| (a) The association must determine which members of
the association must participate in any assessment under §5.4160
and §5.4161 of this title (relating to Member Assessments to
Pay for Reinsurance In Excess of the Association's Statutory Minimum
Funding Level and Member Assessments Other than Assessments for Reinsurance
in Excess of the Association's Statutory Minimum Funding Level).
(1) The association may not include in the assessment
an insurer that became a member of the association after September
1, 2009, and that had not previously been a member of the association,
until after the second anniversary of the date on which the insurer
first becomes a member of the association.
(2) The association must include in the assessment
an insurer described under paragraph (1) of this subsection after
the second anniversary of the date on which the insurer first becomes
a member of the association without regard as to whether the catastrophic
event that gave rise to the assessments occurred prior to the second
anniversary of the date on which the insurer first became a member
of the association.
(3) The association may not include in the assessment
formula the net direct premium of an affiliate insurer engaged in
the business of surplus lines insurance as described in the Insurance
Code §2210.052(c) that a federal agency or court of competent
jurisdiction determines to be exempt from the assessment formula under
Insurance Code Chapter 2210.
(b) Each member company's percentage of participation
must be computed on a calendar year basis for the year in which the
assessment is made. The percentage of participation is not based on
the year in which the catastrophic event occurred, except for an assessment
made during that year. Net direct premiums must be determined as provided
under §5.4001(a)(2)(N) of this title (relating to Plan of Operation).
(c) The participating members of the association must
participate in insured losses and operating expenses of the association,
in excess of premium and other revenue, in the proportions required
by Insurance Code §2210.052 and as depicted in subsection (e)
of this section. A participating member is entitled to receive credit
for insurance voluntarily written in the catastrophe area, as provided
in Insurance Code §2210.052.
(d) If at the time of an assessment the department
has not furnished to the association information necessary to compute
a member's participation during the preceding calendar year, then
each member's participation must be based upon information furnished
to the association from the last calendar year for which such information
is available. When the association receives the necessary information
from the department, the association must reassess or refund to each
participating member the amounts necessary to properly reflect the
member's participation.
(e) The Figure: 28 TAC §5.4162(e) graphically
depicts the Texas Windstorm Insurance Association Procedure For Calculating
Member Assessment Percentages Including Credit For Voluntary Writings.
All premiums are for the most recent preceding calendar year ending
December 31, as furnished by the department.
Attached Graphic
(1) Column 1(a): Statewide net direct premiums for
extended coverage and other allied lines. Column 1(b): Statewide net
direct premiums for extended coverage and other allied lines portion
of the multiple peril line. Column 1(c): Statewide net direct premiums
for homeowners and farm and ranch owners.
(2) Column 2: The sum of the statewide net direct premiums
at 90% of the extended coverage and other allied lines, and 50% of
the homeowners and farm and ranch owner's, or such percentage as may
be determined in accordance with §5.4001(a)(2)(N)(i)(III) of
this chapter (90% of Column 1(a) plus 90% of Column 1(b) plus 50%
of Column 1(c)).
(3) Column 3: Each company's percentage of the net
direct premiums as described in Column 2, which is the basis for indicating
normal required participation in the association prior to credits
for voluntary writings in the designated areas.
(4) Column 4: Total windstorm and hail premiums in
the designated areas (association premiums plus voluntary premiums).
(5) Column 5: Normal company quota of total windstorm
and hail premiums (Column 3 x Column 4).
(6) Column 6: Each company's voluntary writings in
the designated areas multiplied by the same percentages as shown in
Column 2. Note: Maximum credit must be limited to company's normal
quota.
(7) Column 7: Each company's maximum possible allocation
after applying credits for voluntary writings (Column 5 minus Column
6). Negative allocation to be shown as zero.
(8) Column 8: Percentage participation of each member
company in the association, prior to application of offset. Note:
The offset figure measures the excess premiums developed by the maximum
credit in Column 6.
(9) Column 9: Percentage participation of each member
company in the association.
(f) The department will furnish to the association
the amount of net direct premiums of each member company written on
property in this state and the aggregate net direct premiums written
on property in this state by all member companies during the preceding
calendar year as reported by member companies to the department.
(g) Within a reasonable time after receiving the information
described in subsection (f) of this section from the department, the
association must notify each member company, in writing, by certified
mail, of the following:
(1) the amount of net direct premiums the member company
wrote on property in this state during the preceding calendar year;
(2) the amount of net direct premiums of similar insurance
the member company voluntarily wrote in the catastrophe area during
the preceding calendar year; and
(3) that the notice and contents are an act, ruling,
or decision of the association and that the member company to whom
the notice is given is entitled to appeal it not later than the 30th
day after the date shown on the notice in accordance with Insurance
Code §2210.551.
(h) Within a reasonable period of time after sending
the notice described in subsection (g) of this section, the association
must determine the percentage of participation for each member company
in the manner provided in this section and must notify each member
company of its percentage of participation, in writing, by certified
mail. The notice must state that the notice and contents are an act,
ruling, or decision of the association insofar as the mathematical
determination of the percentage of participation is concerned and
that the member company to whom the notice is given is entitled to
appeal not later than the 30th day after the date shown on the notice
in accordance with Insurance Code §2210.551.
(i) In the notices required under subsections (g) and
(h) of this section, the association must disclose to its members
that the resulting participation percentages will be used for any
assessments for reinsurance in excess of the association's statutory
minimum funding level for the calendar year that may be required under
Insurance Code §2210.453(d).
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