|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the operation and name of the Texas Windstorm Insurance |
|
Association, to the resolution of certain disputes concerning |
|
claims made to that association, and to the issuance of windstorm |
|
and hail insurance policies in the private insurance market by |
|
certain insurers; providing penalties. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 83.002, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) This chapter also applies to: |
|
(1) a person appointed as a qualified inspector under |
|
Section 2210.254 or 2210.255; and |
|
(2) a person acting as a qualified inspector under |
|
Section 2210.254 or 2210.255 without being appointed as a qualified |
|
inspector under either of those sections. |
|
SECTION 2. Section 541.152, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Except as provided by Subsection (c), on [On] a finding |
|
by the trier of fact that the defendant knowingly committed the act |
|
complained of, the trier of fact may award an amount not to exceed |
|
three times the amount of actual damages. |
|
(c) Subsection (b) does not apply to an action under this |
|
subchapter brought against the Texas Windstorm Insurance |
|
Association. |
|
SECTION 3. The heading to Chapter 2210, Insurance Code, is |
|
amended to read as follows: |
|
CHAPTER 2210. TEXAS COASTAL [WINDSTORM] INSURANCE PLAN |
|
[ASSOCIATION] |
|
SECTION 4. Section 2210.002(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) This chapter may be cited as the Texas Coastal |
|
[Windstorm] Insurance Plan [Association] Act. A reference to the |
|
Texas Windstorm Insurance Association Act means this chapter. |
|
SECTION 5. If S.B. No. 652, Acts of the 82nd Legislature, |
|
Regular Session, 2011, becomes law, Section 2210.002(b), Insurance |
|
Code, as amended by that Act, is amended to read as follows: |
|
(b) The association is subject to review under Chapter 325, |
|
Government Code (Texas Sunset Act), but is not abolished under that |
|
chapter. The association shall be reviewed during the period in |
|
which state agencies abolished in 2015 [2013] are reviewed. The |
|
association shall pay the costs incurred by the Sunset Advisory |
|
Commission in performing the review of the association under this |
|
subsection. The Sunset Advisory Commission shall determine the |
|
costs of the review performed under this subsection, and the |
|
association shall pay the amount of those costs promptly on receipt |
|
of a statement from the Sunset Advisory Commission regarding those |
|
costs. This subsection expires September 1, 2015 [2013]. |
|
|
|
SECTION 6. Section 2210.003(1), Insurance Code, is amended |
|
to read as follows: |
|
(1) "Association" means the Texas Coastal [Windstorm] |
|
Insurance Plan Association. |
|
SECTION 7. Section 2210.003, Insurance Code, is amended by |
|
adding Subdivision (3-b) to read as follows: |
|
(3-b) "Catastrophe year" means a calendar year in |
|
which an occurrence or a series of occurrences results in insured |
|
losses, regardless of when the insured losses are ultimately paid. |
|
SECTION 8. Section 2210.009(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) The department shall maintain a list of all authorized |
|
insurers that engage in the business of property and casualty |
|
insurance in the voluntary market in the seacoast territory. |
|
SECTION 9. Subchapter A, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.0081, 2210.010, 2210.012, and |
|
2210.013 to read as follows: |
|
Sec. 2210.0081. CERTAIN ACTIONS BROUGHT AGAINST |
|
ASSOCIATION BY COMMISSIONER. In an action brought by the |
|
commissioner against the association under Chapter 441: |
|
(1) the association's inability to satisfy obligations |
|
under Subchapter M 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) 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 is able to |
|
satisfy obligations under Subchapter M related to the issuance of |
|
public securities under this chapter. |
|
Sec. 2210.010. APPLICABILITY OF CERTAIN OTHER LAW. (a) A |
|
person may not bring a private action against the association, |
|
including a claim against an agent or representative of the |
|
association, under Chapter 541 or 542. Notwithstanding any other |
|
provision of this code or this chapter, a class action under |
|
Subchapter F, Chapter 541, or under Rule 42, Texas Rules of Civil |
|
Procedure, may only be brought against the association by the |
|
attorney general at the request of the department. |
|
(b) Chapter 542 does not apply to the processing and |
|
settlement of claims by the association. |
|
Sec. 2210.012. STANDARDS OF CONDUCT: BOARD OF DIRECTORS AND |
|
EMPLOYEES; REPORT OF CERTAIN FRAUDULENT CONDUCT. (a) A member of |
|
the board of directors or an employee of the association may not: |
|
(1) accept or solicit any gift, favor, or service that |
|
might reasonably tend to influence the member or employee in the |
|
discharge of duties related to the operation or business of the |
|
association or that the member or employee knows or should know is |
|
being offered with the intent to influence the member's or |
|
employee's conduct related to the operation or business of the |
|
association; |
|
(2) accept other employment or engage in a business or |
|
professional activity that the member or employee might reasonably |
|
expect would require or induce the member or employee to disclose |
|
confidential information acquired by reason of the member's or |
|
employee's position with the association; |
|
(3) accept other employment or compensation that could |
|
reasonably be expected to impair the member's or employee's |
|
independence of judgment in the performance of the member's or |
|
employee's duties related to the operation or business of the |
|
association; |
|
(4) make personal investments that could reasonably be |
|
expected to create a substantial conflict between the member's or |
|
employee's private interest and the interest of the association; or |
|
(5) intentionally or knowingly solicit, accept, or |
|
agree to accept any benefit for having exercised the member's or |
|
employee's powers related to the operation or business of the |
|
association or having performed, in favor of another, the member's |
|
or employee's duties related to the operation or business of the |
|
association. |
|
(b) An association employee who violates Subsection (a) or a |
|
code of conduct established under Section 2210.107(a)(4) is subject |
|
to an employment-related sanction, including termination of the |
|
employee's employment with the association. |
|
(c) A member of the board of directors or an association |
|
employee who violates Subsection (a) is subject to any applicable |
|
civil or criminal penalty if the violation also constitutes a |
|
violation of another statute or rule. |
|
(d) A board member or employee of the association who |
|
reasonably suspects that a fraudulent insurance act has been or is |
|
about to be committed by any board member or employee of the |
|
association shall, not later than the 30th day after discovering |
|
the conduct, report the conduct and identity of the person engaging |
|
in the conduct to the department and may report the conduct and the |
|
identity of the person engaging in the conduct to another |
|
appropriate governmental authority. The department shall forward a |
|
report received under this subsection to the appropriate |
|
governmental authority if the department does not have the |
|
authority to finally resolve, or jurisdiction over, the matter that |
|
is the subject of the report. |
|
Sec. 2210.013. CERTAIN EMPLOYMENT AND CONTRACTS |
|
PROHIBITED. A member of the board of directors or an employee of |
|
the association may not appoint or employ, or contract with, the |
|
following individuals for the provision of goods or services in |
|
connection with the operation or business of the association, if |
|
the individual to be appointed or employed, or with whom a contract |
|
is to be entered into, is to be directly or indirectly compensated |
|
from funds of the association: |
|
(1) an individual related to the member or employee |
|
within a degree of relationship described by Section 573.002, |
|
Government Code; or |
|
(2) an individual related to any member of the board of |
|
directors or employee of the association within a degree of |
|
relationship described by Section 573.002, Government Code. |
|
SECTION 10. Section 2210.053, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) 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. |
|
(c) The association may not be considered a debtor |
|
authorized to file a petition or seek relief in bankruptcy under |
|
Title 11, United States Code. |
|
SECTION 11. Subchapter B, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.058 and 2210.061 to read as |
|
follows: |
|
Sec. 2210.058. CLAIMS PRACTICES AUDIT. (a) The |
|
commissioner, in the manner and at the time the commissioner |
|
determines to be necessary, shall conduct a random audit of claim |
|
files concerning claims the bases of which are damage to insured |
|
property caused by a particular storm to: |
|
(1) determine whether the association is adequately |
|
and properly documenting claims decisions in each claim file; and |
|
(2) ensure that each claim is being handled |
|
appropriately, including being handled in accordance with the terms |
|
of the policy under which the claim is filed. |
|
(b) The department shall conduct an audit required under |
|
this section as soon as possible to ensure the quality of the |
|
process with which the association is handling claims described by |
|
Subsection (a). |
|
(c) If, following an audit conducted under this section, the |
|
commissioner determines that the association is not adequately and |
|
properly documenting claims decisions or that claims described by |
|
Subsection (a) are not otherwise being handled appropriately, the |
|
commissioner shall: |
|
(1) notify the board of directors of that |
|
determination; and |
|
(2) identify the manner in which the association |
|
should correct any deficiencies identified by the commissioner and |
|
issue an order to that effect. |
|
Sec. 2210.061. CONTRACTORS AND MANAGERIAL EMPLOYEES: |
|
COMPENSATION AND BONUSES. The association shall post on the |
|
association's Internet website any compensation, monetary or |
|
otherwise, and any bonus that, when aggregated, exceed $100,000 in |
|
a calendar year and that are paid or given by the association to: |
|
(1) a vendor or independent contractor with whom the |
|
association has a contract; or |
|
(2) an association employee. |
|
SECTION 12. Section 2210.071(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) If, in a catastrophe year, 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. |
|
SECTION 13. Section 2210.072, Insurance Code, is amended by |
|
amending Subsections (a), (b), and (c) and adding Subsections |
|
(b-1), (e), and (f) to read as follows: |
|
(a) Losses not paid under Section 2210.071(b) [2210.071] |
|
shall be paid as provided by this section from the proceeds from |
|
Class 1 public securities authorized to be issued in accordance |
|
with Subchapter M before, on, or after the date of any occurrence or |
|
series of occurrences that results in insured losses. Public |
|
securities issued under this section must be repaid within a period |
|
not to exceed 14 [10] years, and may be repaid sooner if the board of |
|
directors elects to do so and the commissioner approves. |
|
(b) Public securities described by Subsection (a) that are |
|
issued before an occurrence or series of occurrences that results |
|
in incurred losses: |
|
(1) may be issued on the request of the board of |
|
directors with the approval of the commissioner; and |
|
(2) may not, in the aggregate, exceed $1 billion at any |
|
one time, regardless of the calendar year or years in which the |
|
outstanding public securities were issued. |
|
(b-1) Public securities described by Subsection (a): |
|
(1) shall be issued as necessary in a principal amount |
|
not to exceed $1 billion per catastrophe year, in the aggregate, for |
|
securities issued during that catastrophe year before the |
|
occurrence or series of occurrences that results in incurred losses |
|
in that year and securities issued on or after the date of that |
|
occurrence or series of occurrences, and regardless of whether for |
|
a single occurrence or a series of occurrences; and |
|
(2) subject to the $1 billion maximum described by |
|
Subdivision (1), may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in that year, during the following calendar |
|
year. |
|
(c) If [the losses are paid with] public securities are |
|
issued as described by this section, the public securities shall be |
|
repaid in the manner prescribed by Subchapter M from association |
|
premium revenue. |
|
(e) The proceeds of any outstanding public securities |
|
described by Subsection (a) that are issued before an occurrence or |
|
series of occurrences shall be depleted before the proceeds of any |
|
securities issued after an occurrence or series of occurrences may |
|
be used. This subsection does not prohibit the association from |
|
issuing securities after an occurrence or series of occurrences |
|
before the proceeds of outstanding public securities issued during |
|
a previous catastrophe year have been depleted. |
|
(f) If, under Subsection (e), the proceeds of any |
|
outstanding public securities issued during a previous catastrophe |
|
year must be depleted, those proceeds shall count against the $1 |
|
billion limit on public securities described by this section in the |
|
catastrophe year in which the proceeds must be depleted. |
|
SECTION 14. Section 2210.073, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Public securities described by Subsection (a): |
|
(1) may be issued as necessary in a principal amount |
|
not to exceed $1 billion per catastrophe year, in the aggregate, |
|
whether for a single occurrence or a series of occurrences; and |
|
(2) subject to the $1 billion maximum described by |
|
Subdivision (1), may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in that year, during the following calendar |
|
year. |
|
(c) If the losses are paid with public securities described |
|
by this section, the public securities shall be repaid in the manner |
|
prescribed by Subchapter M. |
|
SECTION 15. Section 2210.074, Insurance Code, is amended by |
|
amending Subsection (b) and adding Subsection (c) to read as |
|
follows: |
|
(b) Public securities described by Subsection (a): |
|
(1) may be issued as necessary in a principal amount |
|
not to exceed $500 million per catastrophe year, in the aggregate, |
|
whether for a single occurrence or a series of occurrences; and |
|
(2) subject to the $500 million maximum described by |
|
Subdivision (1), may be issued, in one or more issuances or |
|
tranches, during the calendar year in which the occurrence or |
|
series of occurrences occurs or, if the public securities cannot |
|
reasonably be issued in that year, during the following calendar |
|
year. |
|
(c) If the losses are paid with public securities described |
|
by this section, the public securities shall be repaid in the manner |
|
prescribed by Subchapter M through member assessments as provided |
|
by this section. The association shall notify each member of the |
|
association of the amount of the member's assessment under this |
|
section. The proportion of the losses allocable to each insurer |
|
under this section shall be determined in the manner used to |
|
determine each insurer's participation in the association for the |
|
year under Section 2210.052. A member of the association may not |
|
recoup an assessment paid under this subsection through a premium |
|
surcharge or tax credit. |
|
SECTION 16. Section 2210.075, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.075. REINSURANCE. (a) Before any occurrence or |
|
series of occurrences, an insurer may elect to purchase reinsurance |
|
to cover an assessment for which the insurer would otherwise be |
|
liable under Section 2210.074(c) [2210.074(b)]. |
|
(b) An insurer must notify the board of directors, in the |
|
manner prescribed by the association whether the insurer will be |
|
purchasing reinsurance. If the insurer does not elect to purchase |
|
reinsurance under this section, the insurer remains liable for any |
|
assessment imposed under Section 2210.074(c) [2210.074(b)]. |
|
SECTION 17. Section 2210.102, Insurance Code, is amended by |
|
adding Subsection (i) to read as follows: |
|
(i) Notwithstanding Subsection (f), for a vacancy occurring |
|
in a position under Subsection (b), the commissioner may appoint, |
|
for the lesser of 120 days or until the vacancy is filled, a person |
|
who has demonstrated knowledge in insurance principles. This |
|
subsection does not apply to a vacancy due to the expiration of a |
|
term occurring under Section 2210.103. This subsection expires |
|
December 31, 2012, and any appointment in effect on that date is |
|
continued until the expiration of the term of the appointment. |
|
SECTION 18. Section 2210.105, Insurance Code, is amended by |
|
amending Subsections (a) and (b) and adding Subsections (b-1), (e), |
|
and (f) to read as follows: |
|
(a) Except for an emergency meeting, the association shall: |
|
(1) notify the department not later than the 11th day |
|
before the date of a meeting of the board of directors or of the |
|
members of the association; and |
|
(2) not later than the seventh day before the date of a |
|
meeting of the board of directors, post notice of the meeting on the |
|
association's Internet website and the department's Internet |
|
website. |
|
(b) Except for a closed meeting authorized by Subchapter D, |
|
Chapter 551, Government Code, a meeting of the board of directors or |
|
of the members of the association is open to[:
|
|
[(1)
the commissioner or the commissioner's designated
|
|
representative; and
|
|
[(2)] the public. |
|
(b-1) The commissioner or the commissioner's designated |
|
representative may attend a meeting of the board of directors or the |
|
members of the association, including a closed meeting authorized |
|
by Subchapter D, Chapter 551, Government Code, except for those |
|
portions of a closed meeting that involve the rendition of legal |
|
advice to the board concerning a regulatory matter or that would |
|
constitute an ex parte communication with the commissioner. |
|
(e) The association shall: |
|
(1) broadcast live on the association's Internet |
|
website all meetings of the board of directors, other than closed |
|
meetings; and |
|
(2) maintain on the association's Internet website an |
|
archive of meetings of the board of directors. |
|
(f) A recording of a meeting must be maintained in the |
|
archive required under Subsection (e) through and including the |
|
second anniversary of the meeting. |
|
SECTION 19. Section 2210.107, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.107. PRIMARY BOARD OBJECTIVES; REPORT. (a) The |
|
primary objectives of the board of directors are to ensure that the |
|
board and the association: |
|
(1) operate [operates] in accordance with this |
|
chapter, the plan of operation, and commissioner rules; |
|
(2) comply [complies] with sound insurance |
|
principles; [and] |
|
(3) meet [meets] all standards imposed under this |
|
chapter; |
|
(4) establish a code of conduct and performance |
|
standards for association employees and persons with which the |
|
association contracts; and |
|
(5) establish, and adhere to terms of, an annual |
|
evaluation of association management necessary to achieve the |
|
statutory purpose, board objectives, and any performance or |
|
enterprise risk management objectives established by the board. |
|
(b) Not later than June 1 of each year, the association |
|
shall submit to the commissioner, the legislative oversight board |
|
established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
evaluating the extent to which the board met the objectives |
|
described by Subsection (a) in the 12-month period immediately |
|
preceding the date of the report. |
|
SECTION 20. Subchapter C, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.108 to read as follows: |
|
Sec. 2210.108. OPEN MEETINGS AND OPEN RECORDS. (a) Except |
|
as specifically provided by this chapter or another law, the |
|
association is subject to Chapters 551 and 552, Government Code. |
|
(b) A settlement agreement to which the association is a |
|
party: |
|
(1) subject to Subsection (d), is public information |
|
and is not exempted from required disclosure under Chapter 552, |
|
Government Code; and |
|
(2) if applicable, must contain the name of any |
|
attorney representing a claimant or the association in connection |
|
with the claim that is the basis of the settlement. |
|
(c) Subsection (b) may not be construed to limit or |
|
otherwise restrict the categories of information that are public |
|
information under Section 552.022, Government Code. |
|
(d) The association, before disclosing a settlement |
|
agreement to which the association is a party, shall redact from the |
|
settlement agreement any information that is confidential under |
|
Chapter 552, Government Code. |
|
SECTION 21. Section 2210.152, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The plan of operation shall require the association to |
|
use the claim settlement guidelines published by the commissioner |
|
under Section 2210.578(f) in evaluating the extent to which a loss |
|
to insured property is incurred as a result of wind, waves, tidal |
|
surges, or rising waters not caused by waves or surges. |
|
SECTION 22. Section 2210.202, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.202. APPLICATION FOR COVERAGE. (a) A person who |
|
has an insurable interest in insurable property may apply to the |
|
association for insurance coverage provided under the plan of |
|
operation and an inspection of the property, subject to any rules |
|
established by the board of directors and approved by the |
|
commissioner. The association shall make insurance available to |
|
each applicant in the catastrophe area whose property is insurable |
|
property but who, after diligent efforts, is unable to obtain |
|
property insurance through the voluntary market, as evidenced by |
|
one declination from an insurer authorized to engage in the |
|
business of, and writing, property insurance providing windstorm |
|
and hail coverage in the first tier coastal counties. For purposes |
|
of this section, "declination" has the meaning assigned by the plan |
|
of operation and shall include a refusal to offer coverage for the |
|
perils of windstorm and hail and the inability to obtain |
|
substantially equivalent insurance coverage for the perils of |
|
windstorm and hail. Notwithstanding Section 2210.203(c), evidence |
|
of one declination every three calendar years is also required with |
|
an application for renewal of an association policy. |
|
(b) A property and casualty agent must submit an application |
|
for initial [the] insurance coverage on behalf of the applicant on |
|
forms prescribed by the association. The association shall develop |
|
a simplified process that allows for the acceptance of an |
|
application for initial or renewal coverage from, and payment of |
|
premiums by, a property and casualty agent, a person insured under |
|
this chapter, or an applicant for coverage under this chapter. Each |
|
[The] application for initial or renewal coverage must contain: |
|
(1) a statement as to whether the applicant has |
|
submitted or will submit the premium in full from personal funds or, |
|
if not, to whom a balance is or will be due; and |
|
(2) [.
Each application for initial or renewal
|
|
coverage must also contain] a statement that the agent acting on |
|
behalf of the applicant possesses proof of the declination |
|
described by Subsection (a) and proof of flood insurance coverage |
|
or unavailability of that coverage as described by Section |
|
2210.203(a-1), regardless of whether the agent or the applicant |
|
submits the application for coverage. |
|
SECTION 23. Section 2210.203, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (d) to read as |
|
follows: |
|
(a) If the association determines that the property for |
|
which an application for initial insurance coverage is made is |
|
insurable property, the association, on payment of the premium, |
|
shall direct the issuance of an insurance policy as provided by the |
|
plan of operation. |
|
(d) The commissioner, after receiving a recommendation from |
|
the board of directors, shall approve a commission structure for |
|
payment of an agent who submits an application for coverage to the |
|
association on behalf of a person who has an insurable interest in |
|
insurable property. The commission structure adopted by the |
|
commissioner must be fair and reasonable, taking into consideration |
|
the amount of work performed by an agent in submitting an |
|
application to the association and the prevailing commission |
|
structure in the private windstorm market. |
|
SECTION 24. Sections 2210.204(d) and (e), Insurance Code, |
|
are amended to read as follows: |
|
(d) If an insured requests cancellation of the insurance |
|
coverage, the association shall refund the unearned premium, less |
|
any minimum retained premium set forth in the plan of operation, |
|
payable to the insured and the holder of an unpaid balance. The |
|
property and casualty agent who received a commission as the result |
|
of the issuance of an association policy providing the canceled |
|
coverage [submitted the application] shall refund the agent's |
|
commission on any unearned premium in the same manner. |
|
(e) For cancellation of insurance coverage under this |
|
section, the minimum retained premium in the plan of operation must |
|
be for a period of not less than 90 [180] days, except for events |
|
specified in the plan of operation that reflect a significant |
|
change in the exposure or the policyholder concerning the insured |
|
property, including: |
|
(1) the purchase of similar coverage in the voluntary |
|
market; |
|
(2) sale of the property to an unrelated party; |
|
(3) death of the policyholder; or |
|
(4) total loss of the property. |
|
SECTION 25. Subchapter E, Chapter 2210, Insurance Code, is |
|
amended by adding Sections 2210.205 and 2210.210 to read as |
|
follows: |
|
Sec. 2210.205. REQUIRED POLICY PROVISIONS: DEADLINE FOR |
|
FILING CLAIM; NOTICE CONCERNING RESOLUTION OF CERTAIN DISPUTES. |
|
(a) A windstorm and hail insurance 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 |
|
to property that is the basis of the claim occurs; and |
|
(2) contain, in boldface type, a conspicuous notice |
|
concerning the resolution of disputes under the policy, including: |
|
(A) the processes and deadlines for appraisal |
|
under Section 2210.574 and alternative dispute resolution under |
|
Section 2210.575; |
|
(B) the binding effect of appraisal under Section |
|
2210.574; and |
|
(C) the necessity of complying with the |
|
requirements of Subchapter L-1 to seek administrative or judicial |
|
relief. |
|
(b) The commissioner, on a showing of good cause by a person |
|
insured under this chapter, may extend the one-year period |
|
described by Subsection (a)(1) for a period not to exceed 180 days. |
|
Sec. 2210.210. COVERAGE OF CERTAIN STRUCTURES PROHIBITED. |
|
The association may not issue coverage for the following |
|
structures, regardless of whether the structure is otherwise |
|
insurable property under this chapter: |
|
(1) a wind turbine; |
|
(2) a structure used primarily as a casino or other |
|
gambling establishment, other than a premises on which bingo may be |
|
conducted under Chapter 2001, Occupations Code; |
|
(3) a structure used as a sexually oriented business, |
|
as defined by Section 243.002, Local Government Code; or |
|
(4) a structure in which, or in any portion of which, |
|
an establishment is located that is used primarily for the |
|
operation of video lottery machines, eight-liners, or other |
|
gambling devices, regardless of whether the gambling devices are |
|
regulated under state law. |
|
SECTION 26. Section 2210.251(g), Insurance Code, is amended |
|
to read as follows: |
|
(g) The department shall issue a certificate of compliance |
|
for each structure that qualifies for coverage. The certificate is |
|
evidence of insurability of the structure by the association. The |
|
decision whether to issue a certificate of compliance for a |
|
structure is wholly within the discretion of the department and is |
|
not dependent on the actions of the Texas Board of Professional |
|
Engineers or any other regulatory agency. |
|
SECTION 27. Section 2210.254, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (e) to read as |
|
follows: |
|
(a) For purposes of this chapter, a "qualified inspector" |
|
includes: |
|
(1) a person determined by the department to be |
|
qualified because of training or experience to perform building |
|
inspections; |
|
(2) a licensed professional engineer who is on the |
|
roster described by Section 1001.652, Occupations Code, and meets |
|
the requirements specified by commissioner rule for appointment to |
|
conduct windstorm inspections; and |
|
(3) an inspector who: |
|
(A) is certified by the International Code |
|
Council, the Building Officials and Code Administrators |
|
International, Inc., the International Conference of Building |
|
Officials, or the Southern Building Code Congress International, |
|
Inc.; |
|
(B) has certifications as a buildings inspector |
|
and coastal construction inspector; and |
|
(C) complies with other requirements specified |
|
by commissioner rule. |
|
(e) The department may establish an annual renewal period |
|
for persons appointed as qualified inspectors. |
|
SECTION 28. Section 2210.255(a), Insurance Code, is amended |
|
to read as follows: |
|
(a) On request of an engineer who is licensed by the Texas |
|
Board of Professional Engineers and is on the roster described by |
|
Section 1001.652, Occupations Code, the commissioner shall appoint |
|
the engineer as an inspector under this subchapter not later than |
|
the 10th day after the date the engineer delivers to the |
|
commissioner information demonstrating that the engineer is |
|
qualified to perform windstorm inspections under this subchapter. |
|
SECTION 29. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.2551 to read as follows: |
|
Sec. 2210.2551. ENFORCEMENT AUTHORITY; RULES. (a) The |
|
department has exclusive authority over all matters relating to the |
|
appointment and oversight of qualified inspectors for purposes of |
|
this chapter and to the physical inspection of structures for the |
|
purposes of this chapter, including the submission of documents to |
|
the department or association regarding the physical inspection of |
|
structures. |
|
(b) The commissioner by rule shall establish criteria to |
|
ensure that a person seeking appointment as a qualified inspector |
|
under this subchapter, including an engineer seeking appointment |
|
under Section 2210.255, possesses the knowledge, understanding, |
|
and professional competence to perform windstorm inspections under |
|
this chapter and to comply with other requirements of this chapter. |
|
(c) Subsection (b) applies only to a determination |
|
concerning the appointment of a qualified inspector under this |
|
chapter. The exclusive jurisdiction of the department under this |
|
section does not apply to the practice of engineering as defined by |
|
Section 1001.003, Occupations Code, or to a license issued, |
|
qualification required, determination made, order issued, judgment |
|
rendered, or other action of a board operating under Chapter 1001, |
|
Occupations Code. In the event of conflict, the authority of that |
|
board prevails with regard to the practice of engineering. |
|
(d) The department shall report to the Texas Board of |
|
Professional Engineers if the department determines that: |
|
(1) after an oversight inspection, the results of a |
|
windstorm inspection performed by a qualified inspector who is |
|
licensed by that board are based on questionable grounds or were the |
|
result of questionable circumstances; or |
|
(2) a qualified inspector on the roster described by |
|
Section 1001.652, Occupations Code, failed to submit to the |
|
department plans, designs, or calculations of other substantiating |
|
information necessary to demonstrate that an inspected structure |
|
meets the requirements of this chapter and department rules. |
|
(e) The department shall include in its biennial report to |
|
the legislature under Section 32.022 the number of matters reported |
|
to the Texas Board of Professional Engineers under this section and |
|
the outcome of those matters. |
|
SECTION 30. The heading to Section 2210.256, Insurance |
|
Code, is amended to read as follows: |
|
Sec. 2210.256. DISCIPLINARY PROCEEDINGS REGARDING |
|
APPOINTED INSPECTORS AND CERTAIN OTHER PERSONS. |
|
SECTION 31. Section 2210.256, Insurance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) In addition to any other action authorized under this |
|
section, the commissioner ex parte may enter an emergency cease and |
|
desist order under Chapter 83 against a qualified inspector, or a |
|
person acting as a qualified inspector, if: |
|
(1) the commissioner believes that: |
|
(A) the qualified inspector has: |
|
(i) through submitting or failing to submit |
|
to the department sealed plans, designs, calculations, or other |
|
substantiating information, failed to demonstrate that a structure |
|
or a portion of a structure subject to inspection meets the |
|
requirements of this chapter and department rules; or |
|
(ii) refused to comply with requirements |
|
imposed under this chapter or department rules; or |
|
(B) the person acting as a qualified inspector is |
|
acting without appointment as a qualified inspector under Section |
|
2210.254 or 2210.255; and |
|
(2) the commissioner determines that the conduct |
|
described by Subdivision (1) is fraudulent or hazardous or creates |
|
an immediate danger to the public. |
|
SECTION 32. Section 2210.259, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) The commissioner by rule may provide for a discount of, |
|
or a credit against, a surcharge assessed under Subsection (a) in |
|
instances in which a policyholder demonstrates that the |
|
noncompliant structure was constructed with at least one structural |
|
building component that complies with the building code standards |
|
set forth in the plan of operation. |
|
SECTION 33. Subchapter F, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.260 to read as follows: |
|
Sec. 2210.260. ALTERNATIVE ELIGIBILITY FOR COVERAGE. (a) |
|
On and after August 31, 2011, a person who has an insurable interest |
|
in a residential structure may obtain insurance coverage through |
|
the association for that structure without obtaining a certificate |
|
of compliance under Section 2210.251(g) in accordance with this |
|
section and rules adopted by the commissioner. |
|
(b) The department may issue an alternative certification |
|
for a residential structure if the person who has an insurable |
|
interest in the structure demonstrates that at least one qualifying |
|
structural building component of the structure has been: |
|
(1) inspected by a department inspector or by a |
|
qualified inspector; and |
|
(2) determined to be in compliance with applicable |
|
building code standards, as set forth in the plan of operation. |
|
(c) The commissioner shall adopt reasonable and necessary |
|
rules to implement this section. The rules adopted under this |
|
section must establish which structural building components are |
|
considered qualifying structural building components for the |
|
purposes of Subsection (b), taking into consideration those items |
|
that are most probable to generate losses for the association's |
|
policyholders and the cost to upgrade those items. |
|
(d) Except as provided in Section 2210.251(f), a person who |
|
has an insurable interest in a residential structure that is |
|
insured by the association as of January 1, 2012, but for which the |
|
person has not obtained a certificate of compliance under Section |
|
2210.251(g), must obtain an alternative certification under this |
|
section before the association, on or after January 1, 2013, may |
|
renew coverage for the structure. |
|
(e) Each residential structure for which a person obtains an |
|
alternative certification under this section must comply with: |
|
(1) the requirements of this chapter, including |
|
Section 2210.258; and |
|
(2) the association's underwriting requirements, |
|
including maintaining the structure in an insurable condition and |
|
paying premiums in the manner required by the association. |
|
(f) The association shall develop and implement an |
|
actuarially sound rate, credit, or surcharge that reflects the |
|
risks presented by structures with reference to which alternative |
|
certifications have been obtained under this section. A rate, |
|
credit, or surcharge under this subsection may vary based on the |
|
number of qualifying structural building components included in a |
|
structure with reference to which an alternative certification is |
|
obtained under this section. A surcharge under this subsection |
|
must be developed and implemented in an amount that does not exceed |
|
the percentage of premium at which a surcharge under Section |
|
2210.259(a) is assessed. |
|
SECTION 34. Section 2210.453, Insurance Code, is amended by |
|
adding Subsections (c), (d), and (e) to read as follows: |
|
(c) If the association does not purchase reinsurance as |
|
authorized by this section, the board, not later than June 1 of each |
|
year, shall submit to the commissioner, the legislative oversight |
|
board established under Subchapter N, the governor, the lieutenant |
|
governor, and the speaker of the house of representatives a report |
|
containing an actuarial plan for paying losses in the event of a |
|
catastrophe with estimated damages of $2.5 billion or more. The |
|
report required by this subsection must: |
|
(1) document and denominate the association's |
|
resources available to pay claims, including cash or other highly |
|
liquid assets, assessments that the association is projected to |
|
impose, pre-event and post-event bonding capacity, and |
|
private-sector recognized risk-transfer mechanisms, including |
|
catastrophe bonds and reinsurance; |
|
(2) include an independent, third-party appraisal of |
|
the likelihood of an assessment, the maximum potential size of the |
|
assessment, and an estimate of the probability that the assessment |
|
would not be adequate to meet the association's needs; and |
|
(3) include an analysis of financing alternatives to |
|
assessments that includes the costs of borrowing and the |
|
consequences that additional purchase of reinsurance, catastrophe |
|
bonds, or other private-sector recognized risk-transfer |
|
instruments would have in reducing the size or potential of |
|
assessments. |
|
(d) A person who prepares a report required by Subsection |
|
(c) may not contract to provide any other service to the |
|
association, except for the preparation of similar reports, before |
|
the third anniversary of the date the last report prepared by the |
|
person under that subsection is submitted. |
|
(e) The report submitted under this section is for |
|
informational purposes only and does not bind the association to a |
|
particular course of action. |
|
SECTION 35. Subchapter J, Chapter 2210, Insurance Code, is |
|
amended by adding Section 2210.455 to read as follows: |
|
Sec. 2210.455. CATASTROPHE PLAN. (a) Not later than June 1 |
|
of each year, the board shall submit to the commissioner, the |
|
legislative oversight board established under Subchapter N, the |
|
governor, the lieutenant governor, and the speaker of the house of |
|
representatives a catastrophe plan covering the period beginning on |
|
the date the plan is submitted and ending on the following May 31. |
|
(b) The catastrophe plan must: |
|
(1) describe the manner in which the association will, |
|
during the period covered by the plan, evaluate losses and process |
|
claims after the following windstorms affecting an area of maximum |
|
exposure to the association: |
|
(A) a windstorm with a four percent chance of |
|
occurring during the period covered by the plan; |
|
(B) a windstorm with a two percent chance of |
|
occurring during the period covered by the plan; and |
|
(C) a windstorm with a one percent chance of |
|
occurring during the period covered by the plan; and |
|
(2) include, if the association does not purchase |
|
reinsurance under Section 2210.453 for the period covered by the |
|
plan, an actuarial plan for paying losses in the event of a |
|
catastrophe with estimated damages of $2.5 billion or more. |
|
(c) The catastrophe plan must include a description of how |
|
losses under association policies will be paid, and how claims |
|
under association policies will be administered and adjusted, |
|
during the period covered by the plan. |
|
(d) The catastrophe plan submitted under this section is for |
|
informational purposes only and does not bind the association to a |
|
particular course of action. |
|
SECTION 36. Section 2210.502, Insurance Code, is amended by |
|
adding Subsection (e) to read as follows: |
|
(e) Notwithstanding Subsection (a), the maximum liability |
|
limit for dwellings and corporeal movable property described by |
|
Section 2210.501(b)(1) may not exceed $1.5 million. |
|
SECTION 37. Sections 2210.551(a) and (b), Insurance Code, |
|
are amended to read as follows: |
|
(a) This section: |
|
(1) does not apply to a person who is required to |
|
resolve a dispute under Subchapter L-1; and |
|
(2) applies only to: |
|
(A) [(1)] a person not described by Subdivision |
|
(1) who is insured under this chapter or an authorized |
|
representative of the person; or |
|
(B) [(2)] an affected insurer. |
|
(b) A person or entity described by Subsection (a)(2) [(a)] |
|
who is aggrieved by an act, ruling, or decision of the association |
|
may appeal to the commissioner not later than the 30th day after the |
|
date of that act, ruling, or decision. |
|
SECTION 38. Chapter 2210, Insurance Code, is amended by |
|
adding Subchapter L-1 to read as follows: |
|
SUBCHAPTER L-1. CLAIMS: SETTLEMENT AND DISPUTE RESOLUTION |
|
Sec. 2210.571. DEFINITIONS. In this subchapter: |
|
(1) "Association policy" means a windstorm and hail |
|
insurance policy issued by the association. |
|
(2) "Claim" means a request for payment under an |
|
association policy. The term also includes any other claim against |
|
the association, or an agent or representative of the association, |
|
relating to an insured loss, under any theory or cause of action of |
|
any kind, regardless of the theory under which the claim is |
|
asserted, the cause of action brought, or the type of damages |
|
sought. |
|
(3) "Claimant" means a person who makes a claim. |
|
Sec. 2210.572. EXCLUSIVE REMEDIES AND LIMITATION ON AWARD. |
|
(a) This subchapter provides the exclusive remedies for a claim |
|
against the association, including an agent or representative of |
|
the association. |
|
(b) Subject to Section 2210.576, the association may not be |
|
held liable for any amount other than covered losses payable under |
|
the terms of the association policy. |
|
(c) The association, and an agent or representative of the |
|
association, may not be held liable for damages under Chapter 17, |
|
Business & Commerce Code, or under any provision of any law |
|
providing for additional damages, punitive damages, or a penalty. |
|
Sec. 2210.573. FILING OF CLAIM; CLAIM PROCESSING. (a) |
|
Subject to Section 2210.205(b), an insured must file a claim under |
|
an association policy not later than the first anniversary of the |
|
date on which the damage to property that is the basis of the claim |
|
occurs. |
|
(b) The claimant may submit written materials, comments, |
|
documents, records, and other information to the association |
|
relating to the claim. If the claimant fails to submit information |
|
in the claimant's possession that is necessary for the association |
|
to determine whether to accept or reject a claim, the association |
|
may, not later than the 30th day after the date the claim is filed, |
|
request in writing the necessary information from the claimant. |
|
(c) The association shall, on request, provide a claimant |
|
reasonable access to all information relevant to the determination |
|
of the association concerning the claim. The claimant may copy the |
|
information at the claimant's own cost or may request the |
|
association to provide a copy of all or part of the information to |
|
the claimant. The association may charge a claimant the actual cost |
|
incurred by the association in providing a copy of information |
|
under this section, excluding any amount for labor involved in |
|
making any information or copy of information available to a |
|
claimant. |
|
(d) Unless the applicable 60-day period described by this |
|
subsection is extended by order of the commissioner, not later than |
|
the later of the 60th day after the date the association receives a |
|
claim or the 60th day after the date the association receives |
|
information requested under Subsection (b), the association shall |
|
provide the claimant, in writing, notification that: |
|
(1) the association has accepted coverage for the |
|
claim in full; |
|
(2) the association has accepted coverage for the |
|
claim in part and has denied coverage for the claim in part; or |
|
(3) the association has denied coverage for the claim |
|
in full. |
|
(e) In a notice described by Subsection (d)(1), the |
|
association must inform the claimant of the amount of loss the |
|
association will pay and of the time limit to request appraisal |
|
under Section 2210.574. |
|
(f) In a notice described by Subsection (d)(2) or (3), the |
|
association must inform the claimant of, as applicable: |
|
(1) the portion of the loss for which the association |
|
accepts coverage and the amount of loss the association will pay; |
|
(2) the portion of the loss for which the association |
|
denies coverage and a detailed summary of the manner in which the |
|
association determined not to accept coverage for that portion of |
|
the claim; and |
|
(3) the time limit to: |
|
(A) request appraisal under Section 2210.574 of |
|
the portion of the loss for which the association accepts coverage; |
|
and |
|
(B) provide notice of intent to bring an action |
|
as required by Section 2210.575. |
|
(g) In addition to the notice required under Subsection |
|
(d)(2) or (3), the association shall provide a claimant with a form |
|
on which the claimant may provide the association notice of intent |
|
to bring an action as required by Section 2210.575. |
|
Sec. 2210.574. DISPUTES CONCERNING AMOUNT OF ACCEPTED |
|
COVERAGE. (a) If the association accepts coverage for a claim in |
|
full and a claimant disputes only the amount of loss the association |
|
will pay for the claim, or if the association accepts coverage for a |
|
claim in part and a claimant disputes the amount of loss the |
|
association will pay for the accepted portion of the claim, the |
|
claimant may request from the association a detailed summary of the |
|
manner in which the association determined the amount of loss the |
|
association will pay. |
|
(b) If a claimant disputes the amount of loss the |
|
association will pay for a claim or a portion of a claim, the |
|
claimant, not later than the 60th day after the date the claimant |
|
receives the notice described by Section 2210.573(d)(1) or (2), may |
|
demand appraisal in accordance with the terms of the association |
|
policy. |
|
(c) If a claimant, on a showing of good cause and not later |
|
than the 15th day after the expiration of the 60-day period |
|
described by Subsection (b), requests in writing that the 60-day |
|
period be extended, the association may grant an additional 30-day |
|
period in which the claimant may demand appraisal. |
|
(d) If a claimant demands appraisal under this section: |
|
(1) the appraisal must be conducted as provided by the |
|
association policy; and |
|
(2) the claimant and the association are responsible |
|
in equal shares for paying any costs incurred or charged in |
|
connection with the appraisal, including a fee charged under |
|
Subsection (e). |
|
(e) If a claimant demands appraisal under this section and |
|
the appraiser retained by the claimant and the appraiser retained |
|
by the association are able to agree on an appraisal umpire to |
|
participate in the resolution of the dispute, the appraisal umpire |
|
is the umpire chosen by the two appraisers. If the appraiser |
|
retained by the claimant and the appraiser retained by the |
|
association are unable to agree on an appraisal umpire to |
|
participate in the resolution of the dispute, the commissioner |
|
shall select an appraisal umpire from a roster of qualified umpires |
|
maintained by the department. The department may: |
|
(1) require appraisers to register with the department |
|
as a condition of being placed on the roster of umpires; and |
|
(2) charge a reasonable registration fee to defray the |
|
cost incurred by the department in maintaining the roster and the |
|
commissioner in selecting an appraisal umpire under this |
|
subsection. |
|
(f) The appraisal decision is binding on the claimant and |
|
the association as to the amount of loss the association will pay |
|
for a fully accepted claim or the accepted portion of a partially |
|
accepted claim and is not appealable or otherwise reviewable. A |
|
claimant that does not demand appraisal before the expiration of |
|
the periods described by Subsections (b) and (c) waives the |
|
claimant's right to contest the association's determination of the |
|
amount of loss the association will pay with reference to a fully |
|
accepted claim or the accepted portion of a partially accepted |
|
claim. |
|
(g) A claimant may not bring an action against the |
|
association with reference to a claim for which the association has |
|
accepted coverage in full. |
|
Sec. 2210.575. DISPUTES CONCERNING DENIED COVERAGE. (a) |
|
If the association denies coverage for a claim in part or in full |
|
and the claimant disputes that determination, the claimant, not |
|
later than the expiration of the limitations period described by |
|
Section 2210.577(a), but after the date the claimant receives the |
|
notice described by Section 2210.573(d)(2) or (3), must provide the |
|
association with notice that the claimant intends to bring an |
|
action against the association concerning the partial or full |
|
denial of the claim. |
|
(b) If a claimant provides notice of intent to bring an |
|
action under Subsection (a), the association may require the |
|
claimant, as a prerequisite to filing the action against the |
|
association, to submit the dispute to alternative dispute |
|
resolution by mediation or moderated settlement conference, as |
|
provided by Chapter 154, Civil Practice and Remedies Code. A |
|
claimant that does not provide notice of intent to bring an action |
|
before the expiration of the period described by Subsection (a) |
|
waives the claimant's right to contest the association's partial or |
|
full denial of coverage and is barred from bringing an action |
|
against the association concerning the denial of coverage. |
|
(c) The association must request alternative dispute |
|
resolution of a dispute described by Subsection (b) not later than |
|
the 60th day after the date the association receives from the |
|
claimant notice of intent to bring an action. |
|
(d) Alternative dispute resolution under this section must |
|
be completed not later than the 60th day after the date a request |
|
for alternative dispute resolution is made under Subsection (c). |
|
The 60-day period described by this subsection may be extended by |
|
the commissioner by rule or by the association and a claimant by |
|
mutual consent. |
|
(e) If the claimant is not satisfied after completion of |
|
alternative dispute resolution, or if alternative dispute |
|
resolution is not completed before the expiration of the 60-day |
|
period described by Subsection (d) or any extension under that |
|
subsection, the claimant may bring an action against the |
|
association in a district court in the county in which the loss that |
|
is the subject of the coverage denial occurred. An action brought |
|
under this subsection shall be presided over by a judge appointed by |
|
the judicial panel on multidistrict litigation designated under |
|
Section 74.161, Government Code. A judge appointed under this |
|
section must be a resident of a first tier coastal county or a |
|
second tier coastal county. |
|
(f) If a claimant brings an action against the association |
|
concerning a partial or full denial of coverage, the court shall |
|
abate the action until the notice of intent to bring an action has |
|
been provided and, if requested by the association, the dispute has |
|
been submitted to alternative dispute resolution, in accordance |
|
with this section. |
|
(g) A moderated settlement conference under this section |
|
may be conducted by a panel consisting of one or more impartial |
|
third parties. |
|
(h) If the association requests mediation under this |
|
section, the claimant and the association are responsible in equal |
|
shares for paying any costs incurred or charged in connection with |
|
the mediation. |
|
(i) If the association requests mediation under this |
|
section, and the claimant and the association are able to agree on a |
|
mediator, the mediator is the mediator agreed to by the claimant and |
|
the association. If the claimant and the association are unable to |
|
agree on a mediator, the commissioner shall select a mediator from a |
|
roster of qualified mediators maintained by the department. The |
|
department may: |
|
(1) require mediators to register with the department |
|
as a condition of being placed on the roster; and |
|
(2) charge a reasonable registration fee to defray the |
|
cost incurred by the department in maintaining the roster and the |
|
commissioner in selecting a mediator under this section. |
|
(j) The commissioner shall establish rules to implement |
|
this section, including provisions for expediting alternative |
|
dispute resolution, facilitating the ability of a claimant to |
|
appear with or without counsel, establishing qualifications |
|
necessary for mediators to be placed on the roster maintained by the |
|
department under Subsection (i), and providing that formal rules of |
|
evidence shall not apply to the proceedings. |
|
Sec. 2210.576. ISSUES BROUGHT TO SUIT; LIMITATIONS ON |
|
RECOVERY. (a) The only issues a claimant may raise in an action |
|
brought against the association under Section 2210.575 are: |
|
(1) whether the association's denial of coverage was |
|
proper; and |
|
(2) the amount of the damages described by Subsection |
|
(b) to which the claimant is entitled, if any. |
|
(b) A claimant that brings an action against the association |
|
under Section 2210.575 may recover only: |
|
(1) the covered loss payable under the terms of the |
|
association policy less, if applicable, the amount of loss already |
|
paid by the association for any portion of a covered loss for which |
|
the association accepted coverage; |
|
(2) prejudgment interest from the 30th day after the |
|
date specified in Section 2210.573(d), at the prejudgment interest |
|
rate provided in Subchapter B, Chapter 304, Finance Code; and |
|
(3) court costs and reasonable and necessary |
|
attorney's fees. |
|
Sec. 2210.577. LIMITATIONS PERIOD. (a) Notwithstanding |
|
any other law, a claimant who brings an action against the |
|
association under Section 2210.575 must bring the action not later |
|
than the second anniversary of the date on which the person receives |
|
a notice described by Section 2210.573(d)(2) or (3). |
|
(b) This section is a statute of repose and controls over |
|
any other applicable limitations period. |
|
Sec. 2210.578. EXPERT PANEL. (a) The commissioner shall |
|
appoint a panel of experts to advise the association concerning the |
|
extent to which a loss to insurable property was incurred as a |
|
result of wind, waves, tidal surges, or rising waters not caused by |
|
waves or surges. The panel shall consist of a number of experts to |
|
be decided by the commissioner. The commissioner shall appoint one |
|
member of the panel to serve as the presiding officer of the panel. |
|
(b) Members of the panel must have professional expertise |
|
in, and be knowledgeable concerning, the geography and meteorology |
|
of the Texas seacoast territory, as well as the scientific basis for |
|
determining the extent to which damage to property is caused by |
|
wind, waves, tidal surges, or rising waters not caused by waves or |
|
surges. |
|
(c) The panel shall meet at the request of the commissioner |
|
or the call of the presiding officer of the panel. |
|
(d) The panel shall investigate, collect, and evaluate the |
|
information necessary to provide recommendations under Subsection |
|
(e). The cost and expense incurred by the panel associated with the |
|
work of the panel under this section shall be paid or reimbursed by |
|
the association. |
|
(e) At the request of the commissioner, the panel shall |
|
recommend to the commissioner methods or models for determining the |
|
extent to which a loss to insurable property may be or was incurred |
|
as a result of wind, waves, tidal surges, or rising waters not |
|
caused by waves or surges for geographic areas or regions |
|
designated by the commissioner. |
|
(f) After consideration of the recommendations made by the |
|
panel under Subsection (e), the commissioner shall publish |
|
guidelines that the association will use to settle claims. |
|
(g) A member of the panel is not individually liable for an |
|
act or failure to act in the performance of the official duties in |
|
connection with the individual's work on the panel. |
|
(h) In any review of a claim under this subchapter, and in |
|
any action brought against the association under Section 2210.575, |
|
the guidelines published by the commissioner under Subsection (f) |
|
govern the claim and are presumed to be accurate and correct, unless |
|
clear and convincing evidence supports a deviation from the |
|
guidelines. |
|
Sec. 2210.579. CONSTRUCTION WITH OTHER LAW. To the extent |
|
of any conflict between a provision of this subchapter and any other |
|
law, the provision of this subchapter prevails. |
|
Sec. 2210.580. RULEMAKING. (a) The commissioner shall |
|
adopt rules regarding the provisions of this subchapter, including |
|
rules concerning: |
|
(1) qualifications and selection of appraisers for the |
|
appraisal procedure, mediators for the mediation process, and |
|
members of the expert panel; |
|
(2) procedures and deadlines for the payment and |
|
handling of claims by the association as well as the procedures and |
|
deadlines for a review of a claim by the association; |
|
(3) notice of expert panel meetings and the |
|
transparency of deliberations of the panel; and |
|
(4) any other matters regarding the handling of claims |
|
that are not inconsistent with this subchapter. |
|
(b) All rules adopted by the commissioner under this section |
|
shall promote the fairness of the process, protect the rights of |
|
aggrieved policyholders, and ensure that policyholders may |
|
participate in the claims review process without the necessity of |
|
engaging legal counsel. |
|
SECTION 39. Section 2210.602(2), Insurance Code, is amended |
|
to read as follows: |
|
(2) "Class 1 public securities" means public |
|
securities authorized to be issued before, on, or after an |
|
occurrence or series of occurrences by Section 2210.072, including |
|
a commercial paper program authorized before the occurrence of a |
|
catastrophic event but in which [so long as] no tranche of |
|
commercial paper is issued under the program until after the |
|
catastrophic event. |
|
SECTION 40. Section 2210.604, Insurance Code, is amended by |
|
amending Subsection (a) and adding Subsection (a-1) to read as |
|
follows: |
|
(a) At the request of the association and with the approval |
|
of the commissioner, the Texas Public Finance Authority shall issue |
|
Class 1, Class 2, or Class 3 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. |
|
(a-1) The association and the commissioner must approve |
|
each tranche of commercial paper issued under a commercial paper |
|
program established under this chapter. |
|
SECTION 41. Section 2210.608, Insurance Code, is amended by |
|
adding Subsection (c) to read as follows: |
|
(c) Notwithstanding Subsection (a)(2), the proceeds from |
|
public securities issued under Section 2210.072 before an |
|
occurrence or series of occurrences that results in incurred |
|
losses, including investment income, may not be used to purchase |
|
reinsurance for the association. |
|
SECTION 42. Section 2210.609(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The board 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 assess a |
|
premium surcharge if necessary. |
|
SECTION 43. Section 2210.611, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.611. EXCESS REVENUE COLLECTIONS AND INVESTMENT |
|
EARNINGS. Revenue collected in any calendar year from a premium |
|
surcharge under Section 2210.613 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 the year |
|
under this subchapter; |
|
(2) used to redeem or purchase outstanding public |
|
securities; or |
|
(3) deposited in the catastrophe reserve trust fund. |
|
SECTION 44. Section 2210.612(b), Insurance Code, is amended |
|
to read as follows: |
|
(b) The association may enter financing arrangements as |
|
described by Section 2210.072(d) as necessary to obtain public |
|
securities issued under that section. Nothing in this subsection |
|
prevents [shall prevent] the authorization and creation of one or |
|
more programs for the issuance of commercial paper before the date |
|
of an occurrence that results in insured losses under Section |
|
2210.072(a) but in which [so long as] no tranche of commercial paper |
|
is issued under a commercial paper program until after such an |
|
occurrence. |
|
SECTION 45. Section 2210.613, Insurance Code, is amended to |
|
read as follows: |
|
Sec. 2210.613. PAYMENT OF CLASS 2 PUBLIC SECURITIES. (a) |
|
The association shall pay Class 2 public securities issued under |
|
Section 2210.073 as provided by this section. Thirty percent of the |
|
cost of the public securities shall be paid through member |
|
assessments as provided by this section. The association shall |
|
notify each member of the association of the amount of the member's |
|
assessment under this section. The proportion of the losses |
|
allocable to each insurer under this section shall be determined in |
|
the manner used to determine each insurer's participation in the |
|
association for the year under Section 2210.052. A member of the |
|
association: |
|
(1) may not recoup an assessment paid under this |
|
subsection through a premium surcharge or tax credit; and |
|
(2) notwithstanding Section 2210.073(a), may elect to |
|
pay an assessment under this subsection in a lump sum. |
|
(b) Seventy percent of the cost of the public securities |
|
shall be paid by a [nonrefundable] premium surcharge collected |
|
under this section in an amount set by the commissioner. On |
|
approval by the commissioner, each insurer, the association, and |
|
the Texas FAIR Plan Association shall assess, as provided by this |
|
section, a premium surcharge to each policyholder of a policy that |
|
is in effect on or after the 180th day after the date the |
|
commissioner issues notice of the approval of the public securities |
|
[its policyholders as provided by this section]. 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 Subsection (b) shall be |
|
assessed on all policyholders of policies that cover [who reside or
|
|
have operations in, or whose] insured property that is located in a |
|
catastrophe area, including automobiles principally garaged in a |
|
catastrophe area. The premium surcharge shall be assessed on [for] |
|
each Texas windstorm and hail insurance policy and each property |
|
and casualty insurance policy, including an automobile insurance |
|
policy, issued for automobiles and other property located in the |
|
catastrophe area. A premium surcharge under Subsection (b) 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 passenger automobile liability |
|
and physical damage insurance; and |
|
(2) the property insurance portion of a commercial |
|
multiple peril insurance [that provide coverage on any premises,
|
|
locations, operations, or property located in the area described by
|
|
this subsection for all property and casualty lines of insurance,
|
|
other than federal flood insurance, workers' compensation
|
|
insurance, accident and health insurance, and medical malpractice
|
|
insurance]. |
|
(d) A premium surcharge under Subsection (b) is a separate |
|
[nonrefundable] 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. |
|
SECTION 46. Sections 2210.6135(a) and (c), Insurance Code, |
|
are amended to read as follows: |
|
(a) The association shall pay Class 3 public securities |
|
issued under Section 2210.074 as provided by this section through |
|
member assessments. The association, for the payment of the |
|
losses, shall assess the members of the association an amount not to |
|
exceed $500 million per catastrophe year [for the payment of the
|
|
losses]. The association shall notify each member of the |
|
association of the amount of the member's assessment under this |
|
section. |
|
(c) A member of the association: |
|
(1) may not recoup an assessment paid under this |
|
section through a premium surcharge or tax credit; and |
|
(2) notwithstanding Section 2210.074(a), may elect to |
|
pay an assessment under this section in a lump sum. |
|
SECTION 47. Subchapter A, Chapter 2301, Insurance Code, is |
|
amended by adding Section 2301.010 to read as follows: |
|
Sec. 2301.010. CONTRACTUAL LIMITATIONS PERIOD AND CLAIM |
|
FILING PERIOD IN CERTAIN PROPERTY INSURANCE FORMS. (a) This |
|
section applies only to an insurer that issues windstorm and hail |
|
insurance in the catastrophe area, as defined by Section 2210.003. |
|
(b) Notwithstanding Section 16.070, Civil Practice and |
|
Remedies Code, and for the purpose described by Section |
|
2210.053(b), a policy form or printed endorsement form for |
|
residential or commercial property insurance that is filed by an |
|
insurer described by Subsection (a) or adopted by the department |
|
under this subchapter for use by an insurer described by Subsection |
|
(a) may provide for a contractual limitations period for filing |
|
suit on a first-party claim under the policy. The contractual |
|
limitations period may not end before the earlier of: |
|
(1) two years from the date the insurer accepts or |
|
rejects the claim; or |
|
(2) three years from the date of the loss that is the |
|
subject of the claim. |
|
(c) A policy or endorsement described by Subsection (b) may |
|
also contain a provision requiring that a claim be filed with the |
|
insurer not later than one year after the date of the loss that is |
|
the subject of the claim. A provision under this subsection must |
|
include a provision allowing the filing of claims after the first |
|
anniversary of the date of the loss for good cause shown by the |
|
person filing the claim. |
|
(d) A contractual provision contrary to Subsection (b) or |
|
(c) is void. If a contractual provision is voided under this |
|
subsection, the voiding of the provision does not affect the |
|
validity of other provisions of a contract that may be given effect |
|
without the voided provision to the extent those provisions are |
|
severable. |
|
(e) The department, to encourage the authorized insurers to |
|
write windstorm and hail insurance in the catastrophe area, as |
|
defined by Section 2210.003, and in other areas of the state, may |
|
approve policy or contractual provisions other than those described |
|
by Subsections (b) and (c) that are consistent with sound |
|
underwriting and insurance principles, provided that the policy or |
|
contractual provisions meet the requirements of Sections |
|
2301.007(a) and 2301.053. |
|
(f) An insurer using a policy form or endorsement form in |
|
this state that includes a provision described by Subsection (b) or |
|
(c) shall, at the time the policy or endorsement is issued or |
|
renewed, disclose in writing to an applicant or insured the |
|
contractual limitations or claims filing period, as applicable, in |
|
the policy or endorsement. |
|
SECTION 48. Chapter 1001, Occupations Code, is amended by |
|
adding Subchapter N to read as follows: |
|
SUBCHAPTER N. WINDSTORM-RELATED DESIGN SERVICES |
|
Sec. 1001.651. DEFINITIONS. In this subchapter: |
|
(1) "Association" means the Texas Windstorm Insurance |
|
Association. |
|
(2) "Plan of operation" means the plan of operation of |
|
the association. |
|
(3) "Windstorm certification standards" means the |
|
building specifications and building codes applicable to insurable |
|
property under Subchapter F, Chapter 2210, Insurance Code, and the |
|
plan of operation, and applicable rules of the Texas Department of |
|
Insurance. |
|
Sec. 1001.652. QUALIFICATIONS; ROSTER. (a) The board |
|
shall: |
|
(1) review the plan of operation and the windstorm |
|
certification standards; and |
|
(2) in consultation with the Texas Department of |
|
Insurance, adopt rules establishing criteria for determining |
|
whether an engineer possesses the knowledge, understanding, and |
|
professional competence to be qualified to provide engineering |
|
design services related to compliance with applicable windstorm |
|
certification standards under Subchapter F, Chapter 2210, |
|
Insurance Code. |
|
(b) The board shall prepare and publish a roster of |
|
engineers who satisfy the criteria adopted under Subsection (a)(2) |
|
and shall make the roster available to the public without cost in an |
|
online computer database format. |
|
Sec. 1001.653. COMPLIANCE WITH BUILDING CODES; |
|
ENFORCEMENT. (a) The board, in consultation with the Texas |
|
Department of Insurance, shall adopt rules requiring an engineer |
|
who is providing engineering design services to comply with |
|
windstorm certification standards. |
|
(b) The board may inspect a structure to ensure an |
|
engineer's compliance with Subsection (a). |
|
(c) If the board determines that an engineer's engineering |
|
design services related to windstorm certification standards do not |
|
comply with the standards, the board may: |
|
(1) issue an emergency order prohibiting the engineer |
|
from entering into a contract to provide design services related to |
|
compliance with applicable windstorm certification standards for a |
|
period not to exceed 30 days; |
|
(2) remove the engineer from the roster described by |
|
Section 1001.652(b); or |
|
(3) determine that a structure was not constructed, |
|
altered, remodeled, enlarged, repaired, or added to according to |
|
the applicable windstorm certification standards and report that |
|
finding to the association and the Texas Department of Insurance. |
|
(d) The board shall give the engineer notice of any action |
|
under this section. |
|
(e) A violation of this subchapter, including a violation of |
|
the windstorm inspection standards, is grounds for disciplinary |
|
action under Section 1001.452. |
|
SECTION 49. Sections 2210.551(e) and 2210.552, Insurance |
|
Code, are repealed. |
|
SECTION 50. Section 2301.010, Insurance Code, as added by |
|
this Act, applies only to an insurance policy that is delivered, |
|
issued for delivery, or renewed on or after January 1, 2012. A |
|
policy delivered, issued for delivery, or renewed before January 1, |
|
2012, 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 51. Not later than December 1, 2011, the Texas Board |
|
of Professional Engineers shall adopt rules to implement Subchapter |
|
N, Chapter 1001, Occupations Code, as added by this Act. |
|
SECTION 52. (a) A legislative interim study committee |
|
shall conduct a study of alternative ways to provide insurance to |
|
the seacoast territory of this state through a quasi-governmental |
|
entity. |
|
(b) The committee is composed of 12 members appointed as |
|
follows: |
|
(1) four members of the senate appointed by the |
|
lieutenant governor, two of whom represent one or more first tier |
|
coastal counties and two of whom do not represent a first tier |
|
coastal county; |
|
(2) four members of the house of representatives |
|
appointed by the speaker of the house of representatives, two of |
|
whom represent one or more first tier coastal counties and two of |
|
whom do not represent a first tier coastal county; and |
|
(3) four public members with a background in actuarial |
|
science, law, business, or insurance, as follows: |
|
(A) two members who do not reside in a first tier |
|
coastal county, appointed by the governor; |
|
(B) one member who resides in a first tier |
|
coastal county, appointed by the lieutenant governor; and |
|
(C) one member who resides in a first tier |
|
coastal county, appointed by the speaker of the house of |
|
representatives. |
|
(c) The speaker of the house of representatives and the |
|
lieutenant governor shall jointly designate a chair or, |
|
alternatively, designate two co-chairs, from among the committee |
|
membership, one of whom represents or resides in a first tier |
|
coastal county. |
|
(d) The committee shall: |
|
(1) examine alternative ways to provide insurance to |
|
the seacoast territory of this state through a quasi-governmental |
|
entity, including providing insurance coverage through a system or |
|
program in which insurers in this state provide insurance in the |
|
seacoast territory of this state in proportion to the percentage of |
|
insurance coverage provided in geographic areas of this state other |
|
than the seacoast territory; |
|
(2) study the residual markets for windstorm and hail |
|
insurance in other states to determine if those markets operate |
|
more efficiently and effectively than the residual market for |
|
windstorm and hail insurance coverage in this state; |
|
(3) study windstorm-related building codes and |
|
mitigation strategies to determine which codes or strategies are |
|
most effective; |
|
(4) recommend: |
|
(A) the appropriate scope of authority and |
|
responsibility for the entity to provide insurance to the seacoast |
|
territory of this state; |
|
(B) an organizational structure to exercise |
|
authority and responsibility over the provision of insurance to the |
|
seacoast territory of this state; |
|
(C) a timetable for implementation; and |
|
(D) specific amendments to state laws and rules |
|
that are necessary to implement the committee's recommendations |
|
under this subdivision; and |
|
(5) estimate funding requirements to implement the |
|
recommendations. |
|
(e) The committee may adopt rules necessary to conduct |
|
business under and implement this section. |
|
(f) Except as specifically provided by this section, the |
|
committee may operate in the same manner as a joint committee of the |
|
82nd Legislature. |
|
(g) Not later than December 1, 2012, the committee shall |
|
report to the governor and the legislature the recommendations made |
|
under this section. |
|
(h) This section expires June 1, 2013. |
|
SECTION 53. (a) The name of the Texas Windstorm Insurance |
|
Association is changed to the Texas Coastal Insurance Plan |
|
Association. |
|
(b) A reference in law to the Texas Windstorm Insurance |
|
Association or the Texas Windstorm Insurance Association Act means |
|
the Texas Coastal Insurance Plan Association or the Texas Coastal |
|
Insurance Plan Act, respectively. |
|
SECTION 54. (a) Except as otherwise specifically provided |
|
by this section, this Act applies only to a Texas windstorm and hail |
|
insurance policy, and to a dispute under a Texas windstorm and hail |
|
insurance policy, that is delivered, issued for delivery, or |
|
renewed by the Texas Windstorm Insurance Association on or after |
|
the 60th day after the effective date of this Act. A Texas |
|
windstorm and hail insurance policy, and a dispute under a Texas |
|
windstorm and hail insurance policy, that is delivered, issued for |
|
delivery, or renewed by the Texas Windstorm Insurance Association |
|
before the 60th day after the effective date of this Act is governed |
|
by the law in effect immediately before the effective date of this |
|
Act, and the former law is continued in effect for that purpose. |
|
(b) The deadline to file a claim under a Texas windstorm and |
|
hail insurance policy delivered, issued for delivery, or renewed |
|
before the effective date of this Act by the Texas Windstorm |
|
Insurance Association is governed by the law in effect on the date |
|
the policy under which the claim is filed was delivered, issued for |
|
delivery, or renewed, and that law is continued in effect for that |
|
purpose. |
|
(c) If a person insured by the Texas Windstorm Insurance |
|
Association disputes the amount the association will pay for a |
|
partially or fully accepted claim filed by the person, Section |
|
2210.574, Insurance Code, as added by this Act, applies only if the |
|
claim is filed on or after the 60th day after the effective date of |
|
this Act. |
|
(d) If a person insured by the Texas Windstorm Insurance |
|
Association disputes the amount the association will pay for a |
|
partially or fully accepted claim filed by the person and the claim |
|
is filed before the 60th day after the effective date of this Act: |
|
(1) Section 2210.574, Insurance Code, as added by this |
|
Act, does not apply to the resolution of the dispute; and |
|
(2) notwithstanding Section 2210.574, Insurance Code, |
|
as added by this Act, or any other provision of this Act, the |
|
claimant must attempt to resolve the dispute through the appraisal |
|
process contained in the association policy under which the claim |
|
is filed before an action may be brought against the Texas Windstorm |
|
Insurance Association concerning the claim. |
|
(e) The person insured by the Texas Windstorm Insurance |
|
Association and the association may agree that an appraisal |
|
conducted under Subsection (d)(2) of this section is binding on the |
|
parties. |
|
(f) An action brought against the association concerning a |
|
claim described by Subsection (d) of this section shall be abated |
|
until the appraisal process under Subsection (d)(2) of this section |
|
is completed. |
|
(g) Notwithstanding Sections 2210.575 and 2210.576, |
|
Insurance Code, as added by this Act, Subsection (b) of this |
|
section, or any other provision of this Act, Sections |
|
2210.576(b)(1)-(3), Insurance Code, apply to any cause of action |
|
that accrues against the Texas Windstorm Insurance Association on |
|
or after the effective date of this Act and the basis of which is a |
|
claim filed under a Texas windstorm and hail policy that is |
|
delivered, issued for delivery, or renewed by the association, |
|
regardless of the date on which the policy was delivered, issued for |
|
delivery, or renewed. |
|
SECTION 55. The Texas Windstorm Insurance Association shall |
|
amend the association's plan of operation to conform to the changes |
|
in law made by this Act not later than the 60th day after the |
|
effective date of this Act. |
|
SECTION 56. If any provision of this Act or its application |
|
to any person or circumstance is held invalid, the invalidity does |
|
not affect other provisions or applications of this Act that can be |
|
given effect without the invalid provision or application, and to |
|
this end the provisions of this Act are severable. |
|
SECTION 57. This Act takes effect immediately if it |
|
receives a vote of two-thirds of all the members elected to each |
|
house, as provided by Section 39, Article III, Texas Constitution. |
|
If this Act does not receive the vote necessary for immediate |
|
effect, this Act takes effect on the 91st day after the last day of |
|
the legislative session. |