Texas Register, Volume 28, Number 14, Pages 2821-2988, April 4, 2003 Page: 2,873
2821-2988 p. ; 28 cm.View a full description of this periodical.
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TITLE 28. INSURANCE
PART 1. TEXAS DEPARTMENT OF
INSURANCE
CHAPTER 5. PROPERTY AND CASUALTY
INSURANCE
SUBCHAPTER T. FAIR PLAN
DIVISION 1. PLAN OF OPERATION
28 TAC 5.9910 - 5.9929
The Texas Department of Insurance proposes new Subchapter
T, 5.9910-5.9929 concerning the Fair Access to Insurance Re-
quirements (FAIR) Plan of Operation developed by the FAIR Plan
Governing Committee and submitted for approval to the Com-
missioner of Insurance pursuant to the Insurance Code Article
21.49A sec. 3(a). Several insurance companies who together
write over 50% of the Texas homeowners insurance market are
not currently writing new homeowners insurance policies. The
largest writer of homeowners insurance in Texas with over 30%
of the market, has not been writing new homeowners policies for
over a year. Another large writer of homeowners insurance with
approximately 20% of the homeowners market in force in Texas,
is also not writing new homeowners policies. Many other insur-
ers have continued to maintain restrictions or limitations on writ-
ing homeowners insurance and some insurers have withdrawn
from the market. In addition, according to statistics obtained from
the Surplus Lines Stamping Office of Texas, from February 28,
2002, to February 28, 2003, there has been a 184.4% increase
in the homeowners premium written by surplus lines insurers,
which indicates a significant increase in the writing of homeown-
ers policies by surplus lines insurers. This increase is a clear
indication that consumers are having difficulty obtaining or are
finding it impossible to obtain homeowners insurance coverage
through the voluntary market, and have had to obtain such cov-
erage in the surplus lines market. Based on all of these factors it
is possible that in some cases residential property homeowners
are having to go without insurance coverage, due to unavailabil-
ity and other factors. In addition, since the FAIR Plan Associa-
tion started issuing policies on December 31, 2002, it has issued
approximately 5000 residential property insurance policies, thus
further evidencing the need for this program. Considering these
facts, it is clear that the consumers seeking new homeowners
insurance coverage are facing difficulty in obtaining or finding it
impossible to obtain homeowners insurance coverage through
the voluntary market. The new sections are necessary to imple-
ment Article 21.49A and to ensure that residential property in-
surance coverage is available to Texas residents. The purpose
of proposed 5.9910-5.9929 is to set forth and establish the
structure, function, procedures and powers of the Texas FAIR
Plan Association. Proposed 5.9910 sets forth the purpose of
the Texas FAIR Plan Association (Association) as well as the
purpose of the Plan of Operation. Proposed 5.9911 provides
the definitions of terms to be used in the subchapter. Proposed
5.9912 provides for the formation and authority of the Govern-
ing Committee. Proposed 5.9913 sets forth the role of agents,
minimum requirements and performance standards for agents,
and the procedure for the payment of commissions. Proposed
5.9914 provides for the maximum limits of liability and other
limitations on FAIR Plan policies. Proposed 5.9915 sets forth
procedures for the inspections of property to be insured under
FAIR Plan policies and the requirements for inspection reports.Proposed 5.9916 provides the procedures for adoption of ap-
plication forms and approval of underwriting rules, rates, policy
forms, and endorsements. Proposed 5.9917 sets forth the doc-
umentation the agents are required to maintain regarding an ap-
plicant's eligibility; rules and procedures for issuance or cancella-
tion of binders; and rules and procedures for issuance, renewal,
or cancellation of policies. Proposed 5.9918 sets forth the As-
sociation's options for servicing its policies and guidelines for
establishing servicing standards. Proposed 5.9919 sets forth
the appeals process for an applicant or affected insurer to ap-
peal an action of the Association. Proposed 5.9920 sets out
the immunity from liability and indemnification available to in-
surers, inspectors, the Association, the Governing Committee,
their agents and employees, the Association administrator, the
Commissioner, and the Commissioner's authorized representa-
tives. Proposed 5.9921 authorizes the Association to purchase
fidelity bonds for the purpose of reimbursing the Association for
losses sustained due to fraud or dishonesty on the part of mem-
bers of the Governing Committee, Association officers, or em-
ployees. Proposed 5.9922 describes the member insurers re-
quired to participate in the Association, how the proportions of
participation are determined, and the procedures for Associa-
tion and member meetings. If necessary, it provides the proce-
dure for an initial assessment of the member insurers to facili-
tate the commencement of operations. Proposed 5.9923 sets
forth the procedures for member insurer assessments and re-
coupment of assessments, for reapportioning assessments of
an insolvent member insurer, and for assessments of member
insurers who cease writing property insurance in Texas. Pro-
posed 5.9924 sets forth the procedures for the Association to
cede or purchase reinsurance and acquire other financing. Pro-
posed 5.9925 sets forth the statistical reporting requirements
of the Association. Proposed 5.9926 provides for the Associa-
tion's treatment of excess funds. Proposed 5.9927 provides for
the Association to file annual and quarterly financial statements.
Proposed 5.9928 lists the additional powers of the Association
and proposed 5.9929 provides for the severability of any section
of this subchapter, or the application thereof, if it is determined
to be invalid.
Marilyn Hamilton, associate commissioner, property and casu-
alty division, has determined that for each year of the first five
years the proposed sections will be in effect, there will be no
fiscal impact to state and local governments as a result of the
enforcement or administration of the rule. There will be no mea-
surable effect on local employment or the local economy as a
result of the proposal.
Ms. Hamilton has also determined that for each year of the first
five years the sections are in effect, the public benefits antici-
pated as a result of the proposed sections will be increased avail-
ability of residential property insurance to qualified citizens in ar-
eas of the state determined by the Commissioner to be under-
served areas. There is no probable economic cost to persons
required to comply with the sections because the sections set
forth the Plan of Operations of the Texas Fair Plan Association,
an entity created by Insurance Code Article 21.49A. There is no
effect on small or micro businesses.
To be considered, written comments on the proposal must be
submitted no later than 5:00 p.m. on May 5, 2003 to Gene C.
Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A,
Texas Department of Insurance, P. O. Box 149104, Austin, Texas
78714-9104. An additional copy of the comment must be si-
multaneously submitted to Marilyn Hamilton, Associate Com-
missioner, Property and Casualty Program, Mail Code 104-PC,PROPOSED RULES April 4, 2003 28 TexReg 2873
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Texas. Secretary of State. Texas Register, Volume 28, Number 14, Pages 2821-2988, April 4, 2003, periodical, April 4, 2003; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth101027/m1/52/: accessed June 5, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.