HBA-TBM H.B. 1162 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1162 By: Eiland Insurance 3/11/2001 Introduced BACKGROUND AND PURPOSE The Texas Windstorm Insurance Association (association) is comprised of all property insurers authorized to transact property insurance in Texas. Under current law, the association is required to issue property insurance covering insurable property in the 14 Texas counties contiguous with the Gulf of Mexico. The association writes both commercial and residential risk plans in these counties. Rates for commercial policies are set each year by the commissioner of insurance (commissioner) at an open meeting and may not be contested. Residential policy rates, determined as part of the annual benchmark rate hearing process, are contestable. Contesting the residential policy rates is an expensive process in terms of time consumed as well as the cost. House Bill 1162 authorizes the commissioner to set rates for residential policies issued by the association in the same manner in which commercial rates are set. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 1162 amends the Insurance Code to modify provisions regarding rates and rating plans in the Texas Windstorm Insurance Association Act (Act). The bill provides that each rate established by the commissioner of insurance (commissioner) in accordance with this Act must be uniform throughout the first tier coastal counties (Sec. 8(h)(1), Art. 21.49). The bill deletes provisions related to the rates of noncommercial windstorm and hail insurance written by the Texas Windstorm Insurance Association (association) (Sec. 8(h)(3), Art. 21.49). Not later than August 1 of each year, the association is required to file with the Texas Department of Insurance (TDI) for approval by the commissioner a proposed manual rate for all types and classes of risks written by the association. The bill removes provisions requiring the rate to be 90 percent of the rate for extended coverage for commercial risks (Sec. 8(h)(2), Art. 21.49). The bill authorizes the commissioner to modify an amended filing of the manual rate before approving it (Sec. 8(h)(7), Art. 21.49). The bill authorizes the association to request and the commissioner to approve a different period of in time in which the association is required to provide additional supporting information related to a filing or an amended filing (Sec. 8(h)(8), Art. 21.49). The bill sets forth provisions for the development of rates and the determination of the catastrophe and noncatastrophe elements of rates promulgated under this Act (Secs. 8(h)(9, 11, 12, and 14), Art. 21.49). The bill requires TDI to 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 (Sec. 8(h)(15), Art. 21.49). Not later than March 31 of each year, TDI is required to provide the experience data to be used in establishing the rates in that year to the association and other interested persons (Sec. 8(h)(16), Art. 21.49). EFFECTIVE DATE September 1, 2001.