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You are here: Home . rules . 2003 . 0324A-059
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SUBCHAPTER D. FIRE AND ALLIED LINES INSURANCE

Division 8. UNDERSERVED AREAS FOR RESIDENTIAL PROPERTY INSURANCE

28 TAC §5.3701

The Commissioner of Insurance adopts new §5.3701, concerning the designation of the areas determined by the Commissioner of Insurance to be underserved for purposes of residential property insurance pursuant to the Texas Insurance Code Article 21.49A (FAIR Plan (Fair Access to Insurance Requirements) Act)). The new section is adopted without changes to the proposed text as published in the Texas Register (28 TexReg 1366) and will not be republished.

The new section is necessary to designate all 254 counties of the State of Texas as the underserved areas for the FAIR Plan because it has been determined that residential property insurance is not reasonably available to a substantial number of owners of insurable property in these areas.

Several insurance companies who together write over 50% of the Texas homeowners insurance market are not currently writing new homeowners insurance policies. The largest writer of homeowners insurance in Texas with over 30% of the market, has not been writing new homeowners policies for over a year. Another large writer of homeowners insurance with approximately 20% of the homeowners market in force in Texas, is also not writing new homeowners policies. These insurers previously wrote new business in all areas of the state. Many other insurers have continued to maintain restrictions or limitations on writing homeowners insurance. According to statistics obtained from the Surplus Lines Stamping Office of Texas, from February 28, 2002 to February 28, 2003, there was a 184.4% increase in the homeowners premium written by surplus lines insurers, which indicates a significant increase in the writing of homeowners policies by surplus lines insurers. This increase is a clear indication that consumers are having difficulty obtaining or are finding it impossible to obtain homeowners insurance coverage through the voluntary market, and have had to obtain such coverage in the surplus lines market. In addition, approximately 5,000 homeowners insurance policies have been issued through the FAIR Plan from December 31, 2002 to March 19, 2003.

Considering all of these facts, it is clear that the consumers seeking new homeowners insurance coverage are facing difficulty in obtaining or finding it impossible to obtain homeowners insurance coverage through the voluntary market. This section is adopted to ensure that residential property insurance coverage is available to Texas residents. The adopted section designates all 254 counties of the State of Texas as the underserved areas for the FAIR Plan because it has been determined that residential property insurance is not reasonably available to a substantial number of owners of insurable property in these areas.

The Commissioner of Insurance finds that an expedited effective date of ten days after the filing date is necessary for the section because of imminent peril to the public safety and welfare. The FAIR Plan is currently issuing 220 new residential policies daily and this number is continually increasing. If the FAIR Plan is unable to issue policies because all 254 counties of the state are not designated as underserved areas this will have a detrimental impact on the public health, safety and welfare.

The new section will increase availability of residential property insurance to a substantial number of owners of insurable property in underserved areas of the state.

No comments were received.

The new section is adopted under the Insurance Code Articles 21.49A and 5.35-3, and §36.001. Article 21.49A provides that underserved areas for the FAIR Plan shall be determined and designated by the Commissioner by rule using the standards specified in Article 5.35-3 §1. Article 5.35-3 §1 provides that in determining which areas will be designated as underserved, the Commissioner shall consider whether residential property insurance is not reasonably available to a substantial number of owners of insurable property in the underserved area and any other relevant factor as determined by the Commissioner. Insurance Code §36.001 authorizes the Commissioner of Insurance to adopt rules for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by statute.

§5.3701. Designation of Underserved Areas for Residential Property Insurance for Purposes of the Insurance Code Article 21.49A. The Commissioner designates all 254 counties of the State of Texas as the underserved areas for the FAIR Plan because it has been determined that residential property insurance is not reasonably available to a substantial number of owners of insurable property in these areas.



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