| (a) Purpose and scope. The purpose of this section is to:
(1) designate the areas determined by the Commissioner of Insurance
to be underserved areas for purposes of residential property insurance pursuant
to the Insurance Code, Article 5.35-3 (Property Protection Program for Underserved
Areas);
(2) designate the areas determined by the Commissioner of Insurance
to be underserved areas for purposes of residential property insurance pursuant
to the Insurance Code, Article 21.49-12 (Market Assistance Program); and
(3) identify the factors and methodology used in determining
such underserved areas.
(b) Definitions. The following words and terms when used in
this section shall have the following meanings unless the context clearly
indicates otherwise.
(1) Class 1 underserved area--An area determined and designated
in this section as an underserved area by the Commissioner of Insurance for
purposes of both the Property Protection Program operated pursuant to the
Insurance Code, Article 5.35-3, and the Residential Property Insurance Market
Assistance Program operated pursuant to the Insurance Code, Article 21.49-12.
Policy forms and types of coverage that insurers may write in these areas
are specified in §5.10004(b)(1) and (d)(2) of this title (relating to
MAP Policy Forms and Types of Coverage).
(2) Class 2 underserved area--An area determined and designated
in this section as an underserved area by the Commissioner of Insurance for
purposes of the Residential Property Insurance Market Assistance Program operated
pursuant to the Insurance Code, Article 21.49-12. Policy forms and types of
coverage that insurers may write in these areas are specified in §5.10004(b)(1)
and (d)(2) of this title (relating to MAP Policy Forms and Types of Coverage).
(3) Commissioner--Commissioner of Insurance of the State of
Texas.
(4) Department--Texas Department of Insurance.
(5) Market Assistance Program--The residential property insurance
market assistance program operated pursuant to Article 21.49-12 of the Insurance
Code and §§5.10001-5.10015 of this title (relating to Plan of Operation).
(6) Property Protection Program--The residential property insurance
program for underserved areas operated pursuant to Article 5.35-3 of the Insurance
Code.
(c) Class 1 underserved areas.
(1) The following areas are designated as Class 1 underserved
areas, effective October 15, 1996:
Attached Graphic
(2) The following areas are designated as Class 1 underserved
areas, effective January 15, 1997:
Attached Graphic
(3) The following areas are designated as Class 1 underserved
areas, effective April 15, 1997:
Attached Graphic
(d) Class 2 underserved areas.
(1) The following areas are designated as Class 2 underserved
areas, effective October 15, 1996:
Attached Graphic
(2) The following areas are designated as Class 2 underserved
areas, effective January 15, 1997:
Attached Graphic
(3) The following areas are designated as Class 2 underserved
areas, effective April 15, 1997:
Attached Graphic
(e) Factors considered in designating Class 1 and Class 2 underserved
areas. In determining the areas designated as underserved, the Commissioner
shall consider whether residential property insurance is not reasonably available
to a substantial number of owners of insurable property in a specific geographic
area and any other relevant factors as determined by the Commissioner. The
determination of the areas to be designated as underserved is based on the
factors and methodology outlined in this subsection.
(1) There is no single comprehensive measure of whether residential
property insurance is or is not reasonably available or is or is not potentially
reasonably available to a substantial number of owners of insurable property
either on a statewide basis or in any particular area of the state. Therefore,
the Commissioner has identified characteristics of particular geographic areas
which are likely to be associated with greater difficulty by consumers in
obtaining residential property insurance. These characteristics were considered
in addition to direct measures of residential property insurance availability
(including the number of surplus lines policies as specified in paragraph
(3)(F) of this subsection).
(2) The Commissioner considered underwriting restrictions and
requirements of insurers writing residential property insurance in Texas that
would limit availability of residential property insurance coverages to a
greater extent in some geographic areas than in others. Underwriting guidelines
are the rules used by insurers to determine whether or not to sell an insurance
policy to a particular consumer and what, if any, restrictions will be placed
on the policy issued. Many underwriting guidelines have a differential geographic
impact. These guidelines include weather-related loss exposure, type of dwelling,
age of dwelling, minimum dwelling value, financial stability of consumers,
employment status of consumers, length of continuous employment, occupation,
and length of continuous residency.
(3) Based upon the review of insurer underwriting guidelines
and the Commissioner's authorization under Article 5.35-3 and the Commissioner's
mandate under Article 21.49-12 to establish programs to increase the availability
of residential property insurance in designated underserved areas as well
as the structure and methods of operation of the two programs, specific factors
for analysis by ZIP Code area or county were developed, and points were assigned
to each of the factors. If the factor for a specific ZIP Code indicated actual
or potential difficulty for consumers in obtaining residential property insurance,
the ZIP Code was assigned one point. If the factor for a specific ZIP Code
indicated especially significant actual or potential difficulty for consumers
in obtaining residential property insurance, the ZIP Code was assigned two
points. ZIP Codes not receiving one or two points received zero points for
the specific factor. The specific factors and the points assigned are as follows:
(A) Low median household income. Underwriting guidelines related
to financial, employment and residential stability and credit histories will
likely affect consumers in areas with lower-income to a greater extent than
consumers in other areas. Therefore, ZIP Codes with median household incomes
of $16,000 or less are assigned one point, except that because of higher median
incomes in Harris, Dallas, and Tarrant Counties, ZIP Codes in these counties
with median household incomes of $18,000 or less are assigned one point.
(B) Low median value of owner-occupied homes. Underwriting
guidelines relating to minimum coverage requirements will likely affect consumers
in areas with lower median housing values to a greater extent than consumers
in other areas. ZIP Codes with median value of owner-occupied dwellings of
$30,000 or less are assigned one point, except that because of higher underwriting
standards in Harris, Dallas, Tarrant, and Travis Counties, ZIP Codes in these
counties with median values of owner-occupied dwellings of $40,000 or less
are assigned one point.
(C) Older median age of homes. Underwriting guidelines relating
to age of dwelling will likely affect consumers in areas with older median
housing age to a greater extent than consumers in other areas. ZIP Codes with
a median year built of 1957 or earlier are assigned one point.
(D) High percentage of dwelling to homeowners policies. The
consideration of this factor is based on the premise that a high percentage
of dwelling to homeowners policies in an area is a possible indicator that
insurers are restricting their writing of homeowners policies. A high percentage
of dwelling policies may indicate that insurers are issuing dwelling policies
even if the homeowners policy could be issued, when the coverage amount was
less than the insurer was willing to issue or the perceived risks were such
that the insurer wanted to reduce exposure by writing a less comprehensive
coverage. Also, because consumers purchasing homeowners coverages generally
have more choices than consumers purchasing dwelling coverages, the increased
coverage choices available through the Property Protection Program will likely
have a greater impact in areas with higher percentages of dwelling policies
to total policies. Because the statewide percentage of dwelling policies to
total dwelling plus homeowners policies is about 20%, ZIP Codes with percentages
of dwelling policies to total dwelling plus homeowners policies of more than
50% are assigned one point.
Cont'd... |
