SECTION 5.9411. Criteria and Procedures for Mandatory Participation by Insurers

(a) Purpose of this section. The purpose of this section is to specify:

(1) the criteria and procedures for implementation of mandatory participation by insurers on the Commissioner's own motion without the need for a recommendation by the Executive Committee pursuant to Article 21.49-12 §2(b)(7) of the Insurance Code which provides that the Commissioner may make insurer participation in the MAP mandatory based on criteria contained in this plan of operation; and

(2) the criteria and procedures to be used by the Executive Committee in determining the need to recommend to the Commissioner implementation of mandatory participation by insurers pursuant to Article 21.49-12 §6(b) of the Insurance Code which provides that the Executive Committee, after periodic review, shall report to the Commissioner as to the need for establishment of a mandatory program.

(b) Implementation of mandatory MAP on Commissioner's own motion.

(1) The criteria and procedures for implementation of mandatory participation in the MAP by insurers on the Commissioner's own motion and without a recommendation from the Executive Committee are as specified in paragraph (2) of this subsection.

(2) The Commissioner may, after notice and hearing, implement mandatory participation by insurers in the MAP if any of the circumstances specified in subparagraph (A) or subparagraph (B) of this paragraph occur. An application shall not be counted for purposes of subparagraphs (A) and (B) of this paragraph unless the application has been either active for 90 days or a policy has been issued, whichever occurs first.

(A) Less than 60% of the eligible applications, either on a statewide basis, or in one or more designated underserved areas, or in unprotected portions of designated underserved areas, referred to participating insurers in the preceding 12 months, or in any other period as determined by the Commissioner, result in the issuance of at least one premium quote per application.

(B) Less than 40% of the eligible applications, either on a statewide basis, or in one or more designated underserved areas, or in unprotected portions of designated underserved areas, referred to participating insurers in the preceding 12 months, or in any other period as determined by the Commissioner, result in the issuance of residential property insurance policies.

(c) Executive Committee's determination of the need to recommend implementation of mandatory MAP.

(1) Periodic review. Pursuant to Article 21.49-12 §6(b) of the Insurance Code, the Executive Committee shall review the demand for and performance of the program six months following the approval of this plan of operation and at least annually thereafter, as necessary, and may make recommendations to the Commissioner on the need to implement mandatory participation by insurers in the MAP.

(2) Criteria for recommendation.

(A) The Executive Committee shall propose a recommendation for mandatory participation by insurers if the committee determines that the level of voluntary participation by insurers is not sufficient to provide adequate opportunities for placement of residential property insurance through the program. The Executive Committee shall base its determination on the following factors:

(i) the number of applications eligible for referral received by the Department statewide, in each designated underserved area, and in unprotected portions of designated underserved areas;

(ii) the number of premium quotes made per application statewide, in each designated underserved area, and in unprotected portions of designated underserved areas;

(iii) the number of policies issued by participating insurers to MAP applicants statewide, in each designated underserved area, and in unprotected portions of designated underserved areas; and

(iv) any other factor that the Executive Committee determines reflects a lack of residential property insurance availability through the MAP.

(B) The Executive Committee may not make a recommendation for mandatory participation by insurers for any designated underserved area unless the MAP has been operational in that underserved area for at least six months.

(3) Procedures for consideration of recommendation.

(A) Consideration of a recommendation for mandatory participation by insurers in one or more designated underserved areas may be initiated as follows:

(i) the chairperson may place the item on the agenda for consideration; or

(ii) any three members of the Executive Committee may make a written request to the chairperson for consideration for mandatory participation by insurers. The chairperson shall place the item on the agenda for consideration at the next meeting of the Executive Committee.

(B) Consideration shall occur at the next meeting of the Executive Committee if the Subcommittee on Data Collection determines that any of the circumstances specified in clauses (i) or (ii) or (iii) of this subparagraph has occurred. An application shall not be counted for purposes of clauses (i) and (ii) of this subparagraph unless the application has been either active for 90 days or a policy has been issued, whichever occurs first.

(i) Less than 60% of the eligible applications, either on a statewide basis, or in one or more designated underserved areas, or in unprotected portions of designated underserved areas, referred to participating insurers in the preceding 12 months resulted in the issuance of at least one premium quote per application.

(ii) Less than 40% of the eligible applications, either on a statewide basis, or in one or more designated underserved areas, or in unprotected portions of designated underserved areas, referred to participating insurers in the preceding 12 months resulted in the issuance of residential property insurance policies.

(iii) The number of participating insurers for any designated underserved area is less than five.

(4) Public comment.

(A) The public shall be given the opportunity to provide comment to the Executive Committee prior to the time the Executive Committee votes on the proposed recommendation.

(B) If written comments are solicited by the Executive Committee, such comments should be addressed to the Executive Committee, Market Assistance Program, Texas Department of Insurance.

(C) Any written comments that are received shall be attached to the copy of the minutes of the Executive Committee meeting at which the proposed recommendation is considered. If minutes are not prepared, the written comments shall be maintained with the tape recording of the meeting.

(D) The Executive Committee may, at its discretion, take oral comments from the public at any meeting.

(5) Possible actions. The Executive Committee may take action on the recommendation for mandatory participation as follows:

(A) the Executive Committee may withdraw the recommendation;

(B) the Executive Committee may defer action on the recommendation, pending further consideration;

(C) the Executive Committee may withdraw its recommendation and propose an amendment to this plan of operation; or

(D) the Executive Committee may recommend to the Commissioner the implementation of mandatory participation by insurers.

(6) Effect of withdrawal of recommendation. Withdrawal of a recommendation for mandatory participation by insurers for any designated underserved area shall not prohibit the Executive Committee from making another recommendation for the same or different designated underserved area at a later date.

(7) Approval of recommendation. A recommendation to the Commissioner by the Executive Committee for implementation of mandatory participation by insurers must:

(A) be approved by at least eight members of the Executive Committee;

(B) state that the Executive Committee believes the level of voluntary participation by insurers does not provide adequate opportunities for placement of residential property insurance to qualified applicants; and

(C) state the specific factors that are the basis for the recommendation.

(8) Commissioner's action on recommendation. Upon receipt of a recommendation from the Executive Committee, the Commissioner may, after notice and hearing, implement mandatory participation by insurers in one or more designated underserved areas in the MAP.

Source Note: The provisions of this §5.9411 adopted to be effective October 1, 1996, 21 TexReg 8715; amended to be effective August 1, 1998, 23 TexReg 7587; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 26, 2000, 25 TexReg 6144