Bill Text: TX HB4534 | 2019-2020 | 86th Legislature | Engrossed
Bill Title: Relating to the rates and other funding of the Texas Windstorm Insurance Association.
Spectrum: Slight Partisan Bill (Republican 6-3)
Status: (Engrossed - Dead) 2019-05-19 - Considered in public hearing [HB4534 Detail]
Download: Texas-2019-HB4534-Engrossed.html
86R28275 JES-D | ||
By: Lucio III, Hunter, Herrero, | H.B. No. 4534 | |
Bonnen of Galveston, Middleton, et al. |
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relating to the rates and other funding of the Texas Windstorm | ||
Insurance Association. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2210.071, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (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. | ||
(b) The association may not pay insured losses and operating | ||
expenses resulting from an occurrence or series of occurrences in a | ||
catastrophe year with premium and other revenue earned in a | ||
subsequent year. | ||
SECTION 2. Section 2210.0715, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a) | ||
The association shall pay losses resulting from an occurrence or | ||
series of occurrences in a catastrophe year in excess of premium and | ||
other revenue of the association for that catastrophe year from | ||
[ |
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during that catastrophe year and [ |
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catastrophe reserve trust fund available before or accrued during | ||
that catastrophe year. | ||
(b) Proceeds of [ |
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assessments made before or as a result [ |
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or series of occurrences in a catastrophe year that results in | ||
insured losses may not be included in [ |
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available for a subsequent catastrophe year for purposes of this | ||
section. | ||
SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is | ||
amended by adding Section 2210.1052 to read as follows: | ||
Sec. 2210.1052. EMERGENCY MEETING. If the final estimate | ||
of losses for an occurrence or series of occurrences made by the | ||
chief financial officer or chief actuary of the association | ||
indicates member insurers may be subject to an assessment under | ||
Subchapter B-1, the board of directors shall call an emergency | ||
meeting of the members of the association to notify the members | ||
about the assessment. | ||
SECTION 4. (a) Effective December 1, 2019, Section | ||
2210.351(d), Insurance Code, is amended to read as follows: | ||
(d) The association may use a rate filed by the association | ||
without prior commissioner approval if: | ||
(1) the filing is made not later than the 30th day | ||
before the date of any use or delivery for use of the rate; | ||
(2) the filed rate does not exceed [ |
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rate in effect on the date on which the filing is made; | ||
(3) the filed rate does not reflect a rate [ |
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an individual rating class that is [ |
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in effect for that rating class on the date on which the filing is | ||
made; and | ||
(4) the commissioner has not disapproved the filing in | ||
writing, advising of the reasons for the disapproval and the | ||
criteria the association is required to meet to obtain approval. | ||
(b) Effective September 1, 2021, Section 2210.351(d), | ||
Insurance Code, is amended to read as follows: | ||
(d) The association may use a rate filed by the association | ||
without prior commissioner approval if: | ||
(1) the filing is made not later than the 30th day | ||
before the date of any use or delivery for use of the rate; | ||
(2) the filed rate does not exceed 105 percent of the | ||
rate in effect on the date on which the filing is made; | ||
(3) the filed rate does not reflect a rate change for | ||
an individual rating class that is 10 percent higher than the rate | ||
in effect for that rating class on the date on which the filing is | ||
made; and | ||
(4) the commissioner has not disapproved the filing in | ||
writing, advising of the reasons for the disapproval and the | ||
criteria the association is required to meet to obtain approval. | ||
SECTION 5. (a) Effective December 1, 2019, Section | ||
2210.352(a-1), Insurance Code, is amended to read as follows: | ||
(a-1) The association may use a rate filed by the | ||
association under this section without prior commissioner approval | ||
if: | ||
(1) the filing is made not later than the 30th day | ||
before the date of any use or delivery for use of the rate; | ||
(2) the filed rate does not exceed [ |
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rate used by the association in effect on the date on which the | ||
filing is made; and | ||
(3) the filed rate does not reflect a rate [ |
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an individual rating class that is [ |
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in effect for that rating class on the date on which the filing is | ||
made. | ||
(b) Effective September 1, 2021, Section 2210.352(a-1), | ||
Insurance Code, is amended to read as follows: | ||
(a-1) The association may use a rate filed by the | ||
association under this section without prior commissioner approval | ||
if: | ||
(1) the filing is made not later than the 30th day | ||
before the date of any use or delivery for use of the rate; | ||
(2) the filed rate does not exceed 105 percent of the | ||
rate used by the association in effect on the date on which the | ||
filing is made; and | ||
(3) the filed rate does not reflect a rate change for | ||
an individual rating class that is 10 percent higher than the rate | ||
in effect for that rating class on the date on which the filing is | ||
made. | ||
SECTION 6. Section 2210.452, Insurance Code, is amended by | ||
amending Subsection (c) and adding Subsection (c-1) to read as | ||
follows: | ||
(c) In addition to the payment required by Subsection (c-1), | ||
at [ |
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association shall use the net gain from operations of the | ||
association, 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, procure reinsurance, | ||
or use alternative risk financing mechanisms, or to make payments | ||
to the trust fund and procure reinsurance or use alternative risk | ||
financing mechanisms. | ||
(c-1) The association shall annually pay to the catastrophe | ||
reserve trust fund 20 percent of net earned premium of the | ||
association. | ||
SECTION 7. Chapter 2210, Insurance Code, is amended by | ||
adding Subchapter N-1 to read as follows: | ||
SUBCHAPTER N-1. LEGISLATIVE FUNDING AND FUNDING STRUCTURE | ||
OVERSIGHT BOARD | ||
Sec. 2210.661. DEFINITION. In this subchapter, "board" | ||
means the windstorm insurance legislative funding and funding | ||
structure oversight board. | ||
Sec. 2210.662. COMPOSITION OF BOARD. The board is composed | ||
of eight members as follows: | ||
(1) four members of the senate appointed by the | ||
lieutenant governor; and | ||
(2) four members of the house of representatives | ||
appointed by the speaker of the house of representatives. | ||
Sec. 2210.663. POWERS AND DUTIES OF BOARD. (a) The board | ||
shall: | ||
(1) gather information regarding: | ||
(A) how the association's current funding and | ||
funding structure operate; | ||
(B) how the catastrophic risk pools of other | ||
states operate; and | ||
(C) other information that the board considers | ||
necessary to prepare the report required by Section 2210.664; and | ||
(2) hold public meetings to hear testimony from | ||
experts, stakeholders, and other interested parties regarding | ||
recommendations and proposals for establishing and implementing | ||
sustainable funding and a sustainable funding structure for the | ||
association. | ||
(b) The board may request reports and other information as | ||
necessary to implement this subchapter from: | ||
(1) the department; | ||
(2) the association; and | ||
(3) experts, stakeholders, and other interested | ||
parties described by Subsection (a)(2). | ||
Sec. 2210.664. REPORT. (a) The board shall prepare a | ||
report of the board's findings regarding the current funding and | ||
funding structure of the association, problems with the funding and | ||
funding structure, and recommendations for legislative action | ||
related to the funding, funding structure, and sustainability of | ||
the association. The report must include: | ||
(1) an analysis of the current funding, funding | ||
structure, and sustainability of the association, including the | ||
association's reliance on debt and reinsurance; and | ||
(2) recommendations for legislative action necessary | ||
to: | ||
(A) address problems with the current funding and | ||
funding structure of the association; and | ||
(B) foster the stability and sustainability of | ||
the association. | ||
(b) Not later than November 15, 2020, the board shall | ||
deliver the report prepared under Subsection (a) to: | ||
(1) the governor; | ||
(2) the lieutenant governor; and | ||
(3) the speaker of the house of representatives. | ||
Sec. 2210.665. EXPIRATION. This subchapter expires | ||
September 1, 2021. | ||
SECTION 8. As soon as practicable after the effective date | ||
of this Act, the Texas Windstorm Insurance Association, through the | ||
board of directors of that association, shall propose to the | ||
commissioner of insurance amendments to the association's plan of | ||
operation to be effective before the hurricane season of 2020 as | ||
necessary under Chapter 2210, Insurance Code, as amended by this | ||
Act. | ||
SECTION 9. (a) Sections 2210.351(d) and 2210.352(a-1), | ||
Insurance Code, as amended by this Act effective December 1, 2019, | ||
apply only to a rate filed by the Texas Windstorm Insurance | ||
Association with the Texas Department of Insurance on or after | ||
December 1, 2019. A rate filed with the Texas Department of | ||
Insurance before December 1, 2019, is governed by the law as it | ||
existed immediately before that date, and that law is continued in | ||
effect for that purpose. | ||
(b) Sections 2210.351(d) and 2210.352(a-1), Insurance Code, | ||
as amended by this Act effective September 1, 2021, apply only to a | ||
rate filed by the Texas Windstorm Insurance Association with the | ||
Texas Department of Insurance on or after September 1, 2021. A rate | ||
filed with the Texas Department of Insurance before September 1, | ||
2021, is governed by the law applicable to the rate immediately | ||
before that date, and that law is continued in effect for that | ||
purpose. | ||
SECTION 10. Except as otherwise provided by this Act, this | ||
Act takes effect December 1, 2019. |