SECTION 5.9303. Definition of Catastrophe

(a) An individual insurer or a group of insurers may petition the Texas Department of Insurance for a determination that a weather-related event is a catastrophe or major natural disaster in accordance with Insurance Code §542.059. The Texas Department of Insurance will make a determination within three business days of receipt of a petition, and if the event is determined to be a catastrophe, it will notify all companies, by bulletin issued by the Texas Department of Insurance of the designated catastrophe.

(b) An insurer's petition as specified in subsection (a) of this section must include, but is not limited to, the following information:

(1) type of losses: wind, hail, tornado, hurricane, freeze, or other weather-related losses;

(2) specific lines of insurance affected: property, automobile, inland marine (any lines which may involve a first party claim);

(3) location of the loss: towns, cities, or other specified areas;

(4) specific time period of the event which produced the catastrophe;

(5) the insurer's total estimated dollar losses for insured property, by line of business;

(6) the insurer's total estimated number of claims, by line of insurance;

(7) a statement of the reason claims cannot be processed within the time periods specified under the conditions of the property and casualty policies and Insurance Code §§542.055 - 542.057.

(c) For a weather-related event to be considered a catastrophe or major natural disaster by the Texas Department of Insurance:

(1) The area in which the losses occur must be defined by reasonable boundaries.

(2) For the designated area where the losses occur, either the:

(A) estimated total dollar losses must be $50 million or more in the aggregate for all insurers, and the estimated total number of claims must be 5,000 or more in the aggregate for all insurers; or

(B) estimated total number of claims must be 10,000 or more in the aggregate for all insurers.

(3) The estimated dollar losses and number of claims in paragraph (2) of this subsection may include all lines of insurance listed in subsection (b)(2) of this section.

(d) If the Texas Department of Insurance determines a catastrophe exists, the provisions of Insurance Code §542.059 apply for all affected insurers.

(e) Claims processed in accordance with Insurance Code §542.059 must include all losses arising from the event or events identified in subsection (b)(4) of this section.

(f) In addition to subsections (a) - (c) of this section, the Texas Department of Insurance may use any other criteria it deems appropriate for determining if a catastrophe exists in connection with a weather-related event or natural disaster.

Source Note: The provisions of this §5.9303 adopted to be effective June 29, 1992, 17 TexReg 4255; amended to be effective September 20, 2017, 42 TexReg 4817