texas department of insurance€¦ · texas department of insurance • 2018 17 leveling an...

Property and Casualty Update

Texas Department of Insurance

Recent Legislation

Recent legislation: 85th Session 2017

TEXAS DEPARTMENT OF INSURANCE • 2018 3

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)


Notice to agents and policyholders

of material changes to policy forms at renewal

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


Notice of cancellation to personal auto lienholders

Definition of commercial property (HB 1298)


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)


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)


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)


Adjuster employed by an insurer

Losses $500 or less

First-party property and casualty claims

TWIA agent reciprocity (HB 3018)


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

Legislative bulletins


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

12

Catastrophe extensions § 5.9303


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


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)


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


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


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


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


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


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

21

Refund of unearned premium - revisited


Determining the amount of unearned premium

Filings Made Easy


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


Anniversary Rating Date Elimination

Revising Retro Plan Parameters

Terrorism Rule Updates

Eliminating Some Class Codes

Eliminate A-rating Process for Certain Class Codes



Dispute Resolution Process

Loss Cost Revisions

Revisions to Negotiated Deductible Program Option

Establishment of Experience Rating Modification Factor Revision Endorsement

Revising Retro Plan Parameters



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


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

28

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