Current through Reg. 50, No. 13; March 28, 2025
(a) Purpose. The purpose of this section is
to:
(1) designate the areas determined by the
Commissioner of Insurance to be underserved areas for purposes of residential
property insurance pursuant to the Insurance Code Article 5.13-2C;
(2) identify the factors and methodology used
in determining such underserved areas, and
(3) provide a procedure that requires
insurers to certify their eligibility for the exemption provided by Article
5.13-2C.
(b)
Definitions. The following words and terms when used in this section shall have
the following meanings unless the context clearly indicates otherwise.
(1) Underserved area--An area determined and
designated in this section as an underserved area by the Commissioner of
Insurance for purposes of an exemption from rate filings and approval
requirements for certain insurers pursuant to the Insurance Code Article
5.13-2C.
(2)
Commissioner--Commissioner of Insurance.
(3) Department--Texas Department of
Insurance.
(4) Market share--the
number of residential property insurance policies that an individual insurer
has in force expressed as a percentage of the total number of residential
property insurance policies in force in a defined geographic area (i.e. state
wide or in a specific ZIP Code).
(c) Underserved areas. The ZIP Codes in
Figure 28 TAC §
5.3702(c) are
designated as underserved areas pursuant to the Insurance Code Article 5.13-2C,
effective May 13, 2004:
Attached
Graphic
(d)
Factors and methodology. In determining the areas designated as underserved,
the Commissioner shall consider whether residential property insurance is not
reasonably available to a substantial number of owners of insurable residential
property in a specific geographic area and any other relevant factors as
determined by the Commissioner. The determination of the areas to be designated
as underserved is based on the factors and methodology outlined in this
subsection.
(1) There is no single
comprehensive measure of whether residential property insurance is or is not
reasonably available or is or is not potentially reasonably available to a
substantial number of owners of insurable property either on a statewide basis
or in any particular area of the state. The Commissioner has identified
characteristics of particular geographic areas which are likely to be
associated with greater difficulty by consumers in obtaining residential
property insurance.
(2) Geographic
factors based on weather-related loss exposure and the resulting underwriting
restrictions used by insurers writing residential property insurance in Texas
that would limit the availability of residential property insurance coverages
to a greater extent in some geographic areas than in others are as follows:
(A) Tier 1 and Tier 2 coastal counties. One
type of weather-related loss exposure concerns the potential for catastrophic
hurricanes and other types of windstorms in the First Tier Coastal Counties
(Tier 1) and Second Tier Coastal Counties (Tier 2), as defined in Article 21.49
§3 (l) and (m), and the inability of residents to obtain windstorm and
hail insurance through the voluntary market in these areas. The Commissioner
has determined that the location of a ZIP Code in the geographic areas that
comprise the Tier 1 and Tier 2 coastal counties is a factor to be used in
determining whether an area is an underserved area for purposes of Article
5.13-2C. ZIP Codes located along the coast, Tiers 1 and 2, are assigned five
points.
(B) Dallas and Tarrant
Counties. A second geographic area that has historically been affected by
weather-related loss exposure underwriting factors is Dallas and Tarrant
counties. Due to the frequency and severity of hail storms and the ensuing
claims in these counties, insurers have restricted their writing of residential
property insurance and have limited the availability of certain property
insurance coverages in these counties. Based on this lack of availability of
residential property insurance to a substantial number of owners of insurable
property in Dallas and Tarrant counties, the Commissioner has determined that
the location of a ZIP Code in these counties be considered a factor in
determining whether an area is underserved for purposes of Article 5.13-2C. ZIP
Codes located in Dallas or Tarrant counties, are assigned five
points.
(3) The specific
demographic factors and the points assigned are as follows:
(A) ZIP Codes with median household incomes
of $36,000 or less are assigned one point.
(B) ZIP Codes with median value of
owner-occupied dwellings of $75,000 or less are assigned one point.
(C) ZIP Codes with a median year built of
1974 or earlier are assigned one point.
(D) ZIP Codes with percentages of insured
households of less than 50% are assigned one point.
(4) Market share of a set of insurer groups
is a factor that correlates with the availability of residential property
insurance. The department examined data reported by insurers pursuant to the
Texas Statistical Plan for Residential Risks and determined the insurer groups
that account for at least 90% of the cumulative market share of residential
property insurance policies written on a state wide basis. The department then
analyzed data for each of the geographic ZIP Codes in Texas (excluding single
point ZIP Codes) and calculated the cumulative market share written by the same
insurer groups for each of the individual ZIP Codes. The cumulative market
share for each individual ZIP Code was then compared to the state wide
cumulative market share of 90%. If the cumulative market share for an
individual ZIP Code is less than 90%, then this ZIP Code will receive one
point.
(5) Based on the factors and
points specified in paragraphs (2), (3), and (4) of this subsection, the number
of points assigned were totaled by ZIP Code. Areas with five or more points
were identified as underserved or potentially underserved and generally
designated as underserved areas in subsection (c) of this section. To be
underserved a ZIP Code can meet any one of the geographic based criteria or it
must meet all four of the demographic based criteria and the market share
criteria.
(e) Required
certification of exemption to the Department.
(1) An insurer that may be entitled to the
exemption from the insurance rate filing and approval requirements of Article
5.142 or Article 5.13-2 of the Insurance Code, pursuant to the provisions of
Article 5.13-2C of the Insurance Code, shall file with the Department a
Certification of Article 5.13-2C Exemption Compliance (EC-1) form at least ten
days preceding the date an insurance rate filing would be otherwise required by
the insurer under Article 5.142 or Article 5.13-2.
(2) The Certification of Article 5.13-2C
Exemption Compliance (EC-1) form is provided by the Department for use by
insurers seeking an exemption from rate filing and approval requirements
pursuant to Article 5.13-2C. This form may be obtained from the Texas
Department of Insurance website http:/www.tdi.state.tx.us or by requesting such
form from the Property and Casualty Actuarial Division, Mail Code 105-5, P.O.
Box 149104, Austin, TX 78714-9104. For purposes of this section, in lieu of
submitting a form provided by the department, an insurer may submit to the
department the insurer's own form if the form contains the same information
that is required and contained in the form provided by the department. All
Application for Article 5.13-2 Exemption forms must be submitted to the Texas
Department of Insurance, Property and Casualty Intake Unit, Mail Code 104-3B,
P.O. Box 149104, Austin, TX 78714-9104.