PART 1. TEXAS DEPARTMENT OF INSURANCE
CHAPTER 5. PROPERTY AND CASUALTY INSURANCE
SUBCHAPTER M. FILING REQUIREMENTS
DIVISION 2. REQUIREMENTS FOR DETERMINING A CATASTROPHE
28 TAC §5.9303
INTRODUCTION. The Texas Department of Insurance adopts an amendment to 28 TAC §5.9303, relating to the definition of catastrophe. Section 5.9303 implements Insurance Code §542.059. The amendment is adopted without changes to the proposed text as published in the June 9, 2017, issue of the Texas Register (42 TexReg 2997). The amended rule will not be republished.
REASONED JUSTIFICATION. The amendment updates the thresholds for extending claim-handling deadlines under Insurance Code §542.059(b).
Insurance Code Chapter 542, Subchapter B, requires insurers to meet specific deadlines when they process and pay insurance claims. Insurance Code §542.059 extends those deadlines by 15 days in the event of a weather-related catastrophe or major natural disaster, as defined by the commissioner of insurance. Before the amendment, a weather event under 28 TAC §5.9303(c)(2) could have been considered a catastrophe or major natural disaster if, in a reasonably defined area in which the losses occur, it resulted in estimates of at least 3,000 claims in aggregate for all insurers and at least $5 million in estimated losses in aggregate for all insurers. The amendment modifies this criteria and adds alternative criteria for declaring a weather-related catastrophe or major natural disaster.
The amendment divides §5.9303(c)(2) into two parts. First, §5.9303(c)(2)(A) updates the threshold for a catastrophe or major natural disaster to at least 5,000 estimated claims and $50 million in estimated losses. TDI adopted the previous thresholds in 1992. Almost all recent petitions exceeded at least one of the new thresholds, even though they were based on data from only one company.
Second, to ensure adequate time to process and pay claims when a weather event causes widespread but less costly damage, §5.9303(c)(2)(B) provides alternative criteria to establish a weather-related catastrophe or major natural disaster. Section 5.9303(c)(2)(B) adds a new threshold of at least 10,000 estimated claims in a reasonably defined area in which the losses occur, regardless of total losses.
In addition, the amendment updates citations to the Insurance Code to reflect changes made by the nonsubstantive recodification of the Insurance Code by House Bill 2922, 78th Legislature, Regular Session (2003). This order also adopts the nonsubstantive editorial and formatting changes included in the proposed text to conform it to TDI's current writing style and improve the rule's clarity.
SUMMARY OF COMMENTS. TDI did not receive any comments on the proposed amendment within the comment period. Likewise, TDI received no comments on an informal draft of the proposed amendment, which was posted on its website on December 8, 2016.
STATUTORY AUTHORITY. TDI amends §5.9303 under Insurance Code §542.059 and §36.001. Insurance Code §542.059 requires the commissioner to define "weather-related catastrophe or major natural disaster" to implement the statute. Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 5.9303 implements Insurance Code §542.059.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on August 31, 2017.
Texas Department of Insurance
Effective date: September 20, 2017
Proposal publication date: June 9, 2017
For further information, please call: (512) 676-6584