HBA-EVB C.S.S.B. 677 76(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 677 By: Jackson Insurance 4/16/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE On September 1, 1998, a new coastal building code approved by the Texas Department of Insurance (department) became effective. The new code applies to fourteen coastal counties and certain designated catastrophic areas in Harris County. To qualify for coverage through the Texas Windstorm Insurance Association (TWIA), coastal residents whose homes are contracted, repaired, or to which additions are made on and after September 1, 1998, must comply with the new building code. Since its implementation, builders have had problems under the new code. Technical challenges encountered under the code have slowed some construction, and disputes over the interpretation of the code have also arisen. An advisory committee established under Section 6A(f), Article 21.49, Insurance Code, consisting of 16 members, developed and recommended the new code. The advisory committee is also responsible for making recommendations to the commissioner of insurance (commissioner) on changes to the building code. Some feel that the committee does not adequately reflect the interested parties affected by the new code, including builders, consumers, and TWIA and its members. There are also no set time limits and procedures for the advisory committee to follow in establishing changes to the building code. C.S.S.B. 677 replaces the current advisory committee with a new committee called the Windstorm Building Code Advisory Committee on Specifications and Maintenance (committee). The new committee consists of nine members: three building industry representatives, three insurance industry representatives, and three public members. The bill specifies a minimum number of meetings per year, sets time limits for meeting notifications, establishes procedures for addressing changes to the code, and sets a time limit for the commissioner's acceptance or rejection of a committee recommendation. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority previously delegated to the commissioner of insurance is modified in SECTION 1 (Section 6C, Article 21.49, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 21.49, Insurance Code, by adding Section 6C, as follows: Sec. 6C. ADVISORY COMMITTEE ON BUILDING CODE SPECIFICATIONS AND MAINTENANCE. (a) Defines "advisory committee" as the Windstorm Building Code Advisory Committee on Specifications and Maintenance (committee). (b) Establishes the committee as an advisory committee to the commissioner of insurance (commissioner) to advise and make recommendations on building specifications and maintenance in the plan of operation. (c) Provides that the committee consists of nine voting members who are appointed by the commissioner. Requires the commissioner or the commissioner's designated representative to serve as an ex-officio nonvoting member of the committee. Requires the voting members of the committee to be appointed as follows: three building industry representatives (two residential builders, one representative of the building supply industry), three insurance industry representatives (one from the Texas Windstorm Insurance Association (TWIA), two full-time employees of a certain type of insurance company), and three public members (one a licensed engineer). (d) Provides that a member of the committee serves a three-year term and is not entitled to compensation but is entitled to reimbursement for actual and necessary expenses incurred in performing duties as a committee member. Provides that the reimbursement is subject to any applicable limitation provided by the General Appropriations Act. (e) Requires the committee to elect a presiding officer from its members, to meet at the call of the presiding officer at least three times each year, and to publish the date and location of the meeting at least 45 days before the meeting is scheduled to occur. Provides that the commissioner or the commissioner's designee must be present at each meeting of the committee. (f) Requires the committee to analyze and make recommendations for changes regarding the building specifications adopted by the commissioner in the plan of operation. Requires the committee to consider technological developments in building products and windstorm research and to seek to balance the concerns of all affected parties, including consumers, builders, and the TWIA, in making recommendations. (g) Provides that each proposal for a change in an applicable building specification must be submitted to the commissioner. Provides that each proposal must be submitted separately in writing and contain certain specified information. (h) Requires the commissioner, by rule, to adopt a form to be used by a person in presenting a proposal for a change in an applicable building specification to the commissioner. (i) Requires each proposal to be submitted not later than the 30th day before the date of a scheduled advisory committee meeting. Prohibits a proposal that does not comply with the requirements adopted under Subsection (g) of this section and is not submitted in a timely manner from being considered at the scheduled meeting. (j) Requires the department to review and organize each proposal submitted and to allow the committee and interested parties to view the proposals to be considered within a reasonable time before the meeting of the committee. Requires the Texas Department of Insurance (department) to also provide the committee with any technical information requested by the committee. (k) Authorizes any interested person at a committee meeting to present the person's views on a proposal for a change in an applicable building specification that is included on the committee's published agenda. Requires the committee to consider each comment presented in its action on the disposition of each proposal. (l) Requires the committee, after consideration of a proposal for a change in an applicable building specification, to vote to recommend adoption of the proposal as initially submitted or with modifications, to recommend rejection of the proposal, or to suspend consideration of the proposal and request additional evaluation and study of the proposal. (m) Requires the committee to submit its recommendation on each proposal to the commissioner. Requires the commissioner to notify the committee of the acceptance or rejection of each recommendation not later than the 30th day after the date of receipt by the commissioner. Provides that the acceptance of a recommendation by the commissioner means that the commissioner will consider adoption of that recommendation at a rulemaking hearing. Provides that the commissioner must determine, before adopting a recommendation, that the proposal, if adopted, will not weaken the integrity or diminish the effectiveness of a building specification. Authorizes the commissioner, by rule, to adopt a recommendation of the advisory committee by amending the plan of operation and, in amending the plan, to adopt a specification by reference. (n) Authorizes the commissioner to adopt rules as necessary to implement this section, in addition to any other rulemaking authority granted under this article. SECTION 2. Repealer: Section 6A(f), Article 21.49, Insurance Code (Inspections for Windstorm and Hail Insurance). This subsection establishes an advisory committee to advise and make recommendations to the State Board of Insurance and sets forth specifications for the committee. SECTION 3. (a) Provides that this Act takes effect immediately, except that SECTION 2 of this Act takes effect September 1, 1999. (b) Provides that the advisory committee established under Section 6A(f), Article 21.49, Insurance Code, is abolished effective August 31, 1999. (c) Requires the initial members of the committee created under Section 6C, Article 21.49, Insurance Code, as added by this Act, to be appointed before September 1, 1999. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 677 modifies the original bill in SECTION 1 (proposed Section 6C, Article 21.49, Insurance Code) to make a technical change by adding a comma in proposed Subsection (g)(1). C.S.S.B. 677 modifies the original bill in SECTION 1 (proposed Section 6C(m), Article 21.49, Insurance Code) by adding the provision that the commissioner must determine, before adopting a recommendation, that the proposal, if adopted, will not weaken the integrity or diminish the effectiveness of a building specification. C.S.S.B. 677 modifies the original bill in SECTION 3 (proposed Subsection (b)) to make a nonsubstantive change to conform to Legislative Council format.