28 TAC §§5.9403 - 5.9406, 5.9408 - 5.9411
The Commissioner of Insurance adopts amendments to §§5.9403,
5.9404, 5.9405, 5.9406, 5.9408, 5.9409, 5.9410, and 5.9411, concerning the
plan of operation of the Residential Property Insurance Market Assistance
Program (MAP). The amendments to §§, 5.9404, 5.9406, 5.9409, 5.9410,
and 5.9411 are adopted without changes to the text published in the April
14, 2000, issue of the
Texas Register
(25
TexReg 3168) and will not be republished. The amendments to §§5.5903,
5.9405 and 5.9408 are adopted with changes.
Article 21.49-12 was enacted by the Texas Legislature in 1995 to require
the Commissioner to establish a voluntary market assistance program to assist
consumers in obtaining residential property insurance coverage, defined in
Article 21.49-12, §1(a) as homeowners and residential fire and allied
lines coverage, in underserved areas that are determined and designated by
the Commissioner. The purpose of the MAP is to provide a fair, efficient,
and economical voluntary mechanism to assist Texas consumers in obtaining
residential property insurance in designated underserved areas of the state,
including rural areas. The adopted amendments are necessary to update the
plan of operation (i) to incorporate changes that allow the MAP application
process to be handled directly by department staff without requiring MAP applications
to be submitted through an originating agent; (ii) to incorporate changes
that reflect that residential property insurance in underserved areas does
not include farm and ranch owners and farm and ranch insurance policies; and
(iii) to revise three miscellaneous areas of the plan. Sections 5.9405(b)
and 5.9408(b)(3) were changed from the text as proposed to conform references
to Article 21.49-12, §§(2) and (4) to the new numbering of subsections
of Article 21.49-12 required by S.B. 324 (enacted by the 76th Texas Legislature.)
Correction of a typographical error has been made to §5.9403. These amendments
are recommended for adoption by the MAP Executive Committee pursuant to Article
21.49-12, §2(a) of the Insurance Code and §5.9412 of the plan of
operation. The amended sections were considered by the Commissioner of Insurance
in a public hearing on May 24, 2000, Docket No. 2447.
The following adopted amendments to §§5.9403, 5.9406 and 5.9409
concern the processing of MAP applications directly by department staff without
requiring the applications to be submitted through an originating agent. Section
5.9403 is amended in definition number (2) entitled "Application" to add the
language "or completed by an applicant and the Department" to clarify that
the department staff may assist applicants with completion of the MAP applications
in addition to MAP applications being completed and submitted through an originating
agent. Section §5.9406 is amended in subsection (e) to provide that if
the department's MAP Division completes an application, the department will
obtain documentation concerning eligibility from the applicant or will obtain
information from the applicant to obtain the needed eligibility documentation
directly from the agent. Subsection (g) is amended to add that the department
as well as an originating agent may re-submit an application to the MAP. Section
5.9409 is amended in subsection (a) to provide that the department's MAP Division
will assist applicants applying directly to the MAP as specified in subsection
(a)(5) (A)-(C). Subsection (a)(1) is amended to delete the word "only" to
clarify that applicants may apply directly to the MAP in lieu of applications
only being submitted through an originating agent. Subsection (a)(2) is deleted
in its entirety because the department staff is now authorized to complete
applications directly without the requirement of referring applicants to participating
agents. Subsection (a)(3) is renumbered as (a)(2) and is amended to delete
the reference to the Property and Casualty Intake Unit and provide that insurers
submit completed application packets to the MAP Division. New subsection (a)(3)
has been added to allow applicants to apply directly to the MAP and receive
assistance in completing the application from department staff. It further
specifies that the same eligibility requirements apply to both direct applications
and those submitted through originating agents. New subsection (a)(4) has
been added to clarify that the MAP application form (TMAP-10) will be used
for the direct applications with information relating to the originating agent
marked "not applicable." New paragraph (5)(A) specifies that when applicants
apply directly to the MAP, department staff will request ZIP code information
to verify that the risk is located in an underserved area. New paragraph (5)(B)
outlines the procedure that department staff will follow to determine if the
applicant meets the eligibility requirements concerning his/her inability
to obtain residential property insurance and that if the applicant requests
assistance with obtaining this information the department staff member will
make a diligent effort to provide the assistance. New paragraph (5)(C) specifies
that department staff will determine eligibility for participation in the
MAP once the required information concerning the applicant's inability to
obtain residential property insurance is received. Paragraph (6)(A) is amended
to provide that if an applicant applies directly to the department, the application
will be initialed and dated by the staff member assisting with the application.
Subsection (b)(1) is amended to clarify that the preliminary processing steps
described in the paragraph apply only to applications submitted by an originating
agent. New subsection (b)(2) has been added to provide that if the applicant
has applied directly to the MAP, preliminary processing includes logging in
the name and address of the applicant. Subsection (b)(4) is amended to clarify
that ineligible applications are required to be returned to the originating
agent only if the application is submitted through an originating agent. Subsection
(c)(1) is amended in paragraph (1) to provide that eligible MAP applications
will be provided electronically by the department's MAP division to all participating
insurers. Paragraphs (1)(A) and (2)(A) of subsection (c) are amended to specify
how the requirements apply in instances where an application is submitted
through an originating agent and also in instances where the applicant applied
directly to the MAP. Subsection (d)(4) is amended in paragraph (4) to clarify
that the requirement of notifying the originating agent of the policy issuance
is only required if the application was submitted by an originating agent.
Section 5.9409 is amended to delete subsection (f) in its entirety. This amendment
is necessary because the 76th Legislature enacted S.B. 324 which repealed
section 5 of Article 21.49-12 of the Insurance Code that imposed the confidentiality
provisions on the MAP program. The confidentiality requirements were repealed
in Article 21.49-12 because such requirements would greatly impede the department
staff's efforts to assist applicants with completion of their applications
over the phone. The adopted amendments to §5.9403 and 5.9494 implement
S.B. 323 (enacted by the 76th Texas Legislature) which establishes that residential
property insurance for purposes of the MAP does not include farm and ranch
and farm and ranch owners policies. The Legislature enacted S.B. 1499 during
the 75th Legislature to provide that effective January 1, 1998, farm and ranch
and farm and ranch owners insurance was no longer regulated as a personal
lines coverage pursuant to Articles 5.35 and 5.101 of the Insurance Code,
but rather was to be regulated as commercial property insurance under Article
5.13-2 of the Insurance Code. S.B. 323 (enacted by the 76th Texas Legislature)
specifies that residential property insurance does not include farm and ranch
coverages and that the MAP will no longer assist homeowners in underserved
areas in obtaining farm and ranch coverages because they are now defined as
commercial coverages. Section 5.9403 is amended to delete the reference to
farm and ranch coverages from the definition of "residential property insurance."
Section 5.9404, subsections (b) and (c) are amended to clarify that residential
property insurance forms and endorsements do not include farm and ranch and
farm and ranch owners policies and may not be used either in Class 1 or Class
2 designated underserved areas in writing coverage through the MAP. A provision
is added to the section to clarify that statutory references do not include
farm and ranch and farm and ranch owners policies. Subsection (d) of §5.9404
is amended in paragraphs (2) (F) and (3)(E) to delete provisions that provide
that the types of coverage that may be provided in underserved areas include
any other coverage available under policy forms and endorsements filed by
an individual insurer pursuant to Article 5.13-2 for the purpose of providing
farm and ranch and farm and ranch owners coverage and approved by the Commissioner.
The remaining adopted amendments revise three miscellaneous areas of the plan
of operation. Subsections (a) and (b) of §5.9405, subsections (b)(3)
and (d)(1)(A) of §5.9408, and subsection (a)(1) of §5.9411 have
been amended to conform references to Article 21.49-12 §2 to the new
numbering of subsections of Article 21.49-12 required by S.B. 324. Section
5.9409 is amended to redesignate current subsections (g) and (h) as new subsections
(f) and (g) respectively. Section 5.9409 is also amended in subparagraph (F)(ii)
to change the reference to "key rates" as a rating factor to "public protection
classification codes." Section 5.9410 (relating to the Executive Committee)
is amended in subsections (c)(2) and (d)(4) to add language to clarify that
the Executive Committee and subcommittees are not required to meet quarterly
unless there are items of substantive business to conduct.
One commenter supports the amendments that allow the MAP application process
to be handled directly by department staff without requiring MAP applications
to be submitted through an originating agent and believes that these revisions
should make the application process faster, easier, and more accessible to
consumers.
For: Office of Public Insurance Counsel.
The amendments are adopted pursuant to the Insurance Code Article
21.49-12 and §36.001. Article 21.49-12 §1(a) requires the Commissioner
to establish a voluntary market assistance program to assist Texas consumers
in obtaining residential property insurance coverage in underserved areas,
which shall be determined and designated by the Commissioner by rule using
the standards specified in Article 5.35-3 §1 of the Insurance Code. Article
21.49-12 §2(a) provides that the MAP Executive Committee may submit suitable
amendments to the plan of operation to the Commissioner for adoption by rule
after notice and hearing. Insurance Code §36.001 authorizes the Commissioner
of Insurance to adopt rules and regulations, which must be for general and
uniform application, for the conduct and execution of the duties and functions
of the Texas Department of Insurance only as authorized by a statute.
§5.9403.Definitions.
The following words and terms when used in this plan of operation,
which is contained in §§5.9401-5.9415 of this title (relating to
the Residential Property Insurance Market Assistance Program Plan of Operation),
shall have the following meanings unless the context clearly indicates otherwise.
(1)
Agent commissions--The portion of the premium paid by an
insurer participating in the Residential Property Insurance Market Assistance
Program for production of the residential property insurance business pursuant
to Article 21.49-12 §4 of the Insurance Code.
(2)
Application--The form promulgated by the Texas Department
of Insurance to be completed by an applicant and the originating agent and
submitted to the Texas Department of Insurance or completed by an applicant
and the Department to apply for assistance in obtaining residential property
insurance through the Residential Property Insurance Market Assistance Program.
(3)
Commissioner--Commissioner of Insurance of the State of
Texas.
(4)
Department--Texas Department of Insurance.
(5)
Designated underserved area--An area determined and designated
by rule as an underserved area by the Commissioner of Insurance, pursuant
to Article 21.49-12 of the Insurance Code, using the standards specified in
Article 5.35-3 §1 of the Insurance Code.
(6)
Executive Committee--The 11-member body appointed by the
Commissioner of Insurance and authorized pursuant to Article 21.49-12 of the
Insurance Code to advise and consult with the Commissioner with regard to
the administration of the Residential Property Insurance Market Assistance
Program.
(7)
Insurer--Any insurer licensed to write property or casualty
insurance and actually writing residential property insurance in Texas, including
Lloyd's, reciprocals, or interinsurance exchanges; an insurer is actually
writing residential property insurance in Texas if the insurer has reported
under the statistical plan a positive number for residential property insurance
direct written premium during the last reporting period.
(8)
Issuing agent--
(A)
A licensed local recording agent appointed to represent
the insurer providing residential property insurance coverage through the
Residential Property Insurance Market Assistance Program who signs, executes,
and delivers the policies of insurance; maintains a record of the business;
examines and inspects the risk; receives and collects premiums; and performs
other customary duties of a local recording agent; or
(B)
A salaried representative for an insurer whose plan of
operation does not contemplate the use of local recording agents appointed
to represent the insurer providing residential property insurance coverage
through the Residential Property Insurance Market Assistance Program who signs,
executes, and delivers the policies of insurance; maintains a record of the
business; examines and inspects the risk; and receives and collects premiums;
and performs other customary duties of a local recording agent.
(9)
Manufactured home--Mobile home, manufactured housing, or
manufactured home as defined in the Texas Manufactured Housing Standards Act
(Texas Revised Civil Statutes, Article 5221f).
(10)
MAP--The Residential Property Insurance Market Assistance
Program authorized and operated pursuant to Article 21.49-12 of the Insurance
Code to assist consumers in Texas in obtaining residential property insurance
coverage in underserved areas as determined and designated by the Commissioner
of Insurance by rule.
(11)
Originating agent--
(A)
A licensed local recording agent authorized by Article
21.49-12 of the Insurance Code to complete an application for assistance on
behalf of an applicant for submission to the Residential Property Insurance
Market Assistance Program without being appointed to represent the insurer
providing the coverage through the Residential Property Insurance Market Assistance
Program; or
(B)
A salaried representative for an insurer whose plan of
operation does not contemplate the use of local recording agents authorized
by Article 21.49-12 of the Insurance Code to complete an application for insurance
on behalf of an applicant for submission to the Residential Property Insurance
Market Assistance Program without being appointed to represent the insurer
providing the coverage through the Residential Property Insurance Market Assistance
Program.
(12)
Residence premises--The residence premises shown on the
declarations page of the insured's residential property insurance policy and
which includes the one-family or two-family dwelling and other private structures
and grounds.
(13)
Residential property insurance--Insurance against loss
to real or tangible personal property at a fixed location provided in a homeowners
policy or residential fire and allied lines policy.
(14)
Residential risk--Dwelling, manufactured home, or other
private structure located on the residence premises, and personal property
contained therein.
(15)
Unaffiliated--Not an affiliate or not affiliated with
another insurer or insurers as "affiliate" is defined in the Insurance Holding
Company System Regulatory Act (Article 21.49-1 of the Insurance Code).
§5.9405.Rates.
(a)
Pursuant to Article 21.49-12 §2(b)(2) of the Insurance
Code, each insurer has the right to individually evaluate the risk and apply
the rates that are in accordance with the provisions of the Insurance Code
that are applicable to that insurer.
(b)
Pursuant to Article 21.49-12 §2(b)(3) of the Insurance
Code, each insurer has the option of providing a premium quote on the same
coverage basis for which it normally provides insurance in this state using
its own underwriting guidelines and the rates determined in accordance with
the provisions of the Insurance Code applicable to that insurer.
§5.9408.Participating Agents.
(a)
Qualifications.
(1)
An individual is eligible to perform the functions of an
originating agent for a MAP applicant if the individual, at the time the application
to the MAP is completed, is duly licensed by the Department as a local recording
agent or is a salaried representative for an insurer whose plan of operation
does not contemplate the use of local recording agents.
(2)
An individual is eligible to perform the functions of an
issuing agent for an insurer voluntarily participating in the MAP if the individual
is duly licensed by the Department as a local recording agent and is appointed
to represent the insurer or is a salaried representative for an insurer whose
plan of operation does not contemplate the use of local recording agents.
(b)
Functions of an originating agent.
(1)
The originating agent shall complete the application for
assistance in obtaining residential property insurance on behalf of the MAP
applicant.
(2)
The originating agent shall submit the application and
documentation required by subsection (e) of §5.9406 of this plan of operation
(also subsection (e) of §5.9406 of this title, relating to Eligibility
for Referral) regarding cancellation, non-renewal, or declination to the MAP
as soon as possible, but no later than the fifth business day following completion
of the application.
(3)
Pursuant to Article 21.49-12 §4(f) of the Insurance
Code, if the originating agent and the issuing agent are not the same person,
the originating agent may not be held to be the agent of the insurer unless
there is an appointment as specified by Article 21.14 of the Insurance Code.
(c)
Functions of an issuing agent.
(1)
The issuing agent shall perform all of the customary duties
of a local recording agent including, but not limited to, the following:
(A)
signing, executing and delivering policies of insurance;
(B)
maintaining a record of the business;
(C)
examining and inspecting the risk; and
(D)
receiving and collecting premiums.
(2)
The issuing agent may also be the originating agent.
(d)
Agent commissions.
(1)
Originating agent's commission.
(A)
Pursuant to Article 21.49-12 §4(e) of the Insurance
Code, the originating agent shall share commissions with the issuing agent.
(B)
The originating agent's share of the commission for the
original policy term shall be as follows: $25 when the policy premium is $500
or less, and $50 when the policy premium is over $500.
(C)
If the issuing agent is a licensed local recording agent,
the originating agent's share of the commission for policy renewals shall
be 25 percent of the amount of the commission paid to the issuing agent by
the insurer. If the issuing agent is a salaried representative, the originating
agent's commission fee for policy renewals shall be $15. The renewal commission
and renewal commission fee requirements shall apply only to policy renewals
in which the insurer is the same insurer as when the original policy was issued
through the MAP.
(D)
Within five working days after the issuance date of the
insurance policy issued through the MAP, the insurer shall notify the Department
by mail or facsimile transmission and the originating agent in writing or
via electronic means that the insurance policy was issued. The notice shall
include the insurance policy number and the name, address, telephone number,
and fax number of the issuing agent.
(E)
The issuing agent shall be responsible for payment of the
originating agent's share of the commission and commission fee as specified
in subparagraphs (B) and (C) of this paragraph within 30 days after the date
the commission payment is made to the issuing agent by the insurer.
(2)
Issuing agent's commission. The payment of the commission
to the issuing agent is based on the contract or agreement between the insurer
and the issuing agent.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on June 6, 2000.
TRD-200003990
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: June 26, 2000
Proposal publication date: April 14, 2000
For further information, please call: (512) 463-6327