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You are here: Home . rules . 2005 . 1025-059
Archived File – for Reference Use.
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ADOPTED SECTION

SUBCHAPTER T. FAIR PLAN

Division 1. Plan of Operation

28 TAC §5.9912

1. INTRODUCTION. The Commissioner of Insurance adopts an amendment to § 5.9912 , concerning the Governing Committee of the Fair Access to Insurance Requirements (FAIR) Plan Association. The section is adopted with one change to the proposed text as published in the July 29, 2005 issue of the Texas Register (30 TexReg 4308).

2. REASONED JUSTIFICATION. The amendment, which was requested by the FAIR Plan Governing Committee, is necessary to clarify that all members of the Governing Committee of the FAIR Plan Association may be reimbursed for reasonable actual expenses. The FAIR Plan Association was established by Insurance Code Article 21.49A for the purpose of delivering residential property insurance to qualified citizens of Texas who are unable to obtain it from the voluntary market in areas determined by the Commissioner of Insurance to be underserved areas. The premise of the FAIR Plan Association is that readily obtainable residential property insurance is necessary to the economic welfare and orderly growth and development of the state. The Governing Committee determines policy and provides guidance for the day-to-day operations of the FAIR Plan Association, allowing the Fair Plan Association to function efficiently. The Governing Committee, comprised of eleven members, five of whom represent insurers, two licensed agents and four public representatives, must meet in order to oversee the operations of the FAIR Plan Association. The meetings are held in different locations throughout the state to allow opportunity for participation by interested members of the public and so that no one location receives the economic benefit of hosting the meeting. Since the Governing Committee frequently meets in towns which are not the home town of the members; it is equitable that the members be reimbursed for their reasonable actual expenses to fulfill the purposes and objectives of the FAIR Plan Association. The word "solely" was added to the new subsection (o) after the word "incurred" to clarify that reimbursable expenses relate exclusively to Fair Plan purposes and nothing else.

3. HOW THE SECTION WILL FUNCTION . Section 5.9912 adds subsection (o) which provides for the reimbursement of reasonable actual expenses to members of the Governing Committee incurred solely as a result of serving as a member of the Governing Committee. Subsection (o) also specifies that the Fair Pl an Association will establish procedures for reimbursement.

4. SUMMARY OF COMMENTS. No comments were received.

5. STATUTORY AUTHORITY. The amendment is adopted under the Insurance Code Article 21.49A and § 36.001. Article 21.49A § 3A authorizes the FAIR Plan Association Governing Committee to propose amendments to the plan of operation and submit them to the Commissioner of Insurance for approval. Article 21.49A charges the Commissioner with the authority to supervise the Association and to approve and adopt by rule the plan of operation developed by the Governing Committee. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

6. TEXT.

§5.9912. Governing Committee.

(a) The Association shall be governed by a Governing Committee.

(b) The Governing Committee shall be composed of 11 voting members appointed by the Commissioner as follows:

(1) five members who represent the interests of insurers;

(2) four public members; and

(3) two members who are licensed agents.

(c) The Commissioner or the Commissioner's designated representative from within the Texas Department of Insurance shall serve as an ex-officio non-voting member.

(d) To be eligible to serve on the Governing Committee as a representative of insurers, a person must be a full-time employee of an authorized insurer.

(e) Members of the Governing Committee shall serve a term of two years.

(f) To stagger the terms of the Governing Committee, five members shall be selected randomly by the initial Governing Committee to serve a one-year term. Those members may be reappointed for a full term.

(g) If a Governing Committee member representing the interest of an insurer vacates the position prior to the end of the term, then the insurer who employed the Governing Committee member shall appoint a replacement within 45 days to serve the remainder of the term. If the insurer fails to appoint a replacement, the Commissioner shall appoint a replacement to serve the reminder of the term.

(h) If any other Governing Committee member vacates a position prior to the end of the term, then the Commissioner shall appoint a replacement to serve the remainder of the term.

(i) The Governing Committee shall meet as often as may be required to perform the general duties of administration of the Association or at the request of the Commissioner. Seven of the members of the Governing Committee shall constitute a quorum.

(j) The Governing Committee may promulgate guidelines consistent with state law and the plan of operation to govern such internal operations as investments, accounting, audit, personnel, underwriting rules, inspections, and claims practices. The guidelines shall be in writing.

(k) The Governing Committee may appoint committees as it deems necessary to carry out the purpose and operations of the Association. Such committees may include an Executive Committee, a Reinsurance Committee, a Finance & Audit Committee, an Underwriting Committee, an Agent Relations Committee, a Depopulation Committee and a Claims Committee.

(l) The Governing Committee may undertake a public education program to assure that the services of the Association receive adequate public attention. The Governing Committee may adopt a written program for decreasing the overall utilization of the Association as a source of insurance. The Association may adopt depopulation plans to reduce the number of risks insured by the Association.

(m) The Governing Committee shall exercise all of the Association's powers not delegated to others pursuant to this plan of operation.

(n) The Governing Committee may propose amendments to the plan of operation to the Commissioner for approval .

(o) Members of the Governing Committee may be reimbursed for their reasonable actual expenses incurred solely as a result of serving as a member of the Governing Committee. The FAIR Pl an Association will establish procedures for reimbursement.



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