AB437 - Provides for the establishment of the Fair Access to Insurance Requirements Plan. (BDR 57-103)

REQUIRES TWO-THIRDS MAJORITY VOTE (§ 15) (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 437 - *AB437_R1* ASSEMBLY BILL NO. 437–ASSEMBLYMEMBERS DICKMAN, GRAY, GURR; DELONG AND GALLANT MARCH 17, 2025 ____________ Referred to Committee on Commerce and Labor SUMMARY—Provides for the establishment of the Fair Access to Insurance Requirements Plan. (BDR 57-103) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to property insurance; creating the Fair Access to Insurance Requirements Plan Association; requiring the membership of certain authorized insurers in the Association; creating the Board of Directors of the Association and prescribing the duties of the Board; requiring the Board to establish the Fair Access to Insurance Requirements (FAIR) Plan; establishing the requirements of the FAIR Plan; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Sections 2-18 of this bill provide for the establishment of the Fair Access to 1 Insurance Requirements (FAIR) Plan to provide property insurance coverage and 2 commercial property insurance coverage which results from the perils of fire or 3 certain other perils when such coverage is not otherwise available from an 4 authorized insurer in this State. Sections 2-8 define certain terms relating to the 5 FAIR Plan. Section 9 creates the Fair Access to Insurance Requirements Plan 6 Association to establish, offer and maintain the FAIR Plan. Section 9 requires any 7 authorized insurer that offers or sells certain property insurance or commercial 8 property insurance in this State to be a member of the Association. Sections 10-12 9 create the Board of Directors for the Association and prescribe the duties of the 10 Board, which include establishing the FAIR Plan, developing a plan of operation 11 for the FAIR Plan and making amendments to the plan of operation, subject to 12 approval of the Commissioner of Insurance. Section 12 establishes the required 13 contents of the plan of operation for the FAIR Plan. Sections 12 and 17 authorize 14 the Commissioner to adopt regulations relating to the FAIR Plan. Section 13 15 authorizes the Commissioner to revoke approval of all or part of the plan of 16 operation and make changes to the plan of operation if the plan of operation is 17 insufficient. Sections 14 and 15 establish provisions governing the issuance of 18 – 2 – - *AB437_R1* policies and collecting certain fees from Association members. Section 16 19 authorizes the Commissioner to take certain actions against an Association member 20 who fails to pay certain fees or otherwise comply with the plan of operation for the 21 FAIR Plan. Section 18 makes a final action or order of the Commissioner relating 22 to the FAIR Plan subject to judicial review. 23 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 691A of NRS is hereby amended by 1 adding thereto the provisions set forth as sections 2 to 18, inclusive, 2 of this act. 3 Sec. 2. As used in sections 2 to 18, inclusive, of this act, 4 unless the context otherwise requires, the words and terms defined 5 in sections 3 to 8, inclusive, of this act have the meanings ascribed 6 to them in those sections. 7 Sec. 3. “Association” means the Fair Access to Insurance 8 Requirements Plan Association created by section 9 of this act. 9 Sec. 4. “Association member” means any authorized insurer 10 that offers or sells any property insurance or commercial property 11 insurance in this State. 12 Sec. 5. “Board” means the Board of Directors of the 13 Association created by section 10 of this act. 14 Sec. 6. “Commercial property insurance” means insurance 15 against direct loss to commercial property, including, without 16 limitation, buildings and the contents of buildings, which results 17 from the perils of fire or perils covered under extended coverage 18 insurance, vandalism or malicious mischief. The term does not 19 include commercial vehicle insurance or farm insurance. 20 Sec. 7. “FAIR Plan” means the Fair Access to Insurance 21 Requirements Plan established by the Board pursuant to section 22 11 of this act. 23 Sec. 8. “Property insurance” means insurance against direct 24 loss to residential property, including, without limitation, buildings 25 and the contents of buildings, which results from the perils of fire 26 or perils covered under extended coverage insurance, vandalism 27 or malicious mischief. The term does not include vehicle 28 insurance or farm insurance. 29 Sec. 9. 1. There is hereby created the Fair Access to 30 Insurance Requirements Plan Association, which is a nonprofit 31 unincorporated public entity. All Association members are and 32 remain members of the Association as a condition of the authority 33 of each Association member to transact insurance or reinsurance 34 in this State. 35 2. The Association shall: 36 – 3 – - *AB437_R1* (a) Exercise its powers through the Board; and 1 (b) Perform its functions under a plan of operation established 2 and approved pursuant to section 12 of this act. 3 3. The Association is established to provide property 4 insurance coverage and commercial property insurance coverage 5 when such coverage is not otherwise available from an authorized 6 insurer. The Association: 7 (a) Shall establish, offer and maintain a policy of property 8 insurance and a policy of commercial property insurance in 9 accordance with the requirements of the FAIR Plan. 10 (b) Shall assess and share among Association members, on a 11 fair and equitable basis, all expenses, income and losses based on 12 the written premium of each Association member for property 13 insurance and commercial property insurance consistent with 14 sections 2 to 18, inclusive, of this act. 15 (c) May issue policies of property insurance and commercial 16 property insurance, reinsure any such policies in whole or in part, 17 cede any such reinsurance or transfer risk to other capital 18 markets. 19 (d) Shall establish an Internet website available to the public 20 which includes information about the FAIR Plan. The Internet 21 website must include a toll-free telephone number that a person 22 may use to obtain information about the FAIR Plan. 23 Sec. 10. 1. There is hereby created the Board of Directors 24 of the Association, as the governing body of the Association and to 25 administer the FAIR Plan, consisting of the following 12 members 26 appointed by the Governor: 27 (a) Two members representing mutual insurers that write 28 property insurance in this State; 29 (b) Two members representing stock insurers that write 30 property insurance in this State; 31 (c) One member representing a trade association based in this 32 State that represents insurers of various property interests; 33 (d) One member representing a trade association based in this 34 State that represents independent agents who are licensed to write 35 property and casualty insurance in this State; 36 (e) One member who is a producer of insurance licensed to 37 write property and casualty insurance in this State; 38 (f) Two members, one of whom resides in Northern Nevada 39 and one of which resides in Southern Nevada, representing the 40 interests of consumers and, to the extent practicable, representing 41 consumer advocacy organizations; and 42 (g) Three members, one of whom is a fire chief in Eastern 43 Nevada, one of whom is a fire chief in Northern Nevada and one 44 of whom is a fire chief in Southern Nevada. 45 – 4 – - *AB437_R1* 2. The term of each member of the Board appointed pursuant 1 to paragraphs (a) to (g), inclusive, of subsection 1 is 3 years. A 2 member may be reappointed for up to three additional terms of 3 3 years in the same manner as the original appointment. A vacancy 4 occurring in the membership of the Board must be filled in the 5 same manner as the original appointment. 6 3. The Board shall annually elect a Chair from among its 7 members. 8 4. The Board shall meet at least annually and may meet at 9 such further times as deemed necessary by the Chair. The Board 10 shall adopt rules for its own management and governance. 11 5. The Board may, on its own initiative or at the request of 12 the Commissioner, and subject to the approval of the 13 Commissioner, amend the FAIR Plan. 14 6. On or before April 1, 2027, and on or before each April 1 15 thereafter, the Board shall submit to the Commissioner, in the 16 form and manner determined by the Commissioner, a report 17 concerning the FAIR Plan during the preceding calendar year. 18 The report must include information concerning: 19 (a) The financial condition of the FAIR Plan; 20 (b) The number of policies and the coverage available through 21 the FAIR Plan; 22 (c) The number and types of claims made under the FAIR 23 Plan; and 24 (d) A description of the sufficiency of coverage under the 25 FAIR Plan and the sufficiency of finances of the FAIR Plan. 26 7. In addition to the requirements of subsection 6, the 27 Commissioner may require the Board to submit quarterly reports 28 or may examine the affairs of the Association if the Commissioner 29 determines that such action is necessary to ensure the continued 30 solvency of the FAIR Plan. 31 Sec. 11. 1. The Board shall establish the Fair Access to 32 Insurance Requirements Plan, in accordance with the 33 requirements of sections 2 to 18, inclusive, of this act, and any 34 regulations adopted pursuant thereto. 35 2. Rates for the FAIR Plan must: 36 (a) Not be excessive, inadequate or unfairly discriminatory; 37 (b) Be actuarially sound so that revenue generated from 38 premiums is adequate to pay for expected losses, expenses and 39 taxes; 40 (c) Reflect the investment income of the FAIR Plan; and 41 (d) Reflect the cost of reinsurance or other capital risk transfer 42 markets. 43 3. All rate filing documentation and review requirements set 44 forth in this title apply to the FAIR Plan. 45 – 5 – - *AB437_R1* Sec. 12. 1. On or before July 1, 2026, the Board shall 1 establish and submit to the Commissioner a plan of operation for 2 the FAIR Plan which satisfies the requirements of sections 2 to 18, 3 inclusive, of this act. The plan of operation and any amendments 4 to the plan of operation become effective upon written approval of 5 the Commissioner. 6 2. The plan of operation for the FAIR Plan must provide for: 7 (a) The lines of insurance coverage which are to be written. 8 (b) Coverage limits for: 9 (1) Property insurance, in an amount which must be 10 $750,000 or less; and 11 (2) Commercial property insurance, in an amount which 12 must be $5,000,000 or less. 13 (c) The policy forms which are to be used. 14 (d) The perils which are to be covered. 15 (e) The establishment of reasonable standards for 16 underwriting to determine the eligibility of a risk, which must 17 include the requirement that coverage under the FAIR Plan is 18 only available if: 19 (1) A fire risk assessment is conducted on the property to be 20 covered and the property owner implements the findings and 21 recommendations for mitigation set forth in the assessment. 22 (2) During the 2 years immediately preceding the date on 23 which the coverage begins, not less than three authorized insurers 24 have declined to issue a policy of property insurance or 25 commercial property insurance, as applicable, which covers the 26 property; and 27 (3) During each 2-year period in which the property is 28 covered by the FAIR Plan, the owner of the property applies to not 29 less than three authorized insurers for a policy of property 30 insurance or commercial property insurance, as applicable, to 31 cover the property and each authorized insurer to which the owner 32 applies declines to issue such a policy. 33 (f) Any compensation or commission which is to be paid to a 34 producer of insurance who offers the FAIR Plan. 35 (g) Procedures for the collection of fees, including the times at 36 which fees will be collected, from Association members. 37 (h) Assessments against Association members, which must be 38 in the proportion that the premiums received by each assessed 39 Association member bear to premiums received for all assessed 40 Association members, for the 3 most recent calendar years for 41 which such information is available. As used in this paragraph, 42 “premiums received” means premiums received on property 43 insurance lines and commercial property insurance lines in this 44 State. 45 – 6 – - *AB437_R1* (i) Administration of the FAIR Plan by the Board, including 1 any servicing agreements into which the Board may enter to 2 support the operations of the Association. 3 (j) Any other matter necessary or convenient for the purpose of 4 assuring fair access to the FAIR Plan. 5 3. If the Board fails to submit a plan of operation in 6 compliance with the requirements of this section, or fails to timely 7 submit suitable amendments to the plan of operation, the 8 Commissioner shall adopt regulations that are necessary to 9 effectuate the provisions of sections 2 to 18, inclusive, of this act. 10 Any regulation adopted pursuant to this subsection must, if the 11 Board subsequently submits a suitable plan of operation or 12 suitable amendments, allow the subsequent plan of operation or 13 amendments, if approved by the Commissioner, to supersede 14 regulations adopted by the Commissioner pursuant to this 15 subsection. 16 Sec. 13. 1. The Commissioner may revoke approval of all 17 or part of an approved plan of operation for the FAIR Plan, in 18 compliance with the requirements of this section, if the 19 Commissioner determines that the approved plan of operation is 20 insufficient to satisfy the requirements of sections 2 to 18, 21 inclusive, of this act. 22 2. The Commissioner shall give notice to the Board not less 23 than 30 days before the date on which the Commissioner intends 24 to revoke all or part of the plan of operation. Not later than 30 25 days after the date on which the Board receives notice from the 26 Commissioner, the Board may submit a revised plan of operation 27 or [Text truncated for display. Full text available on LegiScan.]