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

89(R) SB 2530 - Engrossed version - Bill Text

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 Act, and that law is continued in effect for

that purpose.

(b) On January 1, 2026, the minimum amounts of member

assessments for purposes of Sections 2210.0725(a), 2210.074(a),

and 2210.0742(a), Insurance Code, as amended by this Act, are

adjusted in proportion to the growth in the association's probable

maximum loss between January 1, 2021, and January 1, 2026.

SECTION 18. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.