The Commissioner of Insurance adopts amendments to §5.4001, the plan of operation of the Texas Windstorm Insurance Association (Association or TWIA), and §5.4501 concerning the adoption by reference of the Manual of the Texas Windstorm Insurance Association (Manual) which is the rule manual governing the writing of windstorm and hail insurance coverage by the Association. The amendment to §5.4001 is adopted without changes and the amendment to §5.4501 is adopted with one change to the proposed text published in the August 9, 2002, issue of the Texas Register (27 TexReg 7038) and will not be republished.

The adoption of the amendment to §5.4001 (TWIA Plan of Operation) that amends the exception regarding the binding of new or increased coverage when a hurricane is in the Gulf of Mexico or within the boundaries of 80 degrees west longitude and 20 degrees north latitude (80/20 zone) was requested by the Association in a petition filed with the department on January 2, 2002. The Commissioner held a public hearing on the amendments on September 17, 2002, under Docket no. 2526, at the William P. Hobby Jr., State Office Building, 333 Guadalupe Street in Austin, Texas.

Subsection (d)(1)(E)(ii) of §5.4001 outlines the procedures regarding the binding of new or increased coverage including an exception when a hurricane is in the Gulf of Mexico or the 80/20 zone. The language in subsection (d)(1)(E)(ii) specifies that, if a hurricane is not imminent, the date an application for new or increased coverage will be accepted by TWIA includes both the date the application is received by the Association and the date that the application is mailed if sent by registered, certified, or United States Postal Service Express Mail, or if sent by regular mail that is hand canceled by the United States Postal Service. However, in this subsection there is an exception to this general rule, regarding the binding of new or increased coverage when a hurricane is imminent. In its petition the Association recommended changes to the existing exception because it was not date or time specific regarding when TWIA would no longer accept applications for new or increased coverage when a hurricane is imminent. To remedy the lack of date and time specificity of the existing exception, the new language specifies that no new or increased coverage applications will be accepted by TWIA on the day (beginning at 12:01 a.m.) or after a hurricane designated by the United States Weather Bureau is in the Gulf of Mexico or within the boundaries of 80 degrees west longitude and 20 degrees north latitude, until the General Manager of TWIA determines that the storm no longer threatens property in the designated catastrophe area. The exception does not apply to an application delivered in person to the TWIA's Austin office during its normal business hours prior to a hurricane being in the Gulf of Mexico or within the boundaries of 80 degrees west longitude and 20 degrees north latitude or to an application that is mailed by registered mail, certified mail, United States Postal Service Express Mail, or regular mail that has been hand canceled by the United States Postal Service prior to the first day when a windstorm that has been designated a hurricane by the United States Weather Bureau is in the Gulf of Mexico or the 80/20 zone. Such hand delivered or mailed applications become effective on the date they are delivered in person or the date they are mailed or a later date if stipulated on the application.

The amendment to §5.4501 (Manual for the Texas Windstorm Insurance Association) adopts by reference a rule revision to the manual that is necessary to conform General Rule I, (New or Increased Coverage and Renewal Applications) to the adopted changes to the plan of operation. General Rule I contains the same language as the plan of operation concerning the exception to binding new or increased coverage when a storm is imminent. Any changes to the language in the plan of operation regarding the exception to binding coverage when a storm is imminent were also required to be reflected in General Rule I. The effective date of the section as published in the proposal was October 1, 2002; the effective date of the section has been changed to October 15, 2002.

Subsection (d)(1)(E)(ii) of §5.4001 (the TWIA Plan of Operation) specifies the general requirements for the binding of new or increased windstorm and hail coverage through TWIA. This subsection also includes an exception to the general requirements for binding new or increased coverage that has been amended to clarify the date and time that TWIA will no longer accept applications for new or increased coverage when a hurricane is in the Gulf of Mexico or the 80/20 zone. The purpose of §5.4501 is to adopt by reference the Manual of the Texas Windstorm Insurance Association. The purpose of the Manual is to provide policy writing rules, rating rules, and other information that is necessary for the Association to write the different coverages that it offers. The adopted amendment to §5.4501 adopts by reference the updated Manual pages containing the language that conforms to the amended exception.

No comments were received on the sections.

The amendments are adopted pursuant to the Insurance Code Article 21.49 and §36.001. Article 21.49 §5(c) of the Insurance Code provides that the Commissioner of Insurance by rule shall adopt the TWIA plan of operation with the advice of the TWIA board of directors. Section 5(f) of Article 21.49 provides that any interested person may petition the Commissioner to modify the plan of operation in accordance with the Administrative Procedure Act. Article 21.49 §8 authorizes the Commissioner of Insurance to approve, modify, or disapprove every manual of classification, rules, rates, rating plans, and every modification of any of the foregoing used by the Association. Insurance Code §36.001 authorizes the Commissioner of Insurance to adopt rules which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by statute.