When an insurance company decides to stop writing policies in a particular area, policyholders may have difficulty getting their claims paid or finding coverage with another company. Chapter 827 requires an insurer to notify the Texas Department of Insurance in advance of any such decision and to provide for an orderly transition to their policyholders. Specifically, an insurer must notify TDI of its plans regarding a decision to:
- Reduce its total annual premium volume by 50 percent or more;
- Reduce its premium volume by 75 percent or more in any line;
- Reduce its personal auto or residential property premium volume in a rating territory by 50 percent or more; or
- Restrict its writing of new personal auto or residential property policies in a rating territory within six months after a catastrophic event of natural origin.
The Commissioner of Insurance has no authority under the law to prohibit these actions if the plan filed by the company adequately provides for meeting its obligations, but the Commissioner may impose a moratorium of up to two years if he or she determines that insurance will not be available to a substantial number of citizens because of the proposed action.