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 1 - PLAN OF OPERATION › Section 5.4001 - Plan of Operation

Current through Reg. 49, No. 28; July 12, 2024
(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 less than three years from the last prior
					 adjustment.
(IV) the extended
					 coverage and other allied lines portion of the following policies, which shall
					 not be restored to manual rate levels, and which shall be calculated as
					 follows:
(-a-) 40% of the total policy
					 premium or the combined actual extended coverage and other allied lines premium
					 charged, whichever is the greater, for any commercial policy issued pursuant to
					 the Insurance Code, Article 5.13-2 or Article 5.26(c), or for policies issued
					 pursuant to the Insurance Code, Article 5.31; 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.
(iii) For association policies
					 with inception dates on and after January 1, 1983 through December 31, 1987,
					 inclusive, net direct premiums means the sum of the following premiums:
(I) 90% of the direct written premiums on the
					 extended coverage line of business as reflected on line two, column (1), of the
					 insurer's last Texas annual statement;
(II) 90% of the extended coverage portion of
					 the direct written premiums on the multiple peril line of business as reported
					 on line eight, column (1), of the insurer's last Texas annual statement;
					 and
(III) 40% of the direct written
					 premiums on the homeowners' multiple peril line of business as reported on line
					 four, column (1), of the insurer's last Texas annual statement.
(iv) For association policies with
					 inception dates on and after January 1, 1978, through December 31, 1982,
					 inclusive, net direct premiums means the sum of the following premiums:
(I) 90% of the direct written premiums on the
					 extended coverage line of business as reflected on line two, column (1), of the
					 insurer's last Texas annual statement;
(II) 90% of the extended coverage portion of
					 the direct written premiums on the multiple peril line of business as reported
					 on line eight, column (1), of the insurer's last Texas annual statement;
					 and
(III) 40% of the direct written
					 premiums on the homeowners' multiple peril line of business as reported on line
					 four, column (1), of the insurer's last Texas annual statement.
(O)
					 Secretary-treasurer--The secretary-treasurer of the Texas Catastrophe Property
					 Insurance Association.
(P) Texas
					 windstorm and hail insurance--Deductible insurance against direct loss and
					 indirect losses resulting from a direct loss to insurable property as a result
					 of windstorm or hail as such terms shall be defined and limited in policies and
					 forms approved by the Commissioner. The deductible amount which shall be
					 applied to all risks written by the association shall be determined by the
					 board of directors and approved by the Commissioner.
(Q) Vice chair or vice chair of the
					 board--The vice chair of the board of directors of the Texas Catastrophe
					 Property Insurance Association.