In last quarter’s Agent Newswire, we provided an overview of the four main laws passed by the 2015 84th Texas Legislature that affect TWIA and the agent community. Below is an update on these law changes and how they impact you.

SB 900 “Windstorm Reform Bill”
This law brings changes to TWIA’s operations in three primary areas: our Board of Directors, funding, and depopulation (or reducing the total number of TWIA policies).

Board of Directors. On October 1, 2015, TDI appointed a new Board with a new breakdown of representation from key stakeholder groups: three public members residing in the first tier coastal counties and representing certain regions of the catastrophe area, three non-coastal representatives residing more than 100 miles from the coast, and three industry representatives actively writing and renewing windstorm and hail insurance in the first tier coastal counties. The next quarterly Board of Directors meeting will take place on December 8, 2015, in Corpus Christi, Texas. There, the new Board will receive updates regarding significant agent issues and events.

Funding. Statute now requires TWIA to be funded to a 100-year storm season, at minimum. We already achieved this level of funding prior to SB 900’s passage and the 2015 hurricane season. We will sustain this level in future years by using the funding sources updated under SB 900: TWIA premiums and the Catastrophe Reserve Trust Fund (CRTF), a combination of $1 billion in insurance company assessments and $1 billion in bonds repaid first by TWIA policyholders and if necessary, by all coastal policyholders, and sufficient reinsurance or other risk financing to again achieve the 100-year storm season level.

In order to provide guidance on how TWIA secures funding under the new structure prescribed by SB 900, on October 6, 2015, TDI proposed draft administrative rules. There was a public hearing on these rules on October 28, 2015, and public comment may be made through November 3, 2015, before TDI will issue official administrative rules. Per TDI’s announcement, the rules have no direct impact on TWIA rates. TWIA staff will be in attendance at the hearing and continue to work with TDI to evaluate and implement the changes.

Depopulation. On October 13, 2015, TDI issued proposed rules to help TWIA administer a formal depopulation or “takeout” program as newly authorized by SB900; the rules are set for public hearing on November 16, 2015. TWIA staff will attend the hearing and are in the process of evaluating the impact of these rules and the structure of the new program. While many details are yet to be ironed out, policyholders are guaranteed rates and coverages comparable to TWIA’s for the first year. Additionally, takeout insurers must offer to renew the policy for three years, and policyholders will maintain their ability to keep their own agent, and even to choose to stay with TWIA if they desire.

In the meantime, TWIA continues to maintain its Voluntary Coastal Windstorm Insurance Portal to provide data to interested private market insurers. To date, 16 insurance companies have signed up for access to this information, with over 3,800 TWIA policyholders accepting offers in the private market as a result.

SB 498 “WPI-8 Waiver Extension Bill”
SB 498 indefinitely extends the WPI-8 waiver surcharge program, so that approximately 40,000 TWIA policyholders will remain eligible for coverage after December 31, 2015 for the standard 15% surcharge. *** Policyholders should be aware that even if they are part of the WPI-8 waiver surcharge program, any new repairs or additions made that require windstorm inspection (such as roofs and a/c units) must obtain a WPI-8. If they do not obtain a WPI-8 on the repair work or addition, they may still lose access to the waiver program and risk loss of coverage.***

Agents and TWIA will not need to make any changes to their processes as a result of this self-implementing law. You should simply be aware that the waiver program will now extend indefinitely beyond its original December 31, 2015 expiration date and that the WPI-12 program no longer exists.

HB 2439
The law will apply to new or renewed policies on or after January 1, 2017. It expands policyholders’ options when certifying that they’ve completed improvements that comply with the building code. TDI has not yet proposed administrative rules that will govern how the program is administered and TWIA’s role.

SB 956
This new law, effective September 1, 2015, requires all insurers in the state of Texas to deliver a policy to the policyholder or agent not later than the 30th day after the effective date of the policy. For renewals the insurer must deliver the policy not later than the 15th day after receipt of the policyholder's written request. While TWIA will ensure it complies with these requirements, agents do not need to take any action apart from their normal process.