Texas Register, Volume 28, Number 14, Pages 2821-2988, April 4, 2003 Page: 2,877
2821-2988 p. ; 28 cm.View a full description of this periodical.
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(i) In accordance with the underwriting rules of the Associa-
tion except for subsection (k) of this section, at least 30 days prior to
the expiration of an Association policy, the Association shall do one of
the following:
(1) send an offer to the policyholder with a copy to the
agent to renew the Association policy for a term of one year at the As-
sociation rates that will be in force on the effective date of the renewal;
(2) send an offer to the policyholder with a copy to the
agent to renew the Association policy conditioned upon a change in
coverage, limits and/or terms or conditions; or
(3) send a notice to the policyholder with a copy to the
agent of nonrenewal of the Association policy.
j) If a payment for an estimated premium, annual premium
or any installment payment is refused or dishonored by the bank upon
which it is drawn for any reason, coverage under the Association policy
shall be cancelled for nonpayment of premium, and the Association
shall send a notice of cancellation.
(k) Every two years starting with the second renewal, the pol-
icyholder shall reapply for residential property insurance in the volun-
tary market. If a diligent effort has been made and the policyholder
is unable to obtain residential property insurance, as evidenced by two
current declinations from insurers licensed to write property insurance
and actually writing residential property insurance in the state, the poli-
cyholder will be eligible for renewal of Association coverage. If an As-
sociation policyholder receives a valid offer of comparable residential
property insurance from an insurance company licensed by the State
of Texas, other than a surplus lines carrier, then the policyholder is no
longer eligible for coverage and the Association may nonrenew the pol-
icy.
(1) The Association shall not issue a policy to an applicant if
the applicant or any proposed named insured is indebted to the Associ-
ation on a prior Association policy. If the new Association policy has
already been bound or issued, then the Association shall cancel that
binder or policy and deduct from any return premium the amount that
the Association is owed from the prior Association policy.
(m) Binders shall be issued for a definite period, not to exceed
ninety days.
(n) Policies issued are not subject to flat cancellation and are
subject to a minimum earned premium as stated in the underwriting
rules.
(o) If an insurance policy will not be issued, the full earned
premium must be charged.
(p) A binder shall terminate upon the acceptance of a risk by
the Association and the payment of any premium due; or upon the can-
cellation of a risk and notice of reasons for the cancellation given to the
applicant and agent.
(q) The Association shall not cancel a policy or binder issued
by it, except:
(1) for a condition which would have been grounds for
nonacceptance of the risk had such condition been known to the
Association at the time of acceptance;
(2) for property that does not meet the underwriting rules;
(3) for nonpayment of premium, including nonpayment of
premium on a prior Association policy;
(4) fraud;
(5) material misrepresentation;(6) evidence of incendiarism by the insured or another act-
ing on the insured's behalf; or
(7) at the written request of an insured.
(r) The Association shall send notice of cancellation, stating
the reasons for cancellation to an insured and agent. The cancellation
shall take effect in accordance with the policy provisions.
(s) Any cancellation notice to an insured, except for the can-
cellation set forth in subsection (q)(7) of this section, shall be accom-
panied by a statement that the insured has a right to appeal as provided
in 5.9919 of this subchapter (relating to Right to Appeal).
(t) If a property meets all underwriting requirements, the As-
sociation shall calculate the actual annual premium. The Association
shall remit a return premium to the applicant if the provisional binder
premium exceeds the actual annual premium. The Association shall
bill the applicant for additional premium if the actual annual premium
exceeds the provisional binder premium.
(u) The Association shall cancel a binder on a pro rata basis.
If an applicant requests cancellation of a binder, the Association shall
cancel the binder on a pro rata basis.
5.9918. Servicing of Policies.
(a) In accordance with the provisions of 5.9912(e) of this sub-
chapter (relating to Governing Committee) the Association shall have
the following options for servicing Association policies:
(1) Contract with one or more member insurers to service
some or all of the policies.
(2) Contract with one or more non-member insurers to ser-
vice some or all of the policies;
(3) Contract with one or more private non-insurers to pro-
vide some or all of the servicing of Association policies;
(4) Contract with one or more insurance pools for property
and/or casualty insurance established by Texas law to provide some or
all of the servicing of Association policies; and
(5) Service some or all of the Association policies itself.
(b) No entity, be it a member insurer, non-member insurer, pri-
vate non-insurer, or insurance pool, can be compelled to contract with
the Association to service some or all Association policies.
(c) The servicing contracts under subsection (a)(1)-(4) of this
section shall establish servicing standards and provide for compensa-
tion to be paid to contractors.
(d) The Association may divide the servicing of an Association
policy between two or more persons. For example, the Association may
underwrite an Association policy itself, use a non-insurer contractor for
premium billing and collection, and use insurer contractors to service
policy claims.
(e) In establishing servicing standards for Association poli-
cies, the Association shall consider:
(1) the accessibility of the servicing entity for submission
of applications by agents;
(2) the ability of the servicing entity to provide inspections;
(3) the accessibility of the servicing entity for policyholder
inquiries about underwriting, premium billing, collection, and claims;
(4) the ability of the servicing entity to service claims; and
(5) the ability of the servicing entity to provide catastrophe
claim services.PROPOSED RULES April 4, 2003 28 TexReg 2877
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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/m1/56/: accessed June 6, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.