| (E) High theft losses per policy. The consideration of this
factor is based on the premise that because of insurers' perception of high
theft losses in certain areas, insurers are reluctant to sell policies which
include theft coverage. Consumers in high theft areas, therefore, have less
availability of all kinds of coverages. The Property Protection Program allows
policies to be sold without theft coverage, thereby creating the potential
for greater availability in areas with high theft losses. Because the statewide
average theft loss per residential property policy is approximately $70, ZIP
Codes with a three-year average (1993-1995) of $125 or more theft losses per
policy are assigned one point, while ZIP Codes with an average of $150 of
theft losses in each of the three years are assigned two points.
(F) The number of surplus lines policies. By definition, consumers
who have obtained residential property insurance coverage through a surplus
lines, or non-admitted, carrier have been denied coverage in the admitted
market. Based on a sample of 1994 and 1995 surplus lines policies representing
about 75% of the total surplus lines residential property insurance writings
in Texas, the statewide average of surplus lines policies to total dwelling
and homeowners policies is about 1.0%. Because surplus lines data is available
by county and not by ZIP Code, ZIP Codes in counties with surplus lines percentages
of 2.0% to 4.0% are assigned one point, while ZIP Codes in counties with surplus
lines percentage of over 4.0% are assigned two points.
(4) Based on the factors and points specified in paragraph
(3) of this subsection, the number of points assigned were totaled by ZIP
Code. Areas with three or more points were identified as the most underserved
or potentially most underserved and generally designated as Class 1 underserved
areas. Areas with two points were identified as underserved or potentially
underserved and generally designated as Class 2 underserved areas. Generally,
areas with zero or one point were not designated as underserved areas. The
designated areas resulting from these general rules are modified for four
reasons:
(A) First, areas with two points are generally designated as
Class 2 underserved areas if the areas were geographically contiguous with
other areas of two or more points to promote geographically contiguous underserved
areas. Geographically isolated ZIP Codes with two or more points are not designated
as Class 2 or Class 1 underserved areas to avoid identifying a random result
as an underserved area. In addition, groupings of ZIP Codes with two or more
points but with very few policies are not designated as Class 2 or Class 1
underserved areas to enable insurers participating in the MAP and PPP to dedicate
their initial commitment of resources to underserved areas with the greatest
potential impact.
(B) Second, certain areas with zero or one point are designated
as Class 2 underserved areas because of additional information available to
the Department regarding availability problems in certain areas. This additional
information included the testimony presented at public hearings held by the
Commissioner for the purpose of soliciting comments from consumers, agents,
insurers and other interested parties on residential property insurance availability
problems. The February 8, 1996, hearing in Arlington, Texas identified severe
restrictions in residential property insurance writings by insurers in Dallas
and Tarrant Counties. The Department's review of underwriting guidelines that
was done as preparation for the Arlington hearing, which included the insurers'
plans for writing residential property insurance in Tarrant County and the
City of Dallas, confirmed the geographically-targeted restrictions in Tarrant
County and the City of Dallas. Therefore, zero and one point areas in Tarrant
County and the City of Dallas are designated as Class 2 underserved areas
because of severe restrictions imposed by insurers on new and existing business
in those areas.
(C) Third, certain areas with two points, which are geographically
contiguous with areas of three or more points, are designated as Class 1 underserved
areas in Harris and Bexar Counties and Bexar Counties to create a geographically
contiguous area of eligibility for the Property Protection Program.
(D) Fourth, certain areas in the City of Dallas with three
or more points are designated as Class 2 underserved areas to test for the
effectiveness of the Market Assistance Program alone in addressing insurance
availability problems, especially in comparison to the underserved areas in
Harris County which consist solely of Class 1 designations.
(f) Changes in Class 1 and Class 2 designations. Any changes
in Class 1 or Class 2 designations may be adopted at any time by amending
this section pursuant to the Government Code, §§2001.004-2001.038
(Administrative Procedure Act).
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