required for the issuance of marketable
public securities.
(d) An increase in the principal amount made under
Subsection (c) is not included for purposes of determining the
total amount of an assessment under Section 2210.083 or 2210.084.
Sec. 2210.629. TERMS OF ISSUANCE. (a) The board shall
determine the method of sale, type and form of public security,
maximum interest rates, and other terms of the public securities
that, in the board's judgment, best achieve the goals of the
association and effect the borrowing at the lowest practicable
cost. The board may enter into a credit agreement in connection with
the public securities.
(b) Public securities must be issued by the board on behalf
of the association.
Sec. 2210.630. ADDITIONAL COVENANTS. The board may make
additional covenants with respect to the public securities and the
designated income and receipts of the association pledged to their
payment, and provide for the flow of funds and the establishment,
maintenance, and investment of funds and accounts with respect to
the public securities, and the administration of those funds and
accounts, as provided in the proceedings authorizing the public
securities.
Sec. 2210.631. PUBLIC SECURITY PROCEEDS. The proceeds of
public securities issued by the board under this subchapter may be
deposited with the Texas Treasury Safekeeping Trust Company in
accordance with procedures established by the comptroller. The
comptroller shall account to the association for the deposited
money separately from all other money.
Sec. 2210.632. USE OF PUBLIC SECURITY PROCEEDS. (a) Public
security proceeds, including investment income, shall be held in
trust for the exclusive use and benefit of the association. The
association may use the proceeds to:
(1) pay incurred claims and operating expenses of the
association;
(2) purchase reinsurance for the association;
(3) pay the costs of issuing the public securities and
public security administrative expenses, if any;
(4) provide a public security reserve;
(5) pay capitalized interest and principal on the
public securities for the period determined necessary by the
association under Section 2210.628;
(6) pay private financial agreements entered into by
the association as temporary sources of payment of losses and
operating expenses of the association; and
(7) reimburse the association for any cost described
by Subdivisions (1)-(6) paid by the association before issuance of
the public securities.
(b) Any excess public security proceeds that remain after
the purpose for which the public securities were issued is
satisfied may be used to purchase or redeem outstanding public
securities or pay public security administrative expenses. Any
excess public security proceeds that remain after all outstanding
public securities are purchased or redeemed and all public security
administrative expenses are paid shall be transferred to the
catastrophe reserve trust fund.
Sec. 2210.633. REPAYMENT OF ASSOCIATION'S PUBLIC SECURITY
OBLIGATIONS. (a) The association shall provide for the payment of
all public security obligations from available funds collected by
the association and deposited into the public security obligation
revenue fund. If the association determines that it is unable to pay
the public security obligations and public security administrative
expenses, if any, with available funds, the association shall pay
those obligations and expenses in accordance with Sections
2210.636, 2210.637, 2210.638, and 2210.639, as applicable.
(b) If any public securities issued under this subchapter
are outstanding, the authority shall notify the association of the
amount of the public security obligations and the estimated amount
of public security administrative expenses, if any, each calendar
year in a period sufficient, as determined by the association, to
permit the association to determine the availability of funds and,
if necessary, assess a premium surcharge under Section 2210.637 or
2210.638, as applicable.
(c) The association shall deposit:
(1) all revenue collected under Section 2210.636 in
the public security obligation revenue fund;
(2) all money collected from a premium surcharge
assessed under Section 2210.637 in the Class B public security
trust fund;
(3) all money collected from a premium surcharge
assessed under Section 2210.638 in the Class C public security
trust fund; and
(4) all money received from any source for the purpose
of repaying Class D public securities under Section 2210.639 in the
Class D public security trust fund.
(d) Money deposited in a fund under this section may be
invested as permitted by general law. Money in a fund required to be
used to pay public security obligations and public security
administrative expenses, if any, shall be transferred to the
appropriate funds in the manner and at the time specified in the
proceedings authorizing the public securities in order to ensure
timely payment of obligations and expenses. The board may establish
funds and accounts with the comptroller that the board determines
are necessary to administer and repay the public security
obligations. If the association has not transferred amounts
sufficient to pay the public security obligations to the board's
designated interest and sinking fund in a timely manner, the board
may direct the Texas Treasury Safekeeping Trust Company to transfer
from the public security obligation revenue fund, or the Class B,
Class C, or Class D public security trust fund, to the appropriate
account the amount necessary to pay the public security obligation.
(e) The association shall provide for the payment of the
public security obligations and the public security administrative
expenses by irrevocably pledging revenues received from premiums,
assessments, premium surcharges, and amounts on deposit in the
public security obligation revenue fund, and the Class B, Class C,
and Class D public security trust fund, together with any public
security reserve fund, as provided in the proceedings authorizing
the public securities and related credit agreements.
(f) An amount owed by the board under a credit agreement
shall be payable from and secured by a pledge of revenues received
by the association or amounts from the public security obligation
trust fund or the Class B, Class C, or Class D public security trust
fund to the extent provided in the proceedings authorizing the
credit agreement.
Sec. 2210.634. PUBLIC SECURITY PAYMENTS. (a) Revenue
received from a premium surcharge under Section 2210.637 or
2210.638 may be applied only as provided by this subchapter.
(b) The association may pay public security obligations
with other legally available funds.
(c) Public security obligations are payable only from
sources provided for payment in this subchapter.
Sec. 2210.635. EXCESS REVENUE COLLECTIONS AND INVESTMENT
EARNINGS. Revenue collected in any calendar year from a premium
surcharge under Section 2210.637 or 2210.638 that exceeds the
amount of the public security obligations and public security
administrative expenses payable in that calendar year and interest
earned on the public security obligation fund may, in the
discretion of the association, be:
(1) used to pay public security obligations payable in
the subsequent calendar year, offsetting the amount of the premium
surcharge that would otherwise be required to be levied for that
year under this subchapter;
(2) used to redeem or purchase outstanding public
securities; or
(3) deposited in the catastrophe reserve trust fund.
Sec. 2210.636. PAYMENT OF CLASS A PUBLIC SECURITIES. The
association shall pay Class A public securities issued as described
by Section 2210.083 from net premium and other revenue.
Sec. 2210.637. PAYMENT OF CLASS B PUBLIC SECURITIES. (a)
The association shall pay Class B public securities issued as
described by Section 2210.084 from:
(1) net premium and other revenue; and
(2) a first tier coastal county premium surcharge
collected in accordance with this section.
(b) On approval by the commissioner, the association and
each insurer that provides insurance in a first tier coastal county
shall assess, as provided by this section, a premium surcharge to
each policyholder of a policy described by Subsection (c) that is in
effect on or after the 180th day after the date the commissioner
issues notice of the approval of the public securities. The premium
surcharge must be set in an amount sufficient to pay, for the
duration of the issued public securities, all debt service not
already covered by available funds and all related expenses on the
public securities.
(c) The premium surcharge under this section shall be
assessed on each policyholder of a policy that covers insured
property that is located in a first tier coastal county, including
an automobile principally garaged in a first tier coastal
county. The premium surcharge shall be assessed on each Texas
windstorm and hail insurance policy and each property and casualty
insurance policy, including an automobile insurance policy, issued
for an automobile or other property located in the first tier
coastal county. The premium surcharge applies to:
(1) all policies written under the following lines of
insurance:
(A) fire and allied lines;
(B) farm and ranch owners;
(C) residential property insurance;
(D) private passenger automobile liability and
physical damage insurance; and
(E) commercial automobile liability and physical
damage insurance; and
(2) the property insurance portion of a commercial
multiple peril insurance policy.
(d) A premium surcharge under this section is a separate
charge in addition to the premiums collected and is not subject to
premium tax or commissions. Failure by a policyholder to pay the
surcharge constitutes failure to pay premium for purposes of policy
cancellation.
Sec. 2210.638. PAYMENT OF CLASS C PUBLIC SECURITIES. (a)
The association shall pay Class C public securities issued as
described by Section 2210.085 from:
(1) net premium and other revenue; and
(2) a statewide premium surcharge collected in
accordance with this section.
(b) On approval by the commissioner, the association and
each insurer that provides insurance in this state shall assess, as
provided by this section, a premium surcharge to each policyholder
of a policy described by Subsection (c) that is in effect on or
after the 180th day after the date the commissioner issues notice of
the approval of the public securities. The premium surcharge must
be set in an amount sufficient to pay, for the duration of the
issued public securities, all debt service not already covered by
available funds and all related expenses on the public securities.
(c) The premium surcharge under this section shall be
assessed on each policyholder of a policy that covers insured
property that is located in this state, including an automobile
registered in this state. The premium surcharge shall be assessed
on each Texas windstorm and hail insurance policy and each property
and casualty insurance policy, including an automobile insurance
policy, issued for an automobile or other property located in this
state. The premium surcharge applies to:
(1) all policies written under the following lines of
insurance:
(A) fire and allied lines;
(B) farm and ranch owners;
(C) residential property insurance;
(D) private passenger automobile liability and
physical damage insurance; and
(E) commercial automobile liability and physical
damage insurance; and
(2) the property insurance portion of a commercial
multiple peril insurance policy.
(d) A premium surcharge under this section is a separate
charge in addition to the premiums collected and is not subject to
premium tax or commissions. Failure by a policyholder to pay the
surcharge constitutes failure to pay premium for purposes of policy
cancellation.
Sec. 2210.639. PAYMENT OF CLASS D PUBLIC SECURITIES. (a)
The association shall pay Class D public securities issued as
described by Section 2210.086 from:
(1) net premium and other revenue; and
(2) money received from any source for the purpose of
repaying Class D public securities.
(b) The association may accept for the use and benefit of
the Class D public security trust fund any donation, contribution,
gift, grant, or bequest of money or securities from any source.
Sec. 2210.640. AUTHORIZATION TO ENTER INTO FINANCING
ARRANGEMENTS. The association may enter into financing
arrangements as described by Section 2210.087 as necessary to
obtain public securities issued under this subchapter.
Sec. 2210.641. REFINANCING PUBLIC SECURITIES. The
association may request the board to refinance any public
securities issued under this subchapter, whether Class A, Class B,
Class C, or Class D public securities, with public securities
payable from the same sources as the original public securities.
Class A, Class B, Class C, or Class D public securities may be
issued on a parity or subordinate lien basis with other Class A,
Class B, Class C, or Class D public securities, respectively.
Sec. 2210.642. SOURCE OF PAYMENT; STATE DEBT NOT CREATED.
(a) A public security or credit agreement is payable solely from
revenue as provided by this subchapter.
(b) A public security issued under this subchapter, and any
related credit agreement, is not a debt of this state or any state
agency or political subdivision of this state, and does not
constitute a pledge of the faith and credit of this state or any
state agency or political subdivision of this state.
(c) Each public security, and any related credit agreement,
issued under this subchapter must state on the security's face
that:
(1) neither the state nor a state agency, political
corporation, or political subdivision of the state is obligated to
pay the principal of or interest on the public security except as
provided by this subchapter; and
(2) neither the faith and credit nor the taxing power
of the state or any state agency, political corporation, or
political subdivision of the state is pledged to the payment of the
principal of or interest on the public security.
Sec. 2210.643. STATE NOT TO IMPAIR PUBLIC SECURITY
OBLIGATIONS. (a) The state pledges for the benefit and protection
of financing parties, the board, and the association that the
state will not take or permit any action that would:
(1) impair the collection of premium surcharges or the
deposit of those funds into the Class B or Class C public security
trust fund;
(2) reduce, alter, or impair the premium surcharges to
be imposed, collected, and remitted to financing parties until the
principal, interest, and premium, and any other charges incurred
and contracts to be performed in connection with the related public
securities, have been paid and performed in full; or
(3) in any way impair the rights and remedies of the
public security owners until the public securities are fully
discharged.
(b) A party issuing public securities under this subchapter
may include the pledge described by Subsection (a) in any
documentation relating to those securities.
Sec. 2210.644. ENFORCEMENT BY MANDAMUS. A writ of mandamus
and any other legal and equitable remedies are available to a party
in interest to require the association or another party to fulfill
an agreement and to perform functions and duties under:
(1) this subchapter;
(2) the Texas Constitution; or
(3) a public security resolution or order authorizing
public securities to be issued under this subchapter.
Sec. 2210.645. EXEMPTION FROM TAXATION. 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.
Sec. 2210.646. NO PERSONAL LIABILITY. The members of the
association, members of the association board of directors,
association employees, the board, the employees of the authority,
the commissioner, and department employees are not personally
liable as a result of exercising the rights and responsibilities
granted under this subchapter.
Sec. 2210.647. AUTHORIZED INVESTMENTS. Public securities
issued under this subchapter are authorized investments under:
(1) Subchapter B, Chapter 424;
(2) Subchapter C, Chapter 425; and
(3) Sections 425.203-425.213.
ARTICLE 2. ASSOCIATION OPERATIONS
SECTION 2.01. Section 2210.0081, Insurance Code, is amended
to read as follows:
Sec. 2210.0081. CERTAIN ACTIONS BROUGHT AGAINST
ASSOCIATION BY COMMISSIONER. (a) In an action brought by the
commissioner against the association under Chapter 441:
(1) the association's inability to satisfy obligations
under Subchapters [Subchapter] M and M-1 related to the issuance of
public securities under this chapter constitutes a condition that
makes the association's continuation in business hazardous to the
public or to the association's policyholders for the purposes of
Section 441.052;
(2) a conservator shall complete the conservator's
duties as required by Chapter 441 not later than six months after
the date of the appointment [the time for the association to comply
with the requirements of supervision or for the conservator to
complete the conservator's duties, as applicable, is limited to
three years from the date the commissioner commences the action
against the association]; and
(3) unless the commissioner takes further action
against the association under Chapter 441, as a condition of
release from supervision, the association must demonstrate to the
satisfaction of the commissioner that the association:
(A) is able to satisfy obligations under
Subchapters [Subchapter] M and M-1 related to the issuance of
public securities under this chapter; and
(B) has met the criteria established under
Subsection (b).
(b) The commissioner by rule shall establish specific
criteria for the release of the association from conservatorship.
(c) The conservator shall provide a written report that
states the release status of the association and explains in detail
all efforts undertaken to meet the criteria established under
Subsection (b) to:
(1) the association on a monthly basis; and
(2) the legislature on a quarterly basis.
(d) After notice and hearing, the commissioner may extend
the conservatorship for one additional period not to exceed six
months.
SECTION 2.02. Section 2210.102, Insurance Code, is amended
to read as follows:
Sec. 2210.102. COMPOSITION. (a) The board of directors is
composed of 11 [nine] members appointed by the governor
[commissioner] in accordance with this section.
(b) Three [Four] members must be representatives of the
insurance industry who actively write and renew windstorm and hail
insurance in the seacoast territory.
(c) Six [Four] members must, as of the date of the
appointment, reside in the first tier coastal counties. Of the six
members appointed under this subsection:
(1) two [At least one of the members appointed under
this subsection] must be [a] property and casualty agents [agent]
who are [is] licensed under this code and are [is] not [a] captive
agents;
(2) one must be a representative of the construction
industry;
(3) one must be a coastal engineer; and
(4) two must be policyholders of the association and
not agents [agent].
(d) One member must be a representative of an area of this
state that is not located in the seacoast territory with
demonstrated expertise in insurance and actuarial principles.
(d-1) One member must be a representative of the financial
industry.
(e) All members must have demonstrated experience in
insurance, general business, [or] actuarial principles, finance,
engineering, or construction sufficient to make the success of the
association probable.
(f) Insurers who are members of the association shall
nominate, from among those members, persons to fill any vacancy in
the three [four] 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 governor [commissioner]. The nominee slate
submitted to the governor [commissioner] under this subsection must
include at least three more names than the number of vacancies. The
governor [commissioner] shall appoint replacement insurance
industry representatives from the nominee slate.
(g) The governor [commissioner] shall appoint three persons
[one person] to serve as [a] nonvoting members [member] of the
board, each of whom must, as of the date of the appointment, be a
public official of a first tier coastal county, with each of the
following regions represented by one nonvoting member:
(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 [to advise the board
regarding issues relating to the inspection process. The
commissioner may give preference in an appointment under this
subsection to a person who is a qualified inspector under Section
2210.254. The nonvoting member appointed under this section must:
[(1) be an engineer licensed by, and in good standing
with, the Texas Board of Professional Engineers;
[(2) reside in a first tier coastal county; and
[(3) be knowledgeable of, and have professional
expertise in, wind-related design and construction practices in
coastal areas that are subject to high winds and hurricanes].
(h) The persons appointed under Subsection (c) must be from
different counties with each of the regions listed in Subsection
(g) represented by at least one person.
SECTION 2.03. Section 2210.202, Insurance Code, is amended
by adding Subsection (c) to read as follows:
(c) The association shall develop and implement an
automated initial application and renewal process that allows for
the acceptance of an application for initial or renewal coverage,
and payment of premiums, from a property and casualty agent or a
person insured under this chapter.
SECTION 2.04. Subchapter E, Chapter 2210, Insurance Code,
is amended by adding Section 2210.2031 to read as follows:
Sec. 2210.2031. PREMIUM SURCHARGE TO REINSTATE PREVIOUS
COVERAGE. An insured who without cause cancels or allows to lapse
insurance coverage issued by the association may subsequently
obtain coverage from the association for the previously insured
property only by paying a premium surcharge of 20 percent.
SECTION 2.05. Section 2210.363(a), Insurance Code, is
amended to read as follows:
(a) The association shall [may] offer a person insured under
this chapter an actuarially justified premium discount on a policy
issued by the association, or an actuarially justified credit
against a surcharge assessed against the person, other than a
surcharge assessed under Subchapters [Subchapter] M and M-1, if:
(1) the construction, alteration, remodeling,
enlargement, or repair of, or an addition to, insurable property:
(A) exceeds applicable building code standards
set forth in the plan of operation; or
(B) includes:
(i) roof strapping designed and
manufactured to withstand a wind load as required by the plan of
operation;
(ii) window and door coverings designed and
manufactured to withstand a wind load as required by the plan of
operation;
(iii) a roof designed and constructed to
withstand a wind load as required by the plan of operation; or
(iv) a secondary roof seal; or
(2) the person elects to purchase a binding
arbitration endorsement under Section 2210.554.
SECTION 2.06. Section 2210.0081, Insurance Code, as amended
by this article, applies to an action by the commissioner against
the association under Chapter 441, Insurance Code, brought before,
on, or after the effective date of this Act. For a conservatorship
pending on the effective date of this Act, the conservator shall
complete the conservator's duties as required by Chapter 441,
Insurance Code, not later than six months after the effective date
of this Act.
SECTION 2.07. (a) The board of directors of the Texas
Windstorm Insurance Association established under Section
2210.102, Insurance Code, as that section existed before amendment
by this article, is abolished effective December 31, 2013.
(b) The governor shall appoint the members of the board of
directors of the Texas Windstorm Insurance Association under
Section 2210.102, Insurance Code, as amended by this article, not
later than December 31, 2013.
(c) The term of a person who is serving as a member of the
board of directors of the Texas Windstorm Insurance Association
immediately before the abolition of that board under Subsection (a)
of this section expires on December 31, 2013. Such a person is
eligible for appointment by the governor to the new board of
directors of the Texas Windstorm Insurance Association, subject to
the requirements of Section 2210.102, Insurance Code, as amended by
this article.
SECTION 2.08. Section 2210.2031, Insurance Code, as added
by this article, applies only to a reinstatement of an insurance
policy that is canceled or lapses on or after the effective date of
this Act. A reinstatement of a policy that is canceled or lapses
before the effective date of this Act is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
SECTION 2.09. The change in law made by this article to
Section 2210.363(a), Insurance Code, applies only to an insurance
policy that is delivered, issued for delivery, or renewed on or
after January 1, 2014. A policy delivered, issued for delivery, or
renewed before January 1, 2014, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
ARTICLE 3. MARKET INCENTIVES
SECTION 3.01. Chapter 2210, Insurance Code, is amended by
adding Subchapter J-1 to read as follows:
SUBCHAPTER J-1. MARKET INCENTIVES
Sec. 2210.477. ASSUMED REINSURANCE PROGRAM. (a) The
association may establish a reinsurance program under which the
association, on a quota share or excess of loss basis or otherwise,
assumes reinsurance ceded by insurers included on the list
maintained under Section 2210.476 for a portion of the losses
incurred by the ceding insurers by writing windstorm and hail
insurance coverage for property in the seacoast territory.
(b) A program established under this section:
(1) must:
(A) be administered under the plan of operation
and operate in a manner consistent with sound insurance practices;
(B) provide for efficient, economical, fair, and
nondiscriminatory administration of the program; and
(C) allow reasonable flexibility to accommodate
insurers in situations of an unusual nature or in which undue
hardship may result; and
(2) may not in any way impair, override, supersede, or
constrain the public purpose of the association.
(c) The plan of operation may provide for various levels of
assumption of risk and retention in a program established under
this section.
(d) A program established under this section must provide
reimbursement to the insurer in the manner provided by the
reinsurance contract for covered events in exchange for the
reinsurance premium paid to the association as specified by the
plan of operation. Each reinsurance contract must contain:
(1) a promise to pay the ceding insurer for the
insurer's losses from each covered event in excess of the insurer's
retention, if any, required by the plan of operation;
(2) a requirement that amounts due to the insurer not
be reduced by reinsurance paid or payable to the insurer from other
sources;
(3) a requirement that all contracts covering a
particular contract year may not exceed the association's actual
capacity to pay claims, up to a limit defined in the plan of
operation;
(4) a requirement of interim quarterly reporting to
the association from each insurer of losses from each covered
event; and
(5) a requirement that, if the insurer becomes
insolvent, the association shall pay the net amount owed to the
insurer directly to the conservator, receiver, or other statutory
successor for the benefit of the insurer's policyholders in this
state.
(e) A premium paid by an insurer to the association under a
reinsurance contract shall be treated as a premium paid by the
insurer for approved reinsurance for all accounting and regulatory
purposes.
Sec. 2210.478. INFORMATION SHARING. (a) The association
shall:
(1) maintain an electronic database composed of
information designed to assist an insurer in participating in or
entering the voluntary windstorm and hail insurance market in the
seacoast territory; and
(2) provide access to the database to insurers that
engage in the business of property insurance in this state.
(b) The database may include information on the
association's business that may be disclosed under Chapter 552,
Government Code, or other information as determined by the board,
that relates to:
(1) underwriting;
(2) the issuance of policies;
(3) loss control services;
(4) the investigation or reporting of actual or
potential fraud, misrepresentation, or criminal activity;
(5) ratemaking;
(6) reinsurance or excess loss insurance;
(7) the administration of consumer disputes and
inquiries; and
(8) claims administration, adjustment, and
management.
(c) The database must be designed to protect:
(1) private information about the association's
policyholders or from which a policyholder is identifiable;
(2) information considered to be confidential by
constitutional or statutory law or by judicial decision; and
(3) information relating to litigation of a civil or
criminal nature to which the association is or may be a party or to
which an officer or employee of the association, as a consequence of
the person's office or employment, is or may be a party.
Sec. 2210.479. STUDY OF MARKET INCENTIVES; REPORTING. (a)
The department shall conduct a study of market incentives to
promote participation in the voluntary windstorm and hail insurance
market in the seacoast territory. The study must address as
possible incentives:
(1) the mandatory or voluntary issuance of windstorm
and hail insurance in conjunction with the issuance of a homeowners
policy in the seacoast territory; and
(2) the establishment of an assigned risk pool.
(b) The department shall deliver to the legislature a
biennial report on the results of the study.
Sec. 2210.480. WINDSTORM AND HAIL INSURANCE ISSUED BY
PRIVATE MARKET: CLAIMS SETTLEMENT AND DISPUTE RESOLUTION. (a)
Except as otherwise provided by this section, windstorm and hail
insurance coverage voluntarily issued by an insurer that is
comparable to Texas windstorm and hail insurance issued by the
association as determined by the commissioner by rule and that is
issued for a structure located in the seacoast territory or
corporeal movable property contained in the structure is subject to
the claims settlement and dispute resolution provisions of
Subchapter L-1 as if the insurer were the association and the
windstorm and hail insurance coverage issued by the insurer were an
association policy.
(b) The claims settlement and dispute resolution provisions
applicable under this section apply only with respect to a claim
that is a request for payment under the windstorm and hail insurance
coverage issued by the insurer.
(c) Sections 2210.572(a) and (b) apply to an insurer that
issues windstorm and hail insurance coverage to which this section
applies only with respect to a claim described by Subsection (b).
Section 2210.572(c) limits the insurer's liability for damages
under Chapter 17, Business & Commerce Code, or any other provision
of law providing for additional damages, punitive damages, or a
penalty only to the extent the damages arise in connection with
windstorm and hail insurance coverage to which this section
applies.
(d) An insurer shall use the guidelines published under
Section 2210.578 to settle claims under windstorm and hail
insurance coverage to which this section applies.
(e) This section does not affect the terms for the
submission, settlement, payment, or dispute resolution of any claim
made under any other type of coverage provided in the same policy as
the windstorm and hail insurance coverage.
Sec. 2210.481. WINDSTORM AND HAIL INSURANCE ISSUED BY
PRIVATE MARKET: REQUIRED POLICY PROVISIONS. (a) A policy issued by
an insurer that includes windstorm and hail insurance coverage
described by Section 2210.480(a) must include provisions that
comply with the requirements of Section 2210.205 with respect to
that coverage. The time period for bringing a claim under the
policy provision required by Section 2210.205(a)(1) is subject to
extension by the commissioner in accordance with Section
2210.205(b).
(b) To the extent the claims settlement and dispute
resolution procedures prescribed by Subchapter L-1 are dependent on
terms included in an association policy, a policy that provides
windstorm and hail insurance coverage that is subject to this
section must include comparable provisions applicable to the
coverage as prescribed by the commissioner by rule.
Sec. 2210.482. WINDSTORM AND HAIL INSURANCE ISSUED BY
PRIVATE MARKET: ACCESSIBILITY OF OMBUDSMAN PROGRAM. (a) A person
insured under windstorm and hail insurance coverage described by
Section 2210.480(a) is entitled to assistance and information from
the ombudsman program established under Section 2210.582 to the
same extent as a person insured by the association under this
chapter.
(b) An insurer that issues windstorm and hail insurance
coverage described by Section 2210.480(a) shall notify the insured,
in the manner prescribed by the commissioner by rule, concerning
the operation of the ombudsman program.
SECTION 3.02. Section 2210.009, Insurance Code, is
transferred to Subchapter J-1, Chapter 2210, Insurance Code, as
added by this article, redesignated as Section 2210.476, Insurance
Code, and amended to read as follows:
Sec. 2210.476 [2210.009]. LIST OF PRIVATE INSURERS;
INCENTIVE PLAN. (a) The department shall maintain a list of all
insurers that engage in the business of property and casualty
insurance in the voluntary market in the seacoast territory.
(b) The department shall develop incentive programs that
include the market incentives described by this subchapter [in the
manner described by Section 2210.053(b)] to encourage authorized
insurers to write windstorm and hail insurance on a voluntary basis
to cover property located in the seacoast territory and to minimize
the use of the association as a means to obtain that insurance.
SECTION 3.03. Section 2210.053(b), Insurance Code, is
amended to read as follows:
(b) The department may develop programs to improve the
efficient operation of the association, including a program for
approving policy forms under Section 2301.010 [and a program
designed to create incentives for insurers to write windstorm and
hail insurance voluntarily to cover property located in a
catastrophe area, especially property located on the barrier
islands of this state].
SECTION 3.04. Sections 2210.480, 2210.481, and 2210.482,
Insurance Code, as added by this article, apply only to windstorm
and hail insurance coverage under an insurance policy delivered,
issued for delivery, or renewed on or after January 1, 2014.
Coverage under a policy delivered, issued for delivery, or renewed
before that date is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
ARTICLE 4. BUILDING STANDARDS
SECTION 4.01. Chapter 233, Local Government Code, is
amended by adding Subchapter G to read as follows:
SUBCHAPTER G. RESIDENTIAL BUILDING CODE STANDARDS APPLICABLE TO
UNINCORPORATED AREAS OF COASTAL COUNTIES
Sec. 233.201. DEFINITIONS. In this subchapter:
(1) "First tier coastal county" has the meaning
assigned by Section 2210.003, Insurance Code.
(2) "Residential" means a single-family house or a
duplex.
(3) "Windstorm certificate" means the certificate of
compliance for eligibility for windstorm insurance coverage issued
by the Texas Department of Insurance under Chapter 2210, Insurance
Code.
Sec. 233.202. APPLICABILITY. This subchapter applies only
to a first tier coastal county.
Sec. 233.203. WINDSTORM BUILDING CODE STANDARDS
APPLICABLE. (a) Residential construction, including an
alteration, remodel, enlargement, or repair involving one or more
structural building components, in the unincorporated area of a
county shall conform to the residential building code standards
required to obtain a windstorm certificate.
(b) Standards required under this subchapter apply only to
residential construction in the unincorporated area of a county
that begins after September 1, 2013.
(c) If a municipality located in a county to which this
subchapter applies has adopted a residential building code that
conforms to the standards required to obtain a windstorm
certificate and that applies in the municipality's
extraterritorial jurisdiction, the requirements of this subchapter
have no effect in the municipality's extraterritorial
jurisdiction.
(d) This subchapter may not be construed to:
(1) require prior approval by the county before the
beginning of residential construction; or
(2) authorize the commissioners court of a county to
adopt or enforce zoning regulations.
(e) To the extent of a conflict between this subchapter and
Subchapter F, this subchapter controls.
Sec. 233.204. CERTIFICATE OF OCCUPANCY. A county shall
issue a certificate of occupancy for a residential structure
located in the unincorporated area of the county if the owner of the
structure presents a copy of a windstorm certificate for the
structure with the application for the certificate of occupancy.
Sec. 233.205. RULES; FORMS; FEES. (a) The commissioners
court of a county shall by order adopt the rules and forms necessary
to implement this section.
(b) The commissioners court may by order adopt a reasonable
fee for the issuance of a certificate of occupancy under this
section.
Sec. 233.206. UTILITY CONNECTION. (a) An entity described
by Subsection (b) may not serve or connect a residential structure
located in the unincorporated area of a county and for which
construction began after September 1, 2013, with water, sewer,
electricity, gas, or other utility service unless the county has
issued the structure a certificate of occupancy under this
subchapter.
(b) This section applies to any entity that provides water,
sewer, electricity, gas, or other utility service, including:
(1) a municipality or county;
(2) a municipally owned or operated utility;
(3) a public utility;
(4) a water supply or sewer service corporation
operating under Chapter 67, Water Code; or
(5) a special district or authority created under
state law.
SECTION 4.02. Chapter 250, Local Government Code, is
amended by adding Section 250.007 to read as follows:
Sec. 250.007. MANDATORY INSPECTION OF RESIDENTIAL
CONSTRUCTION IN SEACOAST TERRITORY. (a) In this section,
"seacoast territory" has the meaning assigned by Section 2210.003,
Insurance Code.
(b) This section applies to any residential construction,
including an alteration, remodel, enlargement, or repair,
involving one or more structural building components and located in
the seacoast territory. This section applies without regard to
whether an application for insurance for the property under Chapter
2210, Insurance Code, has been or will be made.
(c) A municipality or county may not issue a certificate of
occupancy or completion for residential construction unless:
(1) the roof of the construction has been designed for
compliance with uniform static wind pressure requirements of 140
miles per hour, for construction seaward of the intercoastal
waterway, or 130 miles per hour, for construction inland of the
intercoastal waterway; and
(2) the construction has been inspected and certified
by the Texas Department of Insurance under Subchapter F, Chapter
32, Insurance Code.
SECTION 4.03. Chapter 32, Insurance Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. RESIDENTIAL CONSTRUCTION INSPECTIONS
Sec. 32.201. DEFINITION. In this subchapter, "seacoast
territory" has the meaning assigned by Section 2210.003.
Sec. 32.202. APPLICABILITY. This subchapter applies to any
residential construction to which Section 250.007, Local
Government Code, applies.
Sec. 32.203. MANDATORY WIND RESISTANT STANDARDS. (a) The
department shall conduct inspections for compliance with the
standards established under Section 250.007, Local Government
Code.
(b) The department shall issue a certificate of compliance
if the construction meets the standards established under Section
250.007, Local Government Code.
Sec. 32.204. WINDSTORM INSURANCE APPLICATION NOT REQUIRED.
The department shall inspect property for compliance with standards
established under Chapter 2210 without regard to whether an
application has been or will be made under that chapter for
insurance for the property.
SECTION 4.04. Section 250.007, Local Government Code, and
Subchapter F, Chapter 32, Insurance Code, as added by this article,
apply only with respect to residential construction commenced on or
after the effective date of this Act. Residential construction
commenced before the effective date of this Act is governed by the
law applicable to the construction immediately before the effective
date of this Act. For the purposes of this section, construction
commenced before the effective date of this Act if the application
for a building permit under which the construction commences was
submitted before the effective date of this Act.
ARTICLE 5. EFFECTIVE DATE
SECTION 5.01. This Act takes effect September 1, 2013.