This section requires rates under the chapter to follow this section, sets rate standards, lets the association establish rating territories and vary rates, and limits certain county subdivisions by percentage caps.
Sec. 2210.355. GENERAL RATE REQUIREMENTS; RATE STANDARDS. (a) Rates for coverage under this chapter must be made in accordance with this section. Text of subsection effective until September 01, 2027 (b) In adopting rates under this chapter, the following must be considered: (1) the past and prospective loss experience within and outside this state of hazards for which insurance is made available through the plan of operation, if any; (2) expenses of operation, including acquisition costs; (3) a reasonable margin for profit and contingencies; (4) payment of financing arrangement obligations or public security obligations issued under this chapter, including the additional amount of any debt service coverage included in a financing arrangement or determined by the association to be required for the issuance of marketable public securities; and (5) all other relevant factors, within and outside this state. Text of subsection effective on September 01, 2027 (b) In adopting rates under this chapter, the following must be considered: (1) the past and prospective loss experience within and outside this state of hazards for which insurance is made available through the plan of operation, if any; (2) expenses of operation, including acquisition costs; (3) a reasonable margin for profit and contingencies; (4) payment of financing arrangement obligations issued under this chapter, including the additional amount of any debt service included in a financing arrangement; and (5) all other relevant factors, within and outside this state. (c) Rates must be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory as to any class of insurer. (d) For the establishment of rates and minimum premiums, the risks may be grouped by classification. (e) Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in those risks on the basis of any or all of the factors described by Subsection (b). The classification rates may include rules for classification of risks insured under this chapter and rate modifications to those classifications. (f) Each provision regarding a rate, classification, standard, or premium must be made without prejudice to, or prohibition of, provision by the association for consent rates on individual risks if the rate and risk are acceptable to the association, and are analogous to the rate provided for under Article 5.26(a). This subsection applies regardless of whether such a risk would otherwise be subject to or the subject of a rate classification provision or eligibility provision. (g) A commission paid to an agent for a windstorm and hail insurance policy issued by the association must comply with the commission structure approved by the commissioner under Section 2210.203(d) and be reasonable, adequate, not unfairly discriminatory, and nonconfiscatory. (h) In adopting rates under this chapter, recognized catastrophe models may be considered. (i) The association may establish rating territories and may vary rates among the territories as provided by this subsection. A rating territory that subdivides a county may be used only if the rate for any subdivision in the county is not more than: (A) five percent higher than the rate used by the association in 2009 in any other subdivision in the county; (B) six percent higher than the rate used by the association in 2010 in any other subdivision in the county; (C) seven percent higher than the rate used by the association in 2011 in any other subdivision in the county; and (D) eight percent higher than the rate used by the association in 2012 in any other subdivision in the county. Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 2, eff. April 1, 2007. Amended by: Acts 2009, 81st Leg., R.S., Ch. 1408 (H.B. 4409), Sec. 36, eff. June 19, 2009. Acts 2011, 82nd Leg., 1st C.S., Ch. 2 (H.B. 3), Sec. 33, eff. September 28, 2011. Acts 2015, 84th Leg., R.S., Ch. 615 (S.B. 900), Sec. 16, eff. September 1, 2015. Acts 2025, 89th Leg., R.S., Ch. 895 (H.B. 3689), Sec. 2.04(a), eff. September 1, 2025. Acts 2025, 89th Leg., R.S., Ch. 895 (H.B. 3689), Sec. 2.04(b), eff. September 1, 2027.