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2005 Texas Insurance Code CHAPTER 2210. TEXAS WINDSTORM INSURANCE ASSOCIATION
INSURANCE CODE CHAPTER 2210. TEXAS WINDSTORM INSURANCE ASSOCIATION SUBCHAPTER A. GENERAL PROVISIONS § 2210.001. PURPOSE. An adequate market for windstorm, hail, and fire insurance is necessary to the economic welfare of this state, and without that insurance, the orderly growth and development of this state would be severely impeded. This chapter provides a method by which adequate windstorm, hail, and fire insurance may be obtained in certain designated portions of this state. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.002. SHORT TITLE. This chapter may be cited as the Texas Windstorm Insurance Association Act. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.003. GENERAL DEFINITIONS. In this chapter, unless the context clearly indicates otherwise: (1) "Association" means the Texas Windstorm Insurance Association. (2) "Board of directors" means the board of directors of the association. (3) "Catastrophe area" means a municipality, a part of a municipality, a county, or a part of a county designated by the commissioner under Section 2210.005. (4) "First tier coastal county" means: (A) Aransas County; (B) Brazoria County; (C) Calhoun County; (D) Cameron County; (E) Chambers County; (F) Galveston County; (G) Jefferson County; (H) Kenedy County; (I) Kleberg County; (J) Matagorda County; (K) Nueces County; (L) Refugio County; (M) San Patricio County; or (N) Willacy County. (5) "Inadequate fire insurance area" means a municipality or county designated by the commissioner under Section 2210.005 that constitutes, or is located in, a catastrophe area. (6) "Insurance" means Texas fire and explosion insurance and Texas windstorm and hail insurance. (7) "Net direct premium" means gross direct written premium less return premium on each canceled contract, regardless of assumed or ceded reinsurance, that is written on property in this state, as defined by the board of directors. (8) "New building code" means a building standard, specification, or guideline adopted by the commissioner after May 1, 1997, that must be satisfied before new residential construction qualifies for a certificate of compliance that constitutes evidence of insurability of the structure by the association. (9) "Plan of operation" means the plan adopted under this chapter for the operation of the association. (10) "Seacoast territory" means the territory of this state composed of the first tier coastal counties and the second tier coastal counties. (11) "Second tier coastal county" means: (A) Bee County; (B) Brooks County; (C) Fort Bend County; (D) Goliad County; (E) Hardin County; (F) Harris County; (G) Hidalgo County; (H) Jackson County; (I) Jim Wells County; (J) Liberty County; (K) Live Oak County; (L) Orange County; (M) Victoria County; or (N) Wharton County. (12) "Texas fire and explosion insurance" means insurance against direct loss to insurable property incurred as a result of fire or explosion, as those terms are defined and limited in policies and forms approved by the department. (13) "Texas windstorm and hail insurance" means deductible insurance against: (A) direct loss to insurable property incurred as a result of windstorm or hail, as those terms are defined and limited in policies and forms approved by the department; and (B) indirect losses resulting from the direct loss. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.004. DEFINITION OF INSURABLE PROPERTY. (a) For purposes of this chapter and subject to this section, "insurable property" means immovable property at a fixed location in a catastrophe area or corporeal movable property located in that immovable property, as designated in the plan of operation, that is determined by the association according to the criteria specified in the plan of operation to be in an insurable condition against windstorm and hail or fire and explosion, as appropriate, as determined by normal underwriting standards. (b) A structure located in a catastrophe area, construction of which began on or after the 30th day after the date of publication of the plan of operation, that is not built in compliance with building specifications set forth in the plan of operation or continued in compliance with those specifications, does not constitute an insurable risk for purposes of windstorm and hail insurance except as otherwise provided by this chapter. (c) A structure, or an addition to a structure, that is constructed in conformity with plans and specifications that comply with the specifications set forth in the plan of operation at the time construction begins may not be declared ineligible for windstorm and hail insurance as a result of subsequent changes in the building specifications set forth in the plan of operation. (d) Except as otherwise provided by this section, if repair of damage to a structure involves replacement of items covered in the building specifications set forth in the plan of operation, the repairs must be completed in a manner that complies with those specifications for the structure to continue to be insurable property for windstorm and hail insurance. (e) If repair to a structure, other than a roof repair that exceeds 100 square feet, is less than five percent of the total amount of property coverage on the structure, the repairs may be completed in a manner that returns the structure to the structure's condition immediately before the loss without affecting the eligibility of the structure to qualify as insurable property. (f) This chapter does not preclude special rating of individual risks as may be provided in the plan of operation. (g) For purposes of this chapter, a residential structure is insurable property if: (1) the residential structure is not: (A) a condominium, apartment, duplex, or other multifamily residence; or (B) a hotel or resort facility; (2) the residential structure is located within an area designated as a unit under the Coastal Barrier Resources Act (Pub. L. No. 97-348); and (3) a building permit or plat for the residential structure was filed with the municipality, the county, or the United States Army Corps of Engineers before January 1, 2004. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.005. DESIGNATION AS CATASTROPHE AREA OR INADEQUATE FIRE INSURANCE AREA; REVOCATION OF DESIGNATION. (a) After at least 10 days' notice and a hearing, the commissioner may designate an area of this state as a catastrophe area if the commissioner determines that windstorm and hail insurance is not reasonably available to a substantial number of the owners of insurable property located in that territory because the territory is subject to unusually frequent and severe damage resulting from windstorms or hailstorms. (b) After at least 10 days' notice and a hearing, the commissioner may designate an area of this state as an inadequate fire insurance area if the commissioner determines that fire and explosion insurance is not reasonably available to a substantial number of owners of insurable property located in that area. (c) The commissioner shall revoke a designation made under Subsection (a) or (b) if the commissioner determines, after at least 10 days' notice and a hearing, that the applicable insurance coverage is no longer reasonably unavailable to a substantial number of owners of insurable property within the designated territory. (d) If the association determines that windstorm and hail insurance or fire and explosion insurance is no longer reasonably unavailable to a substantial number of owners of insurable property in a territory designated as a catastrophe area or inadequate fire insurance area, as applicable, the association may request in writing that the commissioner revoke the designation. After at least 10 days' notice and a hearing, but not later than the 30th day after the date of the hearing, the commissioner shall: (1) approve the request and revoke the designation; or (2) reject the request. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.006. APPLICABILITY OF CHAPTER TO CERTAIN INSURERS. (a) Except as provided by Subsection (b), this chapter applies to each insurer authorized to engage in the business of property insurance in this state, including a county mutual insurance company, a Lloyd's plan, and a reciprocal or interinsurance exchange. (b) This chapter does not apply to: (1) a farm mutual insurance company operating under Chapter 911; (2) a county mutual fire insurance company described by Section 912.310; or (3) a mutual insurance company or a statewide mutual assessment company engaged in business under Chapter 12 or 13, Title 78, Revised Statutes, respectively, before those chapters' repeal by Section 18, Chapter 40, Acts of the 41st Legislature, 1st Called Session, 1929, as amended by Section 1, Chapter 60, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929, that retains the rights and privileges under the repealed law to the extent provided by those sections. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.007. IMMUNITY FROM LIABILITY IN GENERAL. (a) This section applies to: (1) the association and a director, agent, or association staff; (2) the commissioner, the department, and department staff; and (3) a participating insurer and the insurer's agents and staff. (b) A person described by Subsection (a) is not liable, and a cause of action does not arise against the person, for: (1) an inspection made under the plan of operation; or (2) any statement made in good faith by the person: (A) in a report or communication concerning risks submitted to the association; or (B) at any administrative hearing conducted under this chapter in connection with the inspection or statement. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.008. DEPARTMENT ORDERS. (a) After notice and hearing as provided by Subsection (b), the commissioner may issue any orders that the commissioner considers necessary to implement this chapter, including orders regarding maximum rates, competitive rates, and policy forms. (b) Before the commissioner adopts an order, the department shall post notice of the hearing on the order at the secretary of state's office in Austin and shall hold a hearing to consider the proposed order. Any person may appear at the hearing and testify for or against the adoption of the order. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER B. ADMINISTRATION OF ASSOCIATION § 2210.051. COMPOSITION OF ASSOCIATION; REQUIRED MEMBERSHIP. (a) The association is composed of all property insurers authorized to engage in the business of property insurance in this state, other than insurers prevented by law from writing on a statewide basis coverages available through the association. (b) As a condition of the insurer's authority to engage in the business of insurance in this state, each insurer subject to Subsection (a) must be a member of the association and must remain a member for the duration of the association's existence. An insurer that ceases to be a member of the association remains liable on insurance contracts entered into during the insurer's membership in the association to the same extent and effect as if the insurer's membership in the association had not been terminated. (c) An insurer that becomes authorized to write and is engaged in writing insurance that requires the insurer to be a member of the association shall become a member of the association on the January 1 following the effective date of that authorization. The determination of the insurer's participation in the association is made as of the date of the insurer's membership in the manner used to determine participation for all other members of the association. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.052. MEMBER PARTICIPATION IN ASSOCIATION. (a) Each member of the association shall participate in the writings, expenses, profits, and losses of the association in the proportion that the net direct premiums of that member during the preceding calendar year bears to the aggregate net direct premiums by all members of the association, as determined using the information provided under Subsection (b). (b) The department shall review annual statements, other reports, and other statistics that the department considers necessary to obtain the information required under Subsection (a) and shall provide that information to the association. The department is entitled to obtain the annual statements, other reports, and other statistics from any member of the association. (c) Each member's participation in the association shall be determined annually in the manner provided by the plan of operation. For purposes of determining participation in the association, two or more members that are subject to common ownership or that operate in this state under common management or control shall be treated as a single member. The determination shall also include the net direct premiums of an affiliate that is under that common management or control, including an affiliate that is not authorized to engage in the business of property insurance in this state. (d) Notwithstanding Subsection (a), a member, in accordance with the plan of operation, is entitled to receive credit for similar insurance voluntarily written in an area designated by the commissioner. The member's participation in the writings of the association shall be reduced in accordance with the plan of operation. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.053. OPERATION OF ASSOCIATION. (a) In accordance with this chapter and the plan of operation, and with respect to insurance on insurable property, the association, on behalf of the association's members, may: (1) cause issuance of insurance policies to applicants for insurance coverage; (2) assume reinsurance from the members; (3) cede reinsurance to the members; and (4) purchase reinsurance on behalf of the members. (b) The department may develop programs to improve the efficient operation of the association, including 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. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.054. ANNUAL STATEMENT. (a) The association shall file annually with the department a statement covering periods designated by the department that summarizes the transactions, conditions, operations, and affairs of the association during the preceding year. (b) The statement must: (1) be filed at times designated by the department; (2) contain the information prescribed by the department; and (3) be in the form prescribed by the department. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.055. LEGAL COUNSEL. (a) The association shall establish a plan in the plan of operation under which the association's legal representation before the department and the legislature is without conflict of interest or the appearance of a conflict of interest as defined by the Texas Disciplinary Rules of Professional Conduct. (b) The association shall adopt separate and distinct procedures for legal counsel in disputes involving policyholder claims against the association. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.056. USE OF ASSOCIATION ASSETS. (a) The association's net earnings may not inure, in whole or in part, to the benefit of a private shareholder or individual. (b) The association's assets may not be used for or diverted to any purpose other than to: (1) satisfy, in whole or in part, the liability of the association on claims made on policies written by the association; (2) make investments authorized under applicable law; (3) pay reasonable and necessary administrative expenses incurred in connection with the operation of the association and the processing of claims against the association; or (4) make remittance under the laws of this state to be used by this state to: (A) pay claims made on policies written by the association; (B) purchase reinsurance covering losses under those policies; or (C) prepare for or mitigate the effects of catastrophic natural events. (c) On dissolution of the association, all assets of the association revert to this state. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.057. EXAMINATION OF ASSOCIATION. (a) The association is subject to Sections 401.051, 401.052, 401.054-401.062, 401.151, 401.152, 401. 155, and 401.156 and Subchapter A, Chapter 86. (b) A final examination report of the association resulting from an examination as provided by this section is a public record and is available to the public at the offices of the department in accordance with Chapter 552, Government Code. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.058. PAYMENT OF EXCESS LOSSES; PREMIUM TAX CREDIT. (a) If, in any calendar 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 shall be paid as follows: (1) $100 million shall be assessed against the members of the association as provided by Subsection (b); (2) losses in excess of $100 million shall be paid from the catastrophe reserve trust fund established under Subchapter J and any reinsurance program established by the association; (3) for losses in excess of those paid under Subdivisions (1) and (2), an additional $200 million shall be assessed against the members of the association, as provided by Subsection (b); and (4) losses in excess of those paid under Subdivisions (1), (2), and (3) shall be assessed against members of the association, as provided by Subsection (b). (b) The proportion of the losses allocable to each insurer under Subsections (a)(1), (3), and (4) shall be determined in the manner used to determine each insurer's participation in the association for the year under Section 2210.052. (c) An insurer may credit an amount paid in accordance with Subsection (a)(4) in a calendar year against the insurer's premium tax under Chapter 221. The tax credit authorized under this subsection shall be allowed at a rate not to exceed 20 percent per year for five or more successive years following the year of payment of the claims. The balance of payments made by the insurer and not claimed as a premium tax credit may be reflected in the books and records of the insurer as an admitted asset of the insurer for all purposes, including exhibition in an annual statement under Section 862.001. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.059. NOTIFICATION REGARDING TAX CREDITS. (a) The association shall immediately notify the department if an occurrence or series of occurrences in a catastrophe area results in insured losses that result in a tax credit under Section 2210.058(c) in a calendar year. (b) On receipt of notice under Subsection (a), the department shall immediately notify the governor and the appropriate committees of each house of the legislature of the amount of insured losses eligible for tax credits under Section 2210.058(c). Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.060. INDEMNIFICATION BY ASSOCIATION. (a) Except as provided by Subsection (b), the association shall indemnify each director, officer, and employee of the association and each member of the association against all costs and expenses actually and necessarily incurred by the person or entity in connection with the defense of an action or proceeding in which the person or entity is made a party because of the person's status as a director, officer, or employee of the association or the member's status as a member of the association. (b) Subsection (a) does not apply to a matter in which the person or entity is determined in the action or proceeding to be liable because of misconduct in the performance of duties as a director, officer, or employee of the association or a member of the association. (c) Subsection (a) does not authorize the association to indemnify a member of the association for participating in the writings, expenses, profits, and losses of the association in the manner provided by this chapter. (d) Indemnification under this section is not exclusive of other rights to which the member or officer may be entitled as a matter of law. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER C. ASSOCIATION BOARD OF DIRECTORS § 2210.101. ACCOUNTABLE TO COMMISSIONER. The board of directors is responsible and accountable to the commissioner. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.102. COMPOSITION. (a) The board of directors is composed of the following nine members: (1) five representatives of different insurers who are members of the association, elected by the members as provided by the plan of operation; (2) two public representatives who are nominated by the office of public insurance counsel and who, as of the date of the appointment: (A) reside in a catastrophe area; and (B) are policyholders of the association; and (3) two general property and casualty agents: (A) who have demonstrated experience in the association; and (B) whose principal offices, as of the date of the appointment, are located in a catastrophe area. (b) The persons appointed under Subsections (a)(2) and (3) must be from different counties. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.103. TERMS. (a) Members of the board of directors serve three-year staggered terms, with the terms of three members expiring on the third Tuesday of March of each year. (b) A person may serve on the board of directors for not more than three consecutive full terms, not to exceed nine years. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.104. OFFICERS. The board of directors shall elect from the board's membership an executive committee consisting of a presiding officer, assistant presiding officer, and secretary-treasurer. At least one of the officers must be a member appointed under Section 2210.102(a)(2) or (3). Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.105. MEETINGS. (a) Except for an emergency meeting, the association shall 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. (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. (c) Notice of a meeting of the board of directors or the association must be given as provided by Chapter 551, Government Code. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.106. IMMUNITY OF DIRECTOR OR OFFICER FROM LIABILITY. (a) A director or officer of the association is not individually liable for an act or failure to act in the performance of official duties in connection with the association. (b) Subsection (a) does not apply to: (1) an act or failure to act of the association or an employee of the association; (2) an act or omission involving a motor vehicle; or (3) an act or failure to act that constitutes bad faith, intentional misconduct, or gross negligence. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER D. PLAN OF OPERATION § 2210.151. ADOPTION OF PLAN OF OPERATION. With the advice of the board of directors, the commissioner by rule shall adopt the plan of operation to provide: (1) Texas windstorm and hail insurance in a catastrophe area; and (2) Texas fire and explosion insurance in an inadequate fire insurance area. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.152. CONTENTS OF PLAN OF OPERATION. (a) The plan of operation must: (1) provide for the efficient, economical, fair, and nondiscriminatory administration of the association; and (2) include: (A) a plan for the equitable assessment of the members of the association to defray losses and expenses; (B) underwriting standards; (C) procedures for accepting and ceding reinsurance; (D) procedures for determining the amount of insurance to be provided to specific risks; (E) time limits and procedures for processing applications for insurance; and (F) other provisions as considered necessary by the department to implement the purposes of this chapter. (b) The plan of operation may provide for liability limits for an insured structure and for the corporeal movable property located in the structure. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.153. AMENDMENTS TO PLAN OF OPERATION. (a) The association may present a recommendation for a change in the plan of operation to the department at: (1) periodic hearings conducted by the department for that purpose; or (2) hearings relating to property and casualty insurance rates. (b) The association must present a proposed change to the department in writing in the manner prescribed by the commissioner. A proposed change does not take effect unless adopted by the commissioner by rule. (c) An interested person may, in accordance with Chapter 2001, Government Code, petition the commissioner to modify the plan of operation. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER E. INSURANCE COVERAGE § 2210.201. DEFINITION OF INSURABLE INTEREST. In this subchapter, "insurable interest" includes any lawful and substantial economic interest in the safety or preservation of property from loss, destruction, or pecuniary damage. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 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, including any inspection fee, established by the board of directors and approved by the commissioner. (b) A general property and casualty agent must submit an application for the insurance coverage on behalf of the applicant on forms prescribed by the association. The application must contain 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. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.203. ISSUANCE OF COVERAGE; TERM; RENEWAL. (a) If the association determines that the property for which an application for 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. (b) A policy issued under this section is for a one-year term. (c) A policy may be renewed annually on application for renewal as long as the property continues to be insurable property. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.204. CANCELLATION OF CERTAIN COVERAGE. (a) Subsections (b) and (c) apply if: (1) an agent or another person, firm, or corporation finances the payment of all or a portion of the premium for insurance coverage; (2) there is an outstanding balance for the financing of the premium; and (3) that balance, or an installment of that balance, is not paid before the expiration of the 10th day after the due date. (b) The agent or other person, firm, or corporation to whom the balance described by Subsection (a) is due may request cancellation of the insurance coverage by: (1) returning the policy, with proof that the insured was notified of the return; or (2) requesting the association to cancel the insurance coverage by a notice mailed to the insured and to any others shown in the policy as having an insurable interest in the property. (c) On completion of cancellation under Subsection (b), the association shall refund the unearned premium, less any minimum retained premium set forth in the plan of operation, to the person, firm, or corporation to whom the unpaid balance is due. (d) If an insured requests cancellation of the insurance coverage, the association shall refund the unearned premium payable to the insured and the holder of an unpaid balance. The general property and casualty agent who submitted the application shall refund the agent's commission on any unearned premium in the same manner. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.205. DELETION OF INSURANCE COVERAGE FROM OTHER POLICIES. The department shall prepare endorsements and forms applicable to the standard prescribed policies that delete insurance coverages available through the association, and the commissioner shall promulgate the applicable reduction of premiums and rates for the use of the endorsement or form. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.206. INSURANCE COVERAGE FOR CERTAIN GOVERNMENTAL ENTITIES. (a) In insuring property of this state or property of a political subdivision of this state, the association may not direct an insurer to issue the policy if the insurer's organizational plan precludes the insurer from writing insurance coverage for this state or a political subdivision of this state. (b) An insurer described by Subsection (a) may not act as a reinsurer with respect to an insurance policy described by Subsection (a). Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.207. WINDSTORM AND HAIL INSURANCE: REPLACEMENT COST COVERAGE. (a) In this section, "roof covering" means: (1) the roofing material exposed to the weather; (2) the underlayments applied for moisture protection; and (3) all flashings required in the replacement of a roof covering. (b) Subject to any applicable deductibles and the limits for the coverage purchased by the insured, a windstorm and hail insurance policy issued by the association may include replacement cost coverage for one- and two-family dwellings, including outbuildings, as provided under the dwelling extension coverage in the policy. (c) If, at the time of loss, the total amount of insurance applicable to a dwelling is equal to 80 percent or more of the full replacement cost of the dwelling or equal to the maximum amount of insurance otherwise available through the association, coverage applicable to the dwelling under the policy is extended to include the full cost of repair or replacement, without a deduction for depreciation. (d) If, at the time of loss, the total amount of insurance applicable to a dwelling is equal to less than 80 percent of the full replacement cost of the dwelling and less than the maximum amount of insurance available through the association, liability for loss under the policy may not exceed the replacement cost of the part of the dwelling that is damaged or destroyed, less depreciation. (e) Notwithstanding this chapter or any other law, the commissioner, after notice and hearing, may adopt rules to: (1) authorize the association to provide actual cash value coverage instead of replacement cost coverage on the roof covering of a building insured by the association; and (2) establish: (A) the conditions under which the association may provide that actual cash value coverage; (B) the appropriate premium reductions when coverage for the roof covering is provided on an actual cash value basis; and (C) the disclosure that must be provided to the policyholder, prominently displayed on the face of the windstorm and hail insurance policy. (f) Notwithstanding Chapter 40, a hearing under Subsection (e) shall be held before the commissioner or the commissioner's designee. (g) The commissioner may adopt rules as necessary to implement this section. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.208. WINDSTORM AND HAIL INSURANCE: COVERAGE FOR CERTAIN INDIRECT LOSSES. (a) Except as provided by Subsections (e) and (f), a windstorm and hail insurance policy issued by the association for a dwelling, as that term is defined by the department or a successor to the department, must include coverage for: (1) wind-driven rain damage, regardless of whether an opening is made by the wind; (2) loss of use; and (3) consequential losses. (b) A windstorm and hail insurance policy issued by the association for tenant contents of a dwelling or other residential building must include coverage for loss of use and consequential losses. (c) The coverage required under Subsection (a) or (b) must be made: (1) according to forms approved by the commissioner; and (2) for a premium paid by the insured based on rates established by commissioner rule. (d) The association shall provide coverage under this section as directed by commissioner rule. (e) The association is not required to offer coverage for indirect losses as provided by Subsection (a) or (b) unless that coverage was excluded from a companion policy in the voluntary market. (f) The association is not required to provide coverage for: (1) loss of use, if the loss is loss of rent or loss of rental value; or (2) additional living expenses, if the insured property is a secondary or a nonprimary residence. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER F. PROPERTY INSPECTIONS FOR WINDSTORM AND HAIL INSURANCE § 2210.251. INSPECTION REQUIREMENTS. (a) Except as provided by this section, to be considered insurable property eligible for windstorm and hail insurance coverage from the association, a structure that is constructed or repaired or to which additions are made on or after January 1, 1988, must be inspected or approved by the department for compliance with the plan of operation. (b) After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule shall adopt the 2003 International Residential Code for one- and two-family dwellings published by the International Code Council. For those geographic areas, the commissioner by rule may adopt a subsequent edition of that code and may adopt any supplements published by the International Code Council and amendments to that code. (c) After January 1, 2004, a person must submit a notice of a windstorm inspection to the unit responsible for certification of windstorm inspections at the department before beginning to construct, alter, remodel, enlarge, or repair a structure. (d) A structure constructed or repaired or to which additions were made before January 1, 1988, that is located in an area that was governed at the time of the construction, repair, or addition by a building code recognized by the association is insurable property eligible for windstorm and hail insurance coverage from the association without compliance with the inspection or approval requirements of this section or the plan of operation. (e) A structure constructed or repaired or to which additions were made before January 1, 1988, that is located in an area not governed by a building code recognized by the association is insurable property eligible for windstorm and hail insurance coverage from the association without compliance with the inspection or approval requirements of this section or the plan of operation if the structure was previously insured by an insurer authorized to engage in the business of insurance in this state and the structure is in essentially the same condition as when previously insured, except for normal wear and tear, and is without any structural change other than a change made according to code. For purposes of this subsection, evidence of previous insurance coverage includes: (1) a copy of a previous insurance policy; (2) copies of canceled checks or agent's records that show payments for previous policies; and (3) a copy of the title to the structure or mortgage company records that show previous policies. (f) 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. (g) The department may enter into agreements and contracts as necessary to implement this section. (h) The department may charge a reasonable fee to cover the cost of making building requirements and inspection standards available to the public. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.252. INTERNATIONAL RESIDENTIAL CODE BUILDING SPECIFICATIONS. (a) After January 1, 2004, for geographic areas specified by the commissioner, the commissioner by rule may supplement the plan of operation building specifications with the structural provisions of the International Residential Code for one- and two-family dwellings, as published by the International Code Council or an analogous entity recognized by the department. (b) For a geographic area specified under Subsection (a), the commissioner by rule may adopt a subsequent edition of the International Residential Code for one- and two-family dwellings and may adopt a supplement published by the International Code Council or an amendment to that code. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.253. INSURER ASSESSMENT: FIRST TIER COASTAL COUNTY. (a) In this section, "property insurance" means a commercial or residential insurance policy prescribed or approved by the department that provides coverage for windstorm and hail damage, including a Texas windstorm and hail insurance policy. (b) The department shall assess each insurer that provides property insurance in a first tier coastal county in accordance with this section. (c) The total assessment under this section in a state fiscal year must be in the amount estimated by the department as necessary to cover the administrative costs of the windstorm inspection program under Section 2210.251 to be incurred in the first tier coastal counties in that fiscal year. (d) The assessment must be based on each insurer's proportionate share of the total extended coverage and other allied lines premium received by all insurers for property insurance in the first tier coastal counties in the calendar year preceding the year in which the assessment is made. (e) The commissioner shall adopt rules to implement the assessment of insurers under this section. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.254. QUALIFIED INSPECTORS. (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 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. (b) A windstorm inspection may be performed only by a qualified inspector. (c) Before performing building inspections, a qualified inspector must be approved and appointed or employed by the department. (d) The department may charge a reasonable fee for the filing of applications by and determining the qualifications of persons for appointment as qualified inspectors. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.255. APPOINTMENT OF LICENSED ENGINEER AS INSPECTOR. (a) On request of an engineer licensed by the Texas Board of Professional Engineers, 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. (b) The commissioner shall adopt rules establishing the information to be considered in appointing engineers under this section. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.256. DISCIPLINARY PROCEEDINGS REGARDING APPOINTED INSPECTORS. (a) After notice and hearing, the department may revoke an appointment made under Section 2210.254 if the appointee is found to be in violation of this subchapter or a rule of the commissioner adopted under this subchapter. (b) The commissioner, instead of revocation, may impose one or more of the following sanctions if the commissioner determines from the facts that the sanction would be fair, reasonable, or equitable: (1) suspension of the appointment for a specific period, not to exceed one year; (2) issuance of an order directing the appointee to cease and desist from the specified activity or failure to act determined to be in violation of this subchapter or rules of the commissioner adopted under this subchapter; or (3) if the commissioner finds that the appointee knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false or fraudulent statement, issuance of an order directing the appointee to pay within a specified time, not to exceed 60 days, a fine not to exceed $5,000 for the violation. (c) A fine paid as a result of an order issued under Subsection (b)(3) shall be deposited in the general revenue fund. (d) If it is found after a hearing that an appointee has failed to comply with an order issued under Subsection (b), the department shall, unless the order is stayed, revoke the appointment of the person. (e) The department may informally dispose of any matter under Subsection (a) or (b) by consent order or default. (f) If an appointee is an engineer licensed by the Texas Board of Professional Engineers who is found by the department to have knowingly, wilfully, fraudulently, or with gross negligence signed or caused to be prepared an inspection report that contains a false or fraudulent statement, the commissioner may take action against the appointee in the manner provided by Subsections (a) and (b) but may not assess a fine against the appointee. The commissioner shall notify the Texas Board of Professional Engineers of an order issued by the commissioner against an appointee who is an engineer licensed by that board, including an order suspending or revoking the appointment of the person. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.257. DEPOSIT OF FEES. All fees collected by the department under this subchapter shall be deposited to the credit of the Texas Department of Insurance operating account. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER G. WINDSTORM BUILDING CODE ADVISORY COMMITTEE § 2210.301. DEFINITION. In this subchapter, "advisory committee" means the Windstorm Building Code Advisory Committee on Specifications and Maintenance. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.302. ADVISORY COMMITTEE. (a) The advisory committee shall advise and make recommendations to the commissioner on building and maintenance requirements under the plan of operation. (b) The advisory committee is composed of nine voting members appointed by the commissioner without regard to the race, color, disability, sex, religion, age, or national origin of the appointee. (c) The commissioner or the commissioner's designee shall serve as an ex officio, nonvoting member of the advisory committee. (d) The commissioner shall appoint the voting members of the advisory committee as follows: (1) three members who are representatives of the building industry who reside in catastrophe areas: (A) two of whom are residential builders; and (B) one of whom is a representative of the building supply industry; (2) three members who are representatives of the insurance industry: (A) one of whom is a member of the board of directors; and (B) two of whom are full-time employees of an insurer authorized to engage in the business of property and casualty insurance in this state that writes insurance in a catastrophe area; and (3) three members who are representatives of the public who reside in a catastrophe area, one of whom is a professional engineer licensed in this state. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.303. TERMS. A member of the advisory committee serves a three-year term. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.304. COMPENSATION. A member of the advisory committee is not entitled to compensation but is entitled to reimbursement for actual and necessary expenses incurred in performing duties as an advisory committee member, subject to any applicable limitation on reimbursement provided by the General Appropriations Act. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.305. PRESIDING OFFICER. The advisory committee shall elect a presiding officer from the committee members. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.306. MEETINGS. (a) The advisory committee shall meet at least two times each year at the call of the presiding officer with the approval of the commissioner. The advisory committee shall publish the date and location of the meeting not later than the 45th day before the date on which the meeting is scheduled to occur. (b) The commissioner or the commissioner's designee must be present at each meeting of the advisory committee. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.307. RECOMMENDATIONS FOR CHANGES IN PLAN OF OPERATION PROCEDURES. (a) The advisory committee shall analyze and make recommendations for changes regarding procedures described under Section 2210.152(a)(2) that are adopted by the commissioner in the plan of operation. In making recommendations, the advisory committee shall seek to balance the concerns of all affected parties, including consumers, builders, and the association. (b) Each proposal for a change in an applicable procedure must be submitted to the commissioner. Each proposal must be submitted separately in writing and must contain: (1) the name, mailing address, and telephone number of the proponent, or, if the proponent is a group or organization, the name of the group or organization and the mailing address and telephone number of the group or organization; (2) a citation of any applicable statute or rule; (3) the text of the proposed change, with deletions from current language struck through with a single line and new language underlined; and (4) a statement of the purpose of the proposed change, with supporting written or printed information. (c) The commissioner by rule shall adopt a form to be used by a person in presenting to the commissioner a proposal for a change in an applicable procedure. (d) To be considered at a scheduled advisory committee meeting, a proposal must be submitted not later than the 30th day before the date of that meeting and must meet the requirements of Subsection (b). (e) The department shall review and organize each proposal submitted and shall allow the advisory committee and interested parties to view the proposals to be considered within a reasonable time before the meeting of the advisory committee. If requested by a majority of the advisory committee, the department shall make recommendations regarding each proposal submitted and provide to the advisory committee any necessary technical information. (f) At an advisory committee meeting, any interested person may present the person's views on a proposal for a change in an applicable procedure that is included on the advisory committee's published agenda. The advisory committee shall consider each comment presented in acting on the disposition of each proposal. (g) After consideration of a proposal for a change in an applicable procedure, the advisory committee by vote shall: (1) recommend adoption of the proposal as initially submitted; (2) recommend adoption of the proposal with modifications; (3) recommend rejection of the proposal; or (4) suspend consideration of the proposal and request additional evaluation and study of the proposal. (h) The advisory committee shall submit to the commissioner the committee's recommendation on each proposal. The commissioner shall notify the advisory committee of the acceptance or rejection of each recommendation not later than the 30th day after the date of receipt by the commissioner. Acceptance of a recommendation by the commissioner means that the commissioner will consider adoption of that recommendation at a rulemaking hearing. Before adopting a recommendation, the commissioner must determine that the proposal, if adopted, will not weaken the integrity or diminish the effectiveness of a procedure. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.308. RULES. In addition to any other rulemaking authority granted under this chapter, the commissioner may adopt rules as necessary to implement this subchapter. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER H. RATES § 2210.351. ASSOCIATION FILINGS. (a) The association must file with the department each manual of classifications, rules, rates, including condition charges, and each rating plan, and each modification of those items that the association proposes to use. (b) A filing under this section must indicate the character and the extent of the coverage contemplated and must be accompanied by the policy and endorsement forms proposed to be used. The forms may be designed specifically for use by the association without regard to other forms filed with, approved by, or prescribed by the department for use in this state. (c) As soon as reasonably possible after the filing has been made, the commissioner in writing shall approve, modify, or disapprove the filing. A filing is considered approved unless modified or disapproved on or before the 30th day after the date of the filing. (d) If at any time the commissioner determines that a filing approved under Subsection (c) no longer meets the requirements of this chapter, the commissioner may, after a hearing held on at least 20 days' notice to the association that specifies the matters to be considered at the hearing, issue an order withdrawing approval of the filing. The order must specify in what respects the commissioner determines that the filing no longer meets the requirements of this chapter. An order issued under this subsection may not take effect before the 30th day after the date of issuance of the order. (e) The department shall value the loss and loss adjustment expense data to be used for a filing not earlier than March 31 of the year before the year in which the filing is to be made. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.352. MANUAL RATE FILINGS: ANNUAL FILING. (a) Not later than August 15 of each year, the association shall file with the department for approval by the commissioner a proposed manual rate for all types and classes of risks written by the association. Chapter 40 does not apply to: (1) a filing made under this subsection; or (2) a department action with respect to the filing. (b) Before approving, disapproving, or modifying a filing, the commissioner shall provide all interested persons a reasonable opportunity to: (1) review the filing; (2) obtain copies of the filing on payment of any legally required copying cost; and (3) submit to the commissioner written comments or information related to the filing. (c) The commissioner shall schedule an open meeting not later than the 45th day after the date the department receives a filing at which interested persons may present written or oral comments relating to the filing. (d) An open meeting under Subsection (c) is subject to Chapter 551, Government Code, but is not a contested case hearing under Chapter 2001, Government Code. (e) The department shall file with the secretary of state for publication in the Texas Register notice that a filing has been made under Subsection (a) not later than the seventh day after the date the department receives the filing. The notice must include information relating to: (1) the availability of the filing for public inspection at the department during regular business hours and the procedures for obtaining copies of the filing; (2) procedures for making written comments related to the filing; and (3) the time, place, and date of the open meeting scheduled under Subsection (c) at which interested persons may present written or oral comments relating to the filing. (f) After the conclusion of the open meeting, the commissioner shall approve, disapprove, or modify the filing in writing not later than November 15 of the year in which the filing was made. If the filing is not approved, disapproved, or modified on or before that date, the filing is considered approved. (g) If the commissioner disapproves a filing, the commissioner shall state in writing the reasons for the disapproval and the criteria the association is required to meet to obtain approval. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.353. MANUAL RATE FILINGS: AMENDED FILING. (a) Not later than the 30th day after the date the association receives the commissioner's written disapproval under Section 2210.352(f), the association may file with the commissioner an amended filing that conforms to all criteria stated in that written disapproval. (b) Not later than the 30th day after the date an amended filing made under Subsection (a) is received, the commissioner shall approve the amended filing with or without modifications or disapprove the amended filing. If the filing is not modified or disapproved on or before the 30th day after the date of receipt, the filing is considered approved without modification. (c) Before approving or disapproving an amended filing, the commissioner shall, in the manner provided by Section 2210.352(b), provide all interested persons a reasonable opportunity to: (1) review the amended filing; (2) obtain copies of the amended filing on payment of any legally required copying cost; and (3) submit to the commissioner written comments or information related to the amended filing. (d) The commissioner may, in the manner provided by Sections 2210.352(c) and (d), hold a hearing regarding an amended filing not later than the 20th day after the date the department receives the amended filing. (e) Not later than the 10th day after the date the hearing is concluded, the commissioner shall approve or disapprove the amended filing. (f) The requirements imposed under Subsection (a) and under Sections 2210. 352(e), (f), and (g) apply to a hearing conducted under this section and the commissioner's decision resulting from that hearing. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.354. MANUAL RATE FILINGS: ADDITIONAL SUPPORTING INFORMATION. (a) In conjunction with the review of a filing under Section 2210.352 or 2210.353: (1) the commissioner may request the association to provide additional supporting information relating to the filing; and (2) any interested person may file a written request with the commissioner for additional supporting information relating to the filing. (b) A request under this section must be reasonable and must be directly related to the filing. (c) The commissioner shall submit to the association all requests for additional supporting information made under this section for the commissioner's use and the use of any interested person. (d) Unless a different period is requested by the association and approved by the commissioner, the association shall provide the information to the commissioner not later than the fifth day after the date the written request for additional supporting information is delivered to the association. The department shall notify an interested person who has requested additional information of the availability of the information not later than one business day after the date the commissioner receives the information from the association. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.355. GENERAL RATE REQUIREMENTS; RATE STANDARDS. (a) Rates for coverage under this chapter must be made in accordance with this section. (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; and (4) all other relevant factors, within and outside this state. (c) Rates must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory as to any class of insurer. (d) For the establishment of rates and minimum premiums, the risks may be grouped by classification. (e) Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in those risks on the basis of any or all of the factors described by Subsection (b). The classification rates may include rules for classification of risks insured under this chapter and rate modifications to those classifications. (f) Each provision regarding a rate, classification, standard, or premium must be made without prejudice to, or prohibition of, provision by the association for consent rates on individual risks if the rate and risk are acceptable to the association, and are analogous to the rate provided for under Article 5.26(a). This subsection applies regardless of whether such a risk would otherwise be subject to or the subject of a rate classification provision or eligibility provision. (g) A commission paid to an agent must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.356. UNIFORM RATE REQUIREMENTS; INFORMATION USED IN DEVELOPING RATES. (a) Each rate approved by the commissioner in accordance with this subchapter must be uniform throughout the first tier coastal counties. (b) The catastrophe element used to develop rates under this subchapter applicable to risks written by the association must be uniform throughout the seacoast territory. The catastrophe element of the rates must be developed using: (1) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the association, for covered property located in the seacoast territory, using not less than the most recent 30 years of experience available; and (2) 100 percent of both the loss experience and related premium income for the association for covered property, using not less than the most recent 30 years of experience available. (c) The noncatastrophe element of the noncommercial rates must be developed using: (1) 90 percent of both the monoline extended coverage loss experience and related premium income for all insurers, other than the association, for covered property located in the catastrophe area of the seacoast territory, using the most recent 10 years of experience available; and (2) 100 percent of both the loss experience and related premium income for the association for covered property, using the most recent 10 years of experience available. (d) The noncatastrophe element of the commercial rates must be developed using 100 percent of both the loss experience and related premium income for the association for covered property, using the most recent 10 years of experience available. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.357. RATE CLASSIFICATIONS. All premiums written and losses paid under this chapter, as appropriate, must be included in applicable classifications for general ratemaking purposes. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.358. EXPERIENCE DATA. (a) Not later than June 1 of each year, the department shall provide to the association and other interested persons the experience data to be used in establishing the rates under this subchapter in that year. (b) On request from the department, an insurer shall provide the data to the department or the department may obtain the data from a designated statistical agent, as defined by Section 38.201. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.359. LIMITATION ON CERTAIN RATE CHANGES. (a) A rate approved by the commissioner under this subchapter may not reflect an average rate change that is more than 10 percent higher or lower than the rate for commercial windstorm and hail insurance or 10 percent higher or lower than the rate for noncommercial windstorm and hail insurance in effect on the date the filing is made. The rate may not reflect a rate change for an individual rating class that is 15 percent higher or lower than the rate for that individual rating class in effect on the date the filing is made. (b) The commissioner may, after notice and hearing, suspend this section on a finding that a catastrophe loss or series of occurrences resulting in losses in the catastrophe area justify a need to ensure: (1) rate adequacy in the catastrophe area; and (2) availability of insurance outside the catastrophe area. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.360. USE OF CERTAIN SURCHARGES IN DEVELOPING RATES. Surcharges previously collected and used in the development of current rates may not be excluded from future rate development if those surcharges were collected during the experience period considered by the commissioner. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.361. ASSOCIATION RECOMMENDATIONS REGARDING REDUCTIONS IN COVERAGES OR INCREASES IN DEDUCTIBLES. (a) The association may make recommendations to the commissioner that would result in a reduction of coverages or an increase in an applicable deductible if the resultant reduction in coverages or increase in deductibles is accompanied by proposed rate credits. (b) After notice and hearing, the commissioner may accept, modify, or reject a recommendation made by the association under this section. Chapter 40 does not apply to an action taken under this section. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.362. IMPLIED CONSENT BY APPLICANT FOR INSURANCE COVERAGE. For purposes of this chapter, an applicant for insurance coverage is considered to have consented to the appropriate rates and classifications authorized by this chapter regardless of any other rates or classifications. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.363. EFFECT ON RATES OF CERTAIN OTHER INSURANCE COVERAGE. The commissioner may provide for an appropriate premium rate or reduction in premium rate if flood or rising water insurance coverage exists and is maintained on a risk insured by the association. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER I. RATE ROLLBACK § 2210.401. RATE ROLLBACK FOR CERTAIN RESIDENTIAL CONSTRUCTION. (a) This section applies only to insurance coverage issued by the association to cover new residential construction, excluding an addition or repair to an existing structure, built to the standards of a new building code. (b) The commissioner shall hold a rulemaking hearing under Chapter 2001, Government Code, to determine the percentage of equitable across-the-board reductions in insurance rates required for Texas windstorm and hail insurance coverage written by the association. (c) Not later than the 180th day after the date a building code is implemented, the commissioner shall issue an order mandating the appropriate rate reductions. (d) The commissioner shall require a six percent across-the-board reduction if, before the 181st day after the date a new building code is implemented: (1) the commissioner has not issued an order establishing rate reductions for Texas windstorm and hail insurance on new residential construction built to the standards of a new building code; or (2) the order has not become final because of judicial intervention or any other reason. (e) Notwithstanding Chapter 40, a hearing under this section shall be held before the commissioner or the commissioner's designee. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER J. CATASTROPHE RESERVE TRUST FUND AND REINSURANCE PROGRAM § 2210.451. DEFINITION. In this subchapter, "trust fund" means the catastrophe reserve trust fund. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.452. ESTABLISHMENT AND USE OF TRUST FUND. (a) The commissioner shall adopt rules under which association members relinquish their net equity on an annual basis as provided by those rules by making payments to the catastrophe reserve trust fund. The trust fund may be used only to fund: (1) the obligations of the trust fund under Section 2210.058(a); and (2) the mitigation and preparedness plan established under Section 2210.454 to reduce the potential for payments by association members that give rise to tax credits in the event of loss. (b) All money, including investment income, deposited in the trust fund constitutes state funds until disbursed as provided by this chapter and commissioner rules. The comptroller shall hold the money outside the state treasury on behalf of, and with legal title in, the department. The department shall keep and maintain the trust fund in accordance with this chapter and commissioner rules. The comptroller, as custodian of the trust fund, shall administer the trust fund strictly and solely as provided by this chapter and commissioner rules. (c) At the end of each calendar year or policy year, the association shall pay the net equity of a member, including all premium and other revenue of the association in excess of incurred losses and operating expenses, to the trust fund or a reinsurance program approved by the commissioner. (d) The commissioner by rule shall establish the procedure relating to the disbursement of money from the trust fund to policyholders in the event of an occurrence or series of occurrences within a catastrophe area that results in a disbursement under Section 2210.058(a). (e) The trust fund may be terminated only by law. On termination of the trust fund, all assets of the trust fund revert to the state to provide funding for the mitigation and preparedness plan established under Section 2210.454. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.453. REINSURANCE PROGRAM. (a) The association shall: (1) make payments into the trust fund; or (2) establish a reinsurance program approved by the department. (b) With the approval of the department, the association may establish a reinsurance program that operates in addition to or in concert with the trust fund. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.454. MITIGATION AND PREPAREDNESS PLAN. (a) The commissioner shall annually develop and implement a mitigation and preparedness plan. (b) Each state fiscal year, the department may fund the mitigation and preparedness plan using the investment income of the trust fund in an amount not less than $1 million and not more than 10 percent of the investment income of the prior fiscal year. From that amount and as part of that plan, the department may use in each fiscal year $1 million for the windstorm inspection program established under Section 2210.251. (c) The mitigation and preparedness plan must provide for actions to be taken in the seacoast territory by the commissioner, or by a local government, state agency, educational institution, or nonprofit organization designated by the commissioner in the plan, to implement programs to: (1) improve preparedness for windstorm and hail catastrophes; (2) reduce potential losses in the event of such a catastrophe; and (3) provide research into the means to: (A) reduce those losses; (B) educate or inform the public in determining the appropriateness of particular upgrades to structures; or (C) protect infrastructure from potential damage from those catastrophes. (d) Money in excess of $1 million may not be used under this section if the commissioner determines that an expenditure of investment income from the trust fund would jeopardize the actuarial soundness of the fund or materially impair the ability of the fund to serve the state purposes for which the fund was established. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER K. LIABILITY LIMITS § 2210.501. MAXIMUM LIABILITY LIMITS. (a) The board of directors shall propose the maximum liability limits under a windstorm and hail insurance policy issued by the association under this chapter. The maximum liability limits must be approved by the commissioner. (b) Subject to Section 2210.502, the maximum liability limits for coverage on a single insurable property may not be less than: (1) $350,000 for: (A) a dwelling, including an individually owned townhouse unit; and (B) the corporeal movable property located in or about the dwelling and, as an extension of coverage, away from those premises, as provided under the policy; (2) $2,192,000 for a building, and the corporeal movable property located in the building, if the building is: (A) owned by, and at least 75 percent of which is occupied by, a governmental entity; or (B) not owned by, but is wholly and exclusively occupied by, a governmental entity; (3) $125,000 for individually owned corporeal movable property located in an apartment unit, residential condominium unit, or townhouse unit that is occupied by the owner of that property and, as an extension of coverage, away from those premises, as provided under the policy; and (4) $1,500,000 for: (A) a structure other than a dwelling or a public building; and (B) the corporeal movable property located in that structure and, as an extension of coverage, away from those premises, as provided under the policy. (c) Maximum liability limits for insurable property not described by Subsection (b) are established by the plan of operation. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.502. ADJUSTMENTS TO MAXIMUM LIABILITY LIMITS. (a) Not later than September 30 of each year, the board of directors shall propose inflation adjustments to the maximum liability limits imposed under Section 2210.501 in increments of $1,000, rounded to the nearest $1,000, considering the limits imposed by Section 2210.501(b), at a rate that reflects any change in the BOECKH Index. If the BOECKH Index ceases to exist, the board of directors shall propose the adjustments in the same manner based on another index that the board of directors determines accurately reflects changes in the cost of construction or residential values in the catastrophe area. (b) An adjustment to the maximum liability limits that is approved by the commissioner applies to each windstorm and hail insurance policy delivered, issued for delivery, or renewed on or after January 1 of the year following the date of the approval. The indexing of the limits shall adjust for changes occurring on and after January 1, 1997. (c) The board of directors may propose additional increases in the maximum liability limits as the board determines necessary to implement the purposes of this chapter. (d) Notwithstanding Section 2210.501(b), the maximum liability limit imposed under Section 2210.501(b)(2) is frozen, and the indexing and adjustments provided by this section do not apply to that limit, until the limit imposed on a structure subject to Section 2210.501(b)(4) and the corporeal property located in that structure reaches or exceeds $2,192,000, at which time the limit imposed under Section 2210.501(b)(2) shall be indexed and adjusted as provided for a risk under Section 2210.501(b)(4). Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.503. FILING OF PROPOSED ADJUSTMENTS WITH COMMISSIONER. Not later than the 10th day after the date a proposed adjustment to the maximum liability limits is determined under Section 2210.501(a) or (b) or Section 2210.502, the association shall file the proposed adjustments with the commissioner in writing. The filing must include: (1) a statement of the proposed adjusted limits; (2) a statement of the limits in effect immediately preceding the effective date of the proposed adjustment; (3) a brief summary of the changes to the BOECKH Index or other index on which the proposed adjustments are based; and (4) a brief summary of the computations used in determining the proposed adjustments. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.504. COMMISSIONER ACTION ON PROPOSED ADJUSTMENTS. (a) Not later than the 60th day after the date of receipt of a filing under Section 2210.503, and after notice and hearing, the commissioner by order shall approve, disapprove, or modify the proposed adjustment to the maximum liability limits. (b) Notwithstanding Subsection (a) and Sections 2210.501(c), 2210.502(a)-(c), and 2210.503, the commissioner may not approve adjustments of maximum liability limits to amounts lower than the amounts prescribed under Section 2210.501(b). Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.505. REINSURED EXCESS LIMITS. (a) Notwithstanding any other law, the association may issue a windstorm and hail insurance policy that includes coverage for an amount in excess of a maximum liability limit established under Sections 2210.501-2210.504 if the association first obtains from a reinsurer approved by the commissioner reinsurance for the full amount of policy exposure above that limit. (b) The premium charged by the association for the excess coverage must equal the amount of the reinsurance premium charged to the association by the reinsurer, plus any payment to the association that is approved by the commissioner. (c) The commissioner shall adopt rules as necessary to implement this section. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.506. EXCEPTION FROM CERTAIN ADMINISTRATIVE PROCEDURES. Chapter 40 does not apply to an action taken under this subchapter. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.SUBCHAPTER L. APPEALS AND OTHER ACTIONS § 2210.551. APPEALS. (a) This section applies to: (1) a person insured under this chapter or an authorized representative of the person; or (2) an affected insurer. (b) A person or entity described by Subsection (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. (c) If the association is aggrieved by the action of the commissioner with respect to a ruling, order, or determination of the commissioner, the association may, not later than the 30th day after the date of the action, make a written request to the commissioner for a hearing on the action. (d) On 10 days' written notice of the time and place of the hearing, the commissioner shall conduct a hearing on the association's request or the appeal from an act, ruling, or decision of the association, not later than the 30th day after the date of receipt of the request or appeal. (e) A hearing on an act, ruling, or decision of the association relating to the payment of, the amount of, or the denial of a particular claim shall be held, at the request of the claimant, in the county in which the insured property is located or in Travis County. (f) Not later than the 30th day after the date of the hearing, the commissioner shall affirm, reverse, or modify the commissioner's previous action or the act, ruling, or decision appealed to the commissioner. Pending the hearing and decision, the commissioner may suspend or postpone the effective date of the previous action or of the act, ruling, or decision appealed to the commissioner. (g) The association, or the person or entity aggrieved by the order or decision of the commissioner, may appeal to a district court in the county in which the covered property is located or a district court in Travis County. (h) An action brought under this section is subject to the procedures established under Subchapter D, Chapter 36. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007. § 2210.552. CLAIM DISPUTES; VENUE. (a) Except as provided by Sections 2210.007 and 2210.106, a person insured under this chapter who is aggrieved by an act, ruling, or decision of the association relating to the payment of, the amount of, or the denial of a claim may: (1) bring an action against the association, including an action under Chapter 541; or (2) appeal the act, ruling, or decision under Section 2210.551. (b) A person may not proceed under both Section 2210.551 and this section for the same act, ruling, or decision. (c) Except as provided by Subsection (d), venue in an action brought under this section, including an action under Chapter 541, against the association is in the county in which the insured property is located or in a district court in Travis County. (d) Venue in an action, including an action under Chapter 541, brought under this section in which the claimant joins the department as a party to the action is only in a district court in Travis County. Added by Acts 2005, 79th Leg., ch. 727, § 2, eff. April 1, 2007.
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