(a) Definitions.
(1) Words defined in Act. Unless the context clearly dictates
the contrary, words defined in the Texas Catastrophe Property Insurance Pool
Act (the Insurance Code, Article 21.49, as amended) and not specifically defined
in this section shall have the same definition when used in this section as
they have in such Act. The terms "this section" and "plan of operation" are
used interchangeably herein.
(2) Definitions in the section. The following words and terms,
when used in this section, shall have the following meanings, unless the context
clearly indicates otherwise.
(A) Act--The Texas Catastrophe Property Insurance Pool Act,
Senate Bill 31, Acts of the 62nd Legislature, 1971, as amended; codified as
the Insurance Code, Article 21.49, as amended.
(B) Application--An application for catastrophe insurance.
(C) Association--The Texas Catastrophe Property Insurance Association.
(D) Board--The State Board of Insurance
(E) Board of directors--The board of directors of the Texas
Catastrophe Property Insurance Association.
(F) Catastrophe insurance--For the purpose of this plan of
operation, means Texas windstorm and hail insurance.
(G) Catastrophe loss--A loss to property insured by a policy
of Texas windstorm and hail insurance. "Catastrophe losses" means more than
one catastrophe loss.
(H) Chair of the board--The chair of the board of directors
of the Texas Catastrophe Property Insurance Association.
(I) Commissioner--Commissioner of Insurance of the State of
Texas.
(J) Corporeal property--Tangible personal property.
(K) Department--Texas Department of Insurance.
(L) Indirect losses--Personal Lines.
(i) Except as provided in clause (iii) of this subparagraph,
a policy of windstorm and hail insurance issued by the association for a dwelling
as defined by the Department in the association's rates and rules manual,
must include coverage for:
(I) wind-driven rain damage, regardless of whether an opening
is made by the wind;
(II) loss of use, meaning additional living expenses; and
(III) consequential losses.
(ii) Except as provided in clause (iii) of this subparagraph,
a policy of windstorm and hail insurance issued by the association for tenant
contents of a dwelling or other residential building must include coverage
for:
(I) loss of use, meaning additional living expenses; and
(II) consequential losses.
(iii) The association is not required to:
(I) offer coverage for indirect losses as provided in clauses
(i) and (ii) of this subparagraph unless the coverage was excluded from a
companion policy issued in the voluntary market; or
(II) provide loss of rents or loss of rental value coverage
as part of a loss of use coverage or additional living expense coverage to
a secondary or non-primary residence.
(M) Member--An insurer required to be a member of the association
by the Act, §4, or where the context indicates, any duly authorized agent
or representative of such insurer. "Members" shall mean more than one member.
(N) Net direct premiums--
(i) For association policies with inception dates on and after
January 1, 1993, "net direct premiums" shall mean all statewide direct written
premiums (excluding direct written premiums in catastrophe area as designated
by the Commissioner) and shall be the sum of the following:
(I) 90% of the direct written premiums of the extended coverage
line of business and 90% of the direct written premiums on the other allied
lines of business as reported in accordance with the property statistical
plan promulgated by the Commissioner for property insurance, which the association
shall obtain from the Department, and as may be furnished to the association
by the Department after review of the insurer's annual statement, other reports,
and other statistics the Department shall deem necessary;
(II) 90% of the extended coverage and other allied lines portion
of the direct written premiums on the multiple peril line of business as reported
in accordance with the property statistical plan promulgated by the Commissioner
for property insurance, which the association shall obtain from the Department,
and as may be furnished to the association by the Department after review
of the insurer's annual statement, other reports, and other statistics the
Department shall deem necessary; and
(III) 50% of the direct written premium or such other percentage
as may be determined by the board of directors of the association, without
further action by the Commissioner, upon analysis of appropriate statistics
for wind, hail, water damage, and all other perils, on the homeowner's multiple
peril line of business as reported in accordance with the property statistical
plan promulgated by the Commissioner for property insurance, which the association
shall obtain from the Department, and as may be furnished to the association
by the Department after review of the insurer's annual statement, other reports,
and other statistics the Department shall deem necessary and farm and ranch
owners' multiple peril line of business as reported in accordance with the
property statistical plan promulgated by the Commissioner for property insurance,
which the association shall obtain from the Department, and as may be furnished
to the association by the Department after review of the insurer's annual
statement, other reports, and other statistics the Department shall deem necessary,
provided, no adjustment of five percentage points or less shall be made, and
further provided, that no adjustment shall be made in less than three years
from the last prior adjustment;
(IV) the extended coverage and other allied lines portion of
the following policies, which shall be calculated as follows:
(-a-) 40% of the total premium for any commercial policy issued
under a composite rate; or
(-b-) 40% of the total policy premium or the combined actual
extended coverage and other allied lines premium charged whichever is greater,
for any property insurance policy written by an insurance company that is
not authorized to transact property insurance in Texas, and which is affiliated
under common management or control of an insurance company licensed to transact
property insurance in Texas.
(ii) For association policies with inception dates on and after
January 1, 1988, through December 31, 1992, "net direct premiums" shall mean
all statewide direct written premiums (excluding direct written premiums in
the catastrophe area as designated by the State Board of Insurance) restored
to manual level and further adjusted to the manual rate level applicable to
the catastrophe area as designated by the State Board of Insurance and shall
be the sum of the following:
(I) 90% of the direct written premiums of the extended coverage
line of business and 90% of the direct written premiums on the other allied
lines of business as reported in accordance with the property statistical
plan promulgated by the Commissioner for property insurance which the association
shall obtain from the Department and as may be furnished to the association
by the Department after review of the insurer's annual statement, other reports,
and other statistics the Department shall deem necessary;
(II) 90% of the extended coverage and other allied lines portion
of the direct written premiums on the multiple peril line of business as reported
in accordance with the property statistical plan promulgated by the Commissioner
for property insurance, which the association shall obtain from the Department,
and as may be furnished to the association by the Department after review
of the insurer's annual statement, other reports, and other statistics the
Department shall deem necessary;
(III) 50% of the direct written premium or such other percentages
as may be determined by the board of directors of the association, without
further action by the Commissioner, upon analysis of appropriate statistics
for wind, hail, water damage, and all other perils, on the homeowner's multiple
peril line of business as reported in accordance with the property statistical
plan promulgated by the Commissioner for property insurance, which the association
shall obtain from the Department, and as may be furnished to the association
by the Department after review of the insurer's annual statement, other reports,
and other statistics the Department shall deem necessary and farm and ranch
owners' multiple peril line of business as reported in accordance with the
property statistical plan promulgated by the Commissioner for property insurance,
which the association shall obtain from the Department, and as may be furnished
to the association by the Department after review of the insurer's annual
statement, other reports, and other statistics the Department shall deem necessary,
provided, no adjustment of five percentage points or less shall be made, and
further provided, that no adjustment shall be made in Cont'd... |