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Property and Casualty Update

Texas Department of Insurance

Recent Legislation

Recent legislation: 85th Session 2017

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SB 417 - notice of changes to property and casualty policies

SB 1450 - notice to lienholders of auto policy cancellation

HB 1298 - definition of commercial property

HB 1559 - surplus lines and industrial insureds

HB 1774 - consumer actions on property damage claims

SB 718 - unlicensed adjusters for small claims

Notice to agents and policyholders (SB 417)

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Notice to agents and policyholders

of material changes to policy forms at renewal

Notice to lienholders of personal auto policy cancellation (SB 1450)

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Notice of cancellation to personal auto lienholders

Definition of commercial property (HB 1298)

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Commercial property insurance includes any combination of:

• commercial fire or allied lines

• commercial inland marine insurance

• commercial crime coverage

• boiler and machinery insurance other than explosion

• glass insurance provided as part of other coverage

• other authorized by rule

Industrial insureds (HB 1559)

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Allows surplus lines insurers to sell to industrial insureds

Industrial insured:

• employs or retains a qualified risk manager to negotiate insurance coverage; and

• either:

has paid aggregate nationwide commercial property and casualty premiums of more than $25,000 per year; or

employs at least 25 full-time employees.

Suits on property damage claims (HB 1774)

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Applies to claims on real property policies

Notice before suit (61 days)

Limits attorneys’ fees

Interest limited to 5% over prime rate

Insurers may accept agent’s liability

Unlicensed adjusters for small claims (SB 718)

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Adjuster employed by an insurer

Losses $500 or less

First-party property and casualty claims

TWIA agent reciprocity (HB 3018)

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Limits out-of-state agents ability to sell TWIA policies

Legislative bulletins

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Brief summaries of bills from

the 85th Legislature, 2017

B-0028-17 – Life & Health

B-0029-17 – Property and Casualty

B-0030-17 – Financial

Recently Adopted Rules

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Catastrophe extensions § 5.9303

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Updated thresholds for declaring catastrophe

• In the aggregate for all insurers, either

Estimated

Losses $50 million or more, and

Total # of claims 5,000 or more

Or

Total estimated # of claims 5,000 or more

TWIA claim handling deadline extension

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Emergency rule § 5.4203 Hurricane Harvey

• Guidelines for TWIA to request extension

• Extensions limited to 120 days

• TWIA requested and the Commissioner granted extensions

60 additional days for policyholders to request appraisal

30 days for TWIA to handle certain large commercial claims

Permanent rule § 5.4203

TWIA claim settlement guidelines (Expert Panel)

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TDI adopted rules March 7, 2017

Five modules

• Property database

• Hazard module

• Damage estimation module

• Economic loss module

• Report generation module

TWIA implementing by June 1, 2018

Windstorm inspections - 28 TAC Ch. 5, Division 7

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Two-path system to certify building code compliance

• Ongoing improvements

TDI issues WPI-8

• Completed improvements

TWIA issues WPI-8C

Items not requiring windstorm inspection § 5.4605

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leveling an existing pier-and-beam foundation or piling foundation, if no repairs are made

repairs or replacement of preformed flanges with a collar or sleeve used for mechanical, plumbing, or electrical roof penetrations

repairs or replacement of storm doors or screen doors

TWIA depopulation programs

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Depopulation programs

• Voluntary market takeout

Policyholder opts in

• Assumption reinsurance

Generally comparable coverage and premiums

Policyholder can opt out

JUA plan of operation - 28 TAC § 5.2004

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Four amendments:

• Require that eligibility be based on two written rejections by carriers.

• Require that eligibility for reapplication be based on two written rejections by carriers.

• Remove the subsection that allows higher rates to be a criterion for eligibility.

• Prohibit accepting applicants that owe deductibles to the JUA.

Refund of unearned premium - 28 TAC § 5.7015

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Applies to personal auto and residential property

15 business days to refund unearned premium

Defines effective date of cancellation or termination as the later of the:

• date the insurer receives notice of the cancellation or termination, or

• date of the cancellation or termination

Rules in Progress

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Refund of unearned premium - revisited

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Determining the amount of unearned premium

Filings Made Easy

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Incorporate legislative changes

• SB 978 and SB 1554 (2015)

• HB 1298 (2017)

Make SERFF mandatory

Add new rules on confidential filings, personally identifiable information, letter of authorization

General clean up for clarity

Workers’ compensation completed NCCI filings

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Anniversary Rating Date Elimination

Revising Retro Plan Parameters

Terrorism Rule Updates

Eliminating Some Class Codes

Eliminate A-rating Process for Certain Class Codes

Workers’ compensation completed NCCI filings

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Dispute Resolution Process

Loss Cost Revisions

Revisions to Negotiated Deductible Program Option

Establishment of Experience Rating Modification Factor Revision Endorsement

Revising Retro Plan Parameters

Workers’ compensation completed NCCI filings

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Basic Manual Rule 1 and 2 Revisions

Revisions to Basic Manual Classifications and Appendix E – Classifications by Hazard Group, including Trucking and Towing

Workers Comp Stat Plan Revisions

Revisions to Retrospective Rating Plan Manual Appendix B and All Related Rules and Endorsements

Workers’ compensation pending NCCI filings

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Loss Cost Revisions

Basic Manual Classifications and Appendix E-Classifications by Hazard Group

Domestic Classifications Revisions

Revisions to Experience Rating Plan Manual Rules and the Notification of Change in Ownership Endorsement

Current Issues

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