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You are here: Home . rules . 2006 . 0526-059

SUBCHAPTER E. TEXAS WINDSTORM INSURANCE ASSOCIATION Division 7. Inspections for Windstorm and Hail Insurance

28 TAC §5.4607

1. INTRODUCTION. The Department of Insurance proposes new §5.4607 concerning procedures for the appointment by the Commissioner, based on demonstrated need, of temporary qualified inspectors to conduct windstorm inspections in designated catastrophe areas pursuant to Insurance Code Article 21.49 §6A. Under the proposal, after notice and a public hearing pursuant to Article 21.49 §5A, the Commissioner may determine that qualified inspectors are not reasonably available in the first tier coastal counties specified in Article 21.49 and/or in designated catastrophe areas as defined by Article 21.49 §3(h). If the Commissioner makes such a determination, the Commissioner may appoint temporary qualified inspectors as needed and for a limited period. The temporary appointees will be authorized to perform inspections of structures for purposes of determining insurability for windstorm and hail coverage through the Texas Windstorm Insurance Association (TWIA) as provided in Article 21.49. As a result of Hurricane Rita in 2005, the Department found that in the aftermath of a hurricane or other catastrophe, residents and business owners in the affected catastrophe areas can face delays in the building or repair of structures because of the overwhelming demand for windstorm inspections and the lack of qualified inspectors to meet this demand. The delay in rebuilding and repair of structures creates a negative influence in the economic stability of the affected area. To assist in meeting this demand for inspectors in the past, the Department has used various measures to increase the number of windstorm inspectors. Following Hurricane Rita, the Department temporarily assigned its inspectors from other areas of the coast to the affected areas, provided by rule for the temporary appointment of inspectors in the most needed areas, and worked with the TWIA, which provided additional inspection assistance through independent contract inspectors. While these efforts have been effective, the delay in implementing measures to meet the demand for inspections may have contributed to an erosion of economic stability. There is a need for the Department to act earlier and more quickly following any future catastrophe to address the overwhelming demand for windstorm inspections and the lack of qualified inspectors to meet this demand and to lessen the negative economic impact. This expedited action by the Department is necessary to ensure that residents and business owners in the affected catastrophe areas have access to enough qualified windstorm inspectors to prevent any unnecessary delays in the inspection process when re-building or repairing their structures. Therefore, the Department is proposing procedures, qualifications and requirements for the appointment of temporary qualified windstorm inspectors on an as-needed basis. This proposal will enable the Commissioner to make appointments without having to adopt separate rules for each designated catastrophe area that requires additional inspectors following a catastrophe. Under the proposal, the Commissioner may make such appointments if the Commissioner, following notice and a public hearing, determines that the appointment of additional inspectors is necessary to alleviate or prevent long delays for inspections of windstorm damaged structures and that qualified inspectors are not reasonably available. The Department in this proposal is seeking to prevent potential adverse impact to residents and business owners who are trying to build, rebuild, add to, or repair their properties to meet the windstorm building code requirements.

Proposed §5.4607(a) specifies the purposes of the section for the appointment of temporary qualified inspectors for a limited period on an as-needed basis and the conditions under which such appointments can be made. Proposed subsection (b) provides that temporary inspector appointments may be made only upon a determination by the Commissioner, after notice and a hearing, and further provides that an order by the Commissioner shall specify the reasons for the temporary appointments, the designated catastrophe areas in which the temporary inspector appointments are authorized, the types of inspections the temporary inspectors are authorized to perform, the period of time for which the appointments are effective, and any other requirements necessary to properly ensure the availability of qualified inspectors as needed in the designated catastrophe areas. Proposed subsection (c) specifies the qualifications, including necessary experience and training, of persons eligible to apply for a temporary appointment. It also specifies the necessary forms, affidavits and other documents needed for application. Proposed subsection (d) defines terms used throughout the section. Proposed subsection (e) outlines the application process for an appointment. Proposed subsection (f) specifies the training an appointee must undergo. Proposed subsection (g) specifies prohibited financial interests for applicants and temporary appointees. Proposed subsection (h) requires that temporary appointees comply and utilize certain specified windstorm inspection forms. Proposed subsection (i) provides that temporary appointees will be subject to the provisions of the Department's current §5.4604 relating to the appointment of engineers as qualified inspectors, including oversight by the Department. Proposed subsection (j) prohibits temporary appointees from delegating any duties that are part of the authorization of their temporary appointment. Proposed subsection (k) provides that the issuance of a temporary appointment to a qualified inspector only authorizes the appointee to inspect structures for the purposes of determining whether windstorm and hail insurance may be provided by the Association and provides that no other types of inspections by temporary appointees will be valid for purposes of the Insurance Code Article 21.49. It further provides that a temporary appointment issued under this section shall be valid only for the areas and period of time specified by the Commissioner in the order of temporary appointment; at the end of such period or upon action by the Department, the appointment will expire. Proposed subsection (l) provides that temporary appointees will be subject to the provisions of the Department's current rule §5.4604 relating to the appointment of engineers as qualified inspectors, including oversight by the Department, and will also be subject to the emergency cease and desist provisions of the Insurance Code Chapter 83. This is necessary to ensure that improper inspections are halted as quickly as possible to prevent and deter approval of faulty or inadequate building, re-building, adding to, or repairing of structures, which could result in certification of structures that do not meet windstorm building code requirements and also to prevent additional harm to the property of residents and business owners. Proposed subsection (m) contains a severability clause which provides for the continuation of non-affected provisions of the rules if any provisions are declared invalid.

2. FISCAL NOTE. Alexis Dick, Deputy Commissioner, Inspections Division, has determined that, for each year of the first five years the proposed new section is in effect, there will be no fiscal impact on state or local government as a result of enforcing or administering the section. Ms. Dick has also determined that there will be no measurable effect on local employment or the local economy.

3. PUBLIC BENEFIT/COST NOTE. Ms. Dick has further determined that for each year of the first five years the proposed new section is in effect, the public benefit anticipated as a result of administering and enforcing the section will be to ensure that qualified inspectors are available to respond to residents and business owners in catastrophe areas as defined by Article 21.49 most in need of building, rebuilding, adding to, or repairing of structures after a catastrophe. The Department anticipates that these temporary appointments will result in the relatively prompt availability of persons who are willing and qualified to perform windstorm inspections on structures to be considered insurable property for windstorm and hail insurance. Texans benefit from a strong and prompt recovery from devastating natural events like hurricanes and other catastrophes and from an efficient inspection system that provides prompt response to those in need. There is no mandatory cost because the appointees are selected from voluntary applicants. There are no persons who are required to comply with the proposed new section. The anticipated costs to persons who choose to apply for a temporary appointment will be the time to complete the application, obtain the required documents to submit with the application, and to attend the mandatory Department-sponsored two-hour orientation and training session. Because of the uncertainty of which persons who are eligible will actually participate in this voluntary temporary appointment process, it is not possible to estimate exact costs. However, eligible persons who are interested in voluntarily participating will be able to estimate their individual costs. There are no application or other fees required under the proposed new section. The Department expects no differential impact between small, large, and micro-businesses that decide to participate in this temporary appointment process. The cost per hour of labor for the application process should not vary between small, large, and micro-businesses of the same type. Further, the Department has considered the purpose of the statute, which requires windstorm inspections to be performed by qualified inspectors who must be approved and appointed or employed by the Department to perform building inspections, and has determined that it is neither legal nor feasible to exempt small or micro-businesses or to waive compliance for small or micro-businesses.

4. REQUEST FOR PUBLIC COMMENT. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on July 3, 2006, to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113‑2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714‑9104. An additional copy of the comments must be submitted simultaneously to Alexis Dick, Deputy Commissioner, Inspections Division, Mail Code 103-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714‑9104.

The Commissioner will consider the adoption of proposed new §5.4607 in a public hearing under Docket Number 2642, scheduled for 10:00 a.m. on June 21, 2006; in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street, Austin, Texas.

5. STATUTORY AUTHORITY. The new section is proposed pursuant to the Insurance Code Article 21.49 §6A and §36.001. Article 21.49 §6A provides that a windstorm inspection may only be performed by a qualified inspector who must be approved and appointed or employed by the Department to perform building inspections. Section 6A also provides that a qualified inspector includes a person determined by the Department to be qualified to perform building inspections because of training or experience and an inspector who is certified by the International Code Council, the Building Officials and Code Administrators International, Inc., the International Conference of Building Officials, or the Southern Building Code Congress International, Inc. (now known as the International Code Council) who has certifications as a buildings inspector and coastal construction inspector and who also complies with other requirements specified by rule by the Commissioner. Article 21.49 §5A provides that the Commissioner, after notice and hearing, may issue any orders which the Commissioner considers necessary to carry out the purposes of the Texas Windstorm Insurance Association Act. 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. CROSS REFERENCE TO STATUTE. The following statute is affected by this proposal:

Rule Number Statute

§5.4607 Insurance Code Article 21.49

7. TEXT.

§5.4607. Requirements for the Appointment of Temporary Qualified Windstorm Inspectors for a Limited Period on an As-needed Basis.

(a) Purpose. The purpose of this section is to specify the procedures for the Commissioner of Insurance to appoint temporary qualified inspectors for a specified limited period to conduct inspections for windstorm and hail insurance pursuant to the Insurance Code Article 21.49 §6A and to specify qualifications, requirements, and procedures pursuant to the Insurance Code Article 21.49 §6A(d) for the appointment of persons to perform such inspections.

(b) Public Hearing. The Commissioner may make the temporary inspector appointments only upon a determination by the Commissioner after notice and a public hearing pursuant to the Insurance Code Article 21.49 §5A that qualified inspectors are not reasonably available in the first tier coastal counties specified in Article 21.49 and/or in designated catastrophe areas as defined by Article 21.49 §3(h). If the Commissioner makes such a determination, the Commissioner shall issue an order specifying the reasons for the determination, the designated catastrophe areas in which the temporary inspector appointments are authorized, the types of inspections temporary appointees are authorized to perform, the period of time for which the appointments are effective, and any other requirements necessary to properly ensure the availability of qualified inspectors as needed in the designated catastrophe areas.

(c) Qualifications.

(1) Persons appointed under this section must meet the qualifications for appointment under this section and shall perform inspections in accordance with the provisions of this section, §§5.4001 - 5.4010 of this title (relating to the Texas Windstorm Insurance Association plan of operation), §§5.4601 - 5.4605 of this title (relating to inspections for windstorm and hail insurance), the Insurance Code Article 21.49 §6A, and the order issued by the Commissioner pursuant to subsection (b) of this section. The following persons are eligible to apply for an appointment as a temporary qualified inspector:

(A) a person who is certified as a coastal construction inspector by the International Code Council and who has at least two years of construction, design or inspection experience on buildings or structures located in high wind areas; this may include a person employed full-time by a municipality of this state who meets the qualifications as stated in this paragraph; or

(B) a Texas registered architect with construction, design or inspection experience on buildings or structures located in high wind areas; or

(C) any person with experience, education, or training in programs at an accredited university which shall include at a minimum successful completion of at least two years of technical or university training in the field of civil or architectural engineering, the field of architecture, or the field of construction technology or construction science and at least two years of construction, design or inspection experience on buildings or structures located in high wind areas.

(2) Persons applying under the requirements of paragraph (1)(A) of this subsection must affirm to the Commissioner through a sworn statement the current, active, and good-standing status of their certification and/or shall also provide a Certification of Employment affidavit from the municipality as applicable.

(3) Persons applying under the requirements of paragraph (1)(B) of this subsection must affirm to the Commissioner through a sworn statement the current, active, and good-standing status of the architect's registration through the Texas Board of Architectural Examiners.

(4) Persons applying under the requirements of paragraph (1)(C) of this subsection must provide a certified copy of a completed degree, if any; certificate; or transcript.

(d) Definitions. For the purposes of this section, the following words and terms shall have the following meanings:

(1) Appointee - A person who has been issued a temporary appointment as a qualified inspector under this section.

(2) Commissioner - Commissioner of Insurance of the State of Texas .

(3) Department - Texas Department of Insurance.

(4) Person - An individual and includes a resident or non-resident of this state.

(e) Application. A person applying for a temporary inspector appointment under this section must complete and file an application on a form prepared, maintained, and obtainable from the Department.

(f) Training. An appointee must attend within 30 days of the person's appointment a two-hour orientation and training session provided by the Department at one of its field offices or in Austin , Texas .

(g) Financial interest prohibitions. An appointee must not have a financial interest either directly or indirectly in or be employed by a business that is financially interested either directly or indirectly in the furnishing of labor, material, or appliances for the construction, alteration, or maintenance of any building, nor have current employment or accept compensation or accept other employment or compensation during the period of appointment which could reasonably be expected to impair the appointee's independence of judgment in the performance of inspections pursuant to this section.

(h) Inspection forms. An appointee shall comply with and utilize all windstorm inspection forms required by §5.4604 of this title (relating to appointment of engineers as qualified inspectors), with such forms modified to substitute "appointed temporary inspector" for "engineer" as applicable.

(i) Department oversight. Except as otherwise provided in this section, an appointee is subject to all provisions of §5.4604 of this title including oversight by the Department as specified in subsection (h) of §5.4604. If there is a conflict between the provisions of this section and the provisions of §5.4604 of this title, this section controls.

(j) Delegation prohibition. An appointee is prohibited from delegating the duties under this section to any other person. The delegation/assistance provision of subsection (g)(5) of §5.4604 of this title shall not apply to an appointee,

(k) Limited authorization.

(1) An appointee is only authorized to perform inspections of structures for insurability for windstorm and hail insurance as provided in the Commissioner's order issued pursuant to subsection (b) of this section. No other types of inspections by the temporary inspector appointees will be considered valid for purposes of the Insurance Code Article 21.49.

(2) An appointment made under this section is valid only for the designated catastrophe areas and period of time specified by the Commissioner in the Commissioner's order issued pursuant to subsection (b) of this section; at the end of such period or upon action by the Department, the appointment will expire.

(l) Administrative remedies. In addition to any other remedy available under the Insurance Code Article 21.49 §6A, and Chapters 82 and 84, and §5.4604 of this title (relating to appointment of engineers as qualified inspectors), the Department may issue an emergency cease and desist order pursuant to the Insurance Code Chapter 83 to any person who violates any provision of this subchapter or any other rule or statute relating to inspections of structures to be considered insurable property for windstorm and hail insurance.

(m) Severability clause. If a court of competent jurisdiction holds that any provision of this section is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this section shall remain in effect.



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