Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 5 - PROPERTY AND CASUALTY INSURANCE › Subchapter E - TEXAS WINDSTORM INSURANCE ASSOCIATION › Division 3 - LOSS FUNDING, INCLUDING CATASTROPHE RESERVE TRUST FUND, FINANCING ARRANGEMENTS, AND PUBLIC SECURITIES › Section 5.4102 - Definitions

Current through Reg. 49, No. 28; July 12, 2024
The following words and terms when used in this division
						will have the following meanings unless the context clearly indicates
						otherwise:
(1) Association--Texas
					 Windstorm Insurance Association.
(2) Association program--The funding of any
					 or all of the purposes authorized to be funded with the public securities under
					 Insurance Code Chapter 2210, Subchapter M.
(3) Association surcharge--Premium surcharges
					 on policyholders of association policies under Insurance Code §§
											2210.612,
					 2210.613, or
					 2210.6131.
(4) Association surcharge percentage--The
					 percentage amount determined by the Commissioner under §
											5.4126(c)
					 or (d) of this title (relating to
					 Determination of the Association Surcharge Percentage).
(5) Authorized representative of the
					 department--Any officer or employee of the department empowered to execute
					 instructions and take other necessary actions on behalf of the department as
					 designated in writing by the Commissioner.
(6) Authorized representative of the trust
					 company--Any officer or employee of the comptroller or the trust company who is
					 designated in writing by the comptroller as an authorized
					 representative.
(7) Budgeted
					 operating expenses--All operating expenses as budgeted for and approved by the
					 association's board of directors, excluding expenses related to catastrophic
					 losses.
(8) Catastrophe area--A
					 municipality, a part of a municipality, a county, or a part of a county
					 designated by the Commissioner under Insurance Code §
											2210.005.
(9) CRTF--Catastrophe Reserve Trust Fund. A
					 statutorily created trust fund established with the trust company under
					 Insurance Code Chapter 2210, Subchapter J.
(10) Catastrophic event--An occurrence or a
					 series of occurrences in a catastrophe area during a calendar year resulting in
					 insured losses and operating expenses of the association in excess of premium
					 and other revenue of the association.
(11) Catastrophic losses--Losses resulting
					 from a catastrophic event.
(12)
					 Class 1 payment obligation--The contractual amount of net premium and other
					 revenue and association surcharges that the association must deposit in the
					 class 1 public security trust fund at specified periods for the payment of
					 class 1 public security obligations, public security administrative expenses,
					 and contractual coverage amount as required by class 1 public security
					 agreements.
(13) Class 2 payment
					 obligation--The contractual amount of net premium and other revenue and either
					 association surcharges or contingent surcharges that the association must
					 deposit in the class 2 public security trust fund, or in the case of contingent
					 surcharges, the premium surcharge trust fund, at specified periods for the
					 payment of class 2 public security obligations, public security administrative
					 expenses, and contractual coverage amount as required by class 2 public
					 security agreements.
(14) Class 3
					 payment obligation--The contractual amount of net premium and other revenue and
					 either association surcharges or contingent surcharges that the association
					 must deposit in the class 3 public security trust fund, or in the case of
					 contingent surcharges, the premium surcharge trust fund, at specified periods
					 for the payment of class 3 public security obligations, public security
					 administrative expenses, and contractual coverage amount as required by class 3
					 public security agreements.
(15)
					 Class 1 public securities--A debt instrument or other public security that TPFA
					 may issue as authorized under Insurance Code §
											2210.072 and Insurance
					 Code Chapter 2210, Subchapter M.
(16) Class 2 public securities--A debt
					 instrument or other public security that TPFA may issue as authorized under
					 Insurance Code §
											2210.073 and Insurance
					 Code Chapter 2210, Subchapter M.
(17) Class 3 public securities--A debt
					 instrument or other public security that TPFA may issue as authorized under
					 Insurance Code §
											2210.0741 and
					 Insurance Code Chapter 2210, Subchapter M.
(18) Commercial paper notes--A debt
					 instrument that the association may issue as a financing arrangement or that
					 TPFA may issue as any class of public security.
(19) Commissioner--The Commissioner of
					 Insurance.
(20) Comptroller--The
					 Comptroller of the State of Texas.
(21) Contingent surcharge--Premium surcharges
					 on policyholders of policies that cover insured property that is located in a
					 catastrophe area and that may be necessary as provided under Insurance Code
					 §
											2210.6132.
(22) Contractual coverage amount--Minimum
					 amount over scheduled debt service that the association is required to deposit
					 in the applicable public security trust fund or premium surcharge trust fund,
					 as security for the payment of debt service on the public securities,
					 administrative expenses on public securities, or other payments the association
					 must pay in connection with public securities.
(23) Credit agreement--An agreement described
					 by Government Code Chapter 1371 that TPFA may enter into as authorized under
					 Insurance Code Chapter 2210, Subchapter M.
(24) Department--The Texas Department of
					 Insurance.
(25) Earned
					 premium--That portion of gross premium that the association has earned because
					 of the portion of time during which the insurance policy has been in
					 effect.
(26) Financing
					 arrangement--An agreement between the association and any market source under
					 which the market source makes interest-bearing loans or provides other
					 financial instruments to the association to enable the association to pay
					 losses or obtain public securities under Insurance Code §
											2210.072.
(27) Gross premium--The amount of premium the
					 association receives, less premium returned to policyholders for canceled or
					 reduced policies.
(28) Insured
					 property--Real property, or tangible or intangible personal property including
					 automobiles, covered under an insurance policy issued by an insurer. Insured
					 property includes motorcycles, recreational vehicles, and all other vehicles
					 eligible for coverage under a private passenger automobile or commercial
					 automobile policy.
(29) Investment
					 income--Income from the investment of funds.
(30) Letter of instruction--The
					 Commissioner's or authorized department representative's signed written
					 authorization and direction to an authorized representative of the trust
					 company.
(31) Losses--Amounts paid
					 or expected to be paid on association insurance policy claims, including
					 adjustment expenses, litigation expenses, other claims expenses, and other
					 amounts that are incurred in resolving a claim for indemnification under an
					 association insurance policy.
(32)
					 Net gain from operations--Net income reported during a calendar year equal to
					 the amount of all earned premium, other revenue of the association, and
					 distributions of excess net premium and other revenue from the class 1, class
					 2, and class 3 public security trust funds that are in excess of: current
					 catastrophe year incurred losses; operating expenses; reinsurance premium not
					 paid or payable from member assessments; current year financial arrangement
					 obligations; current year net premium payment obligations; and current year
					 public security administrative expenses.
(33) Net investment income--Investment income
					 less associated fees and expenses charged by the trust company, or others, for
					 managing or investing the assets.
(34) Net premium--Gross premium less unearned
					 premium.
(35) Net premium payment
					 obligations--Public security obligations that are paid in whole or in part from
					 net premium and other revenue for public securities repayable under Insurance
					 Code §§
											2210.612,
					 2210.613, and
					 2210.6131. The term
					 does not include public security obligations or the portion of public security
					 obligations that are paid from association surcharges.
(36) Net revenues--Net premium plus other
					 revenue, less scheduled policy claims, less budgeted operating expenses, less
					 net premium payment obligations for that calendar year, less amounts necessary
					 to fund or replenish any reserve fund required by a public security
					 agreement.
(37) One-in-100-year
					 probable maximum loss--The minimum funding level required by Insurance Code
					 §
											2210.453(b).
(38) Operating reserve fund--Association or
					 trust company held fund for the payment of budgeted scheduled policy claims and
					 budgeted operating expenses.
(39)
					 Other revenue--Revenue of the association from any source other than premium.
					 Other revenue includes net investment income on association assets. Other
					 revenue does not include premium surcharges collected under Insurance Code
					 §§
											2210.259,
					 2210.612,
					 2210.613,
					 2210.6131, or
					 2210.6132 or member
					 assessments collected under Insurance Code §§
											2210.0725,
					 2210.074,
					 2210.0742, or
					 2210.453 and interest
					 income on those amounts. For the purpose of Insurance Code Section
					 2210.071, other
					 revenue does not include investment income on any trust company account. For
					 the purpose of Insurance Code §
											2210.612, other
					 revenue does not include investment income on the CRTF, the class 2 trust fund,
					 or the class 3 trust fund. For the purpose of Insurance Code §
											2210.613, other
					 revenue does not include investment income on the CRTF, the class 1 trust fund,
					 or the class 3 trust fund. For the purpose of Insurance Code §
											2210.6131, other
					 revenue does not include investment income on the CRTF, the class 1 trust fund,
					 or the class 2 trust fund.
(40)
					 Plan of operation--The association's plan of operation as adopted by the
					 Commissioner under Insurance Code §
											2210.151 and §
											2210.152.
(41) Premium--Amounts received in
					 consideration for the issuance of association insurance coverage. The term does
					 not include premium surcharges collected by the association under Insurance
					 Code §§
											2210.259,
					 2210.612,
					 2210.613,
					 2210.6131, or
					 2210.6132.
(42) Premium surcharge trust fund(s)--The
					 dedicated trust fund or funds established by TPFA and held by the trust company
					 in which the association or insurers must deposit contingent surcharges. TPFA
					 may establish separate trust funds or separate accounts for class 2 and class 3
					 contingent surcharges.
(43) Public
					 securities--Collective reference to class 1 public securities, class 2 public
					 securities, and class 3 public securities.
(44) Public security administrative
					 expenses--Expenses incurred by the association, TPFA, or TPFA consultants to
					 administer public securities issued under Insurance Code Chapter 2210,
					 including fees for credit enhancement, paying agents, trustees, attorneys, and
					 other professional services.
(45)
					 Public security obligations--The principal of a public security and any premium
					 and interest on a public security issued under Insurance Code Chapter 2210,
					 Subchapter M, together with any amount owed under a related credit
					 agreement.
(46) Scheduled policy
					 claims--That portion of the association's earned premium and other revenue
					 expected to be paid in connection with the disposition of losses that do not
					 result from a catastrophic event.
(47) Trust company--The Texas Treasury
					 Safekeeping Trust Company managed by the comptroller under Government Code
					 §
											404.101, et
					 seq.
(48) Trust company
					 representative--Any individual employed by the trust company who is designated
					 by the trust company as its authorized representative for purposes of any
					 agreement related to the CRTF or the public securities.
(49) TPFA--The Texas Public Finance
					 Authority.
(50) Unearned
					 premium--That portion of gross premium that has been collected in advance for
					 insurance that the association has not yet earned because of the unexpired
					 portion of the time for which the insurance policy has been in
					 effect.