SB2530 - Relating to the Texas Windstorm Insurance Association; providing an administrative penalty.

      By: Middleton, et al. S.B. No. 2530     A BILL TO BE ENTITLED   AN ACT   relating to the Texas Windstorm Insurance Association; providing an   administrative penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter A, Chapter 2210, Insurance Code, is   amended by adding Section 2210.017 to read as follows:           Sec.   2210.017.     LEGISLATIVE LOBBYING. (a)   The association   may not use any money under its control to attempt to influence the   passage or defeat of a legislative measure.           (b)     An association employee or member of the board of   directors who violates Subsection (a) is subject to:                 (1)  immediate termination; and                 (2)     an administrative penalty under Chapter 84 in the   amount of $10,000 to be deposited in the catastrophe reserve trust   fund.           (c)     This section does not prohibit an association employee   or member of the board of directors from using money under the   association's control to provide public information or to provide   information responsive to a request for public information.          SECTION 2.  Subchapter B, Chapter 2210, Insurance Code, is   amended by adding Section 2210.063 to read as follows:           Sec.   2210.063.     LOCATION OF ASSOCIATION HEADQUARTERS. The   headquarters of the association must be located in a first tier   coastal county or a second tier coastal county.          SECTION 3.  Section 2210.072(a), Insurance Code, is amended   to read as follows:          (a)  Losses not paid under Section 2210.0715 shall be paid as   provided by this section from the proceeds from Class 1 public   securities 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 described by this   section must be paid within a period not to exceed 14 years, and   must [ may ] be paid sooner if the board of directors determines the   association has the ability [ elects ] to do so and the commissioner   approves.          SECTION 4.  Section 2210.0725(a), Insurance Code, is amended   to read as follows:          (a)  Losses in a catastrophe year not paid under Sections   2210.0715 and 2210.072 shall be paid as provided by this section   from Class 1 member assessments of at least [ not to exceed ] $500   million , adjusted annually in proportion to the growth in the   association's probable maximum loss for that catastrophe year.          SECTION 5.  Section 2210.073(a), Insurance Code, is amended   to read as follows:          (a)  Losses not paid under Sections 2210.0715, 2210.072, and   2210.0725 shall be paid as provided by this section from the   proceeds from Class 2 public securities authorized to be issued in   accordance with Subchapter M 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 paid within a period   not to exceed 10 years and must [ may ] be paid sooner if the board of   directors determines the association has the ability [ elects ] to do   so and the commissioner approves.          SECTION 6.  Section 2210.074(a), Insurance Code, is amended   to read as follows:          (a)  Losses in a catastrophe year not paid under Sections   2210.0715, 2210.072, 2210.0725, and 2210.073 shall be paid as   provided by this section from Class 2 member assessments of at least   [ not to exceed ] $250 million , adjusted annually in proportion to   the growth in the association's probable maximum loss for that   catastrophe year.          SECTION 7.  Section 2210.0741(a), Insurance Code, is amended   to read as follows:          (a)  Losses not paid under Sections 2210.0715, 2210.072,   2210.0725, 2210.073, and 2210.074 shall be paid as provided by this   section from the proceeds from Class 3 public securities authorized   to be issued in accordance with Subchapter M 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 paid   within a period not to exceed 10 years, and must [ may ] be paid   sooner if the board of directors determines the association has the   ability [ elects ] to do so and the commissioner approves.          SECTION 8.  Section 2210.0742(a), Insurance Code, is amended   to read as follows:          (a)  Losses in a catastrophe year not paid under Sections   2210.0715, 2210.072, 2210.0725, 2210.073, 2210.074, and 2210.0741   shall be paid as provided by this section from Class 3 member   assessments of at least [ not to exceed ] $250 million , adjusted   annually in proportion to the growth in the association's probable   maximum loss for that catastrophe year.          SECTION 9.  Sections 2210.102(c), (c-1), and (d), Insurance   Code, are amended to read as follows:          (c)  Three members must, as of the date of the appointment,   reside in the first tier coastal counties. [ Each of the following   regions must be represented by a member residing in the region and   appointed under this subsection:                [ (1) the region consisting of Cameron, Kenedy,   Kleberg, and Willacy Counties;                [ (2) the region consisting of Aransas, Calhoun,   Nueces, Refugio, and San Patricio Counties; and                [ (3) the region consisting of Brazoria, Chambers,   Galveston, Jefferson, and Matagorda Counties and any part of Harris   County designated as a catastrophe area under Section 2210.005. ]          (c-1)   At least one  [ One ] of the members appointed under   Subsection (c) must be a property and casualty agent who is licensed   under this code , is actively offering or selling Texas windstorm   and hail insurance policies under this chapter, and is not a captive   agent.          (d)  Three members must reside in an area of this state that   is located outside of a first tier coastal county [ more than 100   miles from the Texas coastline ].          SECTION 10.  Section 2210.105, Insurance Code, is amended by   amending Subsection (d) and adding Subsection (h) to read as   follows:          (d)  Except for an emergency meeting or a meeting described   by Subsection (h) , a meeting of the board of directors shall be held   at a location as determined by the board of directors.           (h)     A meeting to establish the association's probable   maximum loss and the annual rate setting meeting shall be held in   person at a location within a first tier coastal county.   Notwithstanding Section 2210.1051, a member of the board of   directors may only vote for the establishment of the probable   maximum loss or the adoption of the annual rate filing in person at   a meeting held under this subsection.          SECTION 11.  Subchapter E, Chapter 2210, Insurance Code, is   amended by adding Section 2210.211 to read as follows:           Sec.   2210.211.     LIMITATIONS ON CERTAIN ADJUSTMENTS.   The   association may not adjust premiums, fees, or any other costs to   policyholders for inflation without a vote by the board of   directors.          SECTION 12.  Sections 2210.352(a) and (c), Insurance Code,   are amended to read as follows:          (a)  Not later than September [ August ] 15 of each year, the   association shall file with the department a proposed manual rate   for all types and classes of risks written by the association.          (c)  Except as provided by Subsection (a-1), the   commissioner shall approve or disapprove the filing in writing not   later than November [ October ] 15 of the year in which the filing was   made. If the filing is not approved or disapproved on or before that   date, the filing is considered approved.          SECTION 13.  Section 2210.355(b), Insurance Code, is amended   to read as follows:          (b)  In adopting rates under this chapter, the following must   be considered:                (1)  the past and prospective loss experience within   [ and outside ] this state of hazards for which insurance is made   available through the plan of operation, if any;                (2)  expenses of operation, including acquisition   costs;                (3)  a reasonable margin for profit and contingencies;                (4)  payment of public security obligations issued   under this chapter, including the additional amount of any debt   service coverage determined by the association to be required for   the issuance of marketable public securities; and                (5)  all other relevant factors[ , ] within [ and outside ]   this state.          SECTION 14.  Section 2210.453, Insurance Code, is amended by   amending Subsection (b) and adding Subsection (b-1) to read as   follows:          (b)  The association shall maintain total available loss   funding in an amount not less than the probable maximum loss for the   association for a catastrophe year with a probability of one in 50   [ 100 ]. If necessary, the required funding level shall be achieved   through the purchase of reinsurance or the use of alternative   financing mechanisms, or both, to operate in addition to or in   concert with the trust fund, public securities, financial   instruments, and assessments authorized by this chapter.           (b-1)     The probable maximum loss described by Subsection (b)   shall be established as provided by Section 2210.4531.          SECTION 15.  Subchapter J, Chapter 2210, Insurance Code, is   amended by adding Section 2210.4531 to read as follows:           Sec.   2210.4531.     PROBABLE MAXIMUM LOSS. (a) The   association shall file with the department a proposed probable   maximum loss to be used for purposes of Section 2210.453(b).   The   association may not propose a probable maximum loss unless     two-thirds of the board of directors votes to approve the proposed   probable maximum loss in the manner provided by Section   2210.105(h).           (b)     The association may use a probable maximum loss only if   the probable maximum loss is approved by the commissioner.           (c)     The commissioner may reject a proposed probable maximum   loss filed with the department under Subsection (a) and set a   probable maximum loss in an amount determined by the commissioner.     If the association does not timely propose a probable maximum loss,   the commissioner shall set a probable maximum loss.           (d)     The amount of loss adjustment expense adopted by the   board of directors for a catastrophe year and used for the   association's rate indication for purposes of filing a rate under   this chapter may not be included in the probable maximum loss.          SECTION 16.  Section 2210.063, Insurance Code, as added by   this Act, applies to the Texas Windstorm Insurance Association   beginning on January 1, 2027.          SECTION 17.  (a)  Subchapter B-1, Chapter 2210, Insurance   Code, as amended by this Act, applies only to the payment of losses   of the Texas Windstorm Insurance Association incurred on or after   January 1, 2026.  Payment of losses incurred before January 1, 2026,   is governed by the law as it existed immediately before the   effective date of this Ac [Text truncated for display. 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