                            ATTORNEY GENERAL OF TEXAS
                                       GREG       ABBOTT

                                          December 30,2013



The Honorable Todd Hunter                         Opinion No. GA-1033
Chair, Committee on Calendars
Texas House ofRepresentatives                     Re:        Texas    Windstorm     Insurance
Post Office Box 2910                              Association's authority to assess insurance
Austin, Texas 78768-2910                          carriers and to use future premiums to pay
                                                  prior obligations (RQ-1134-GA)

Dear Representative Hunter:

        You ask two questions regarding the authority and duty of the Texas Windstorm
Insurance Association ("TWIA'') to assess insurance carriers and to use future premiums to pay
prior obligations. 1

        You first ask whether it is "negligence and/or failure of authority or responsibility of
duties by the TWIA organization, TWIA Board and/or Texas Department of Insurance to not
make said assessments" against insurance carriers in response to losses incurred by WIA due to
Hurricane Ike. Request Letter at 1. Thus, rather than ask a legal question about TWIA's current
authority to assess insurance carriers, you ask us to determine whether TWIA has been negligent
or committed a "failure of authority or responsibility of duties." ld. Whether a particular entity
has failed to perform its duties, and whether that failure creates a cause of action for negligence
involve a number of fact questions that cannot be answered in the opinion process. Tex. Att'y
Gen. Op. No. JM-153 (1984) at 8. This office is not authorized to investigate allegations of
negligence in the opinions process, nor do we resolve disputed questions of fact. Instead,
attorney general opinions advise authorized requestors about questions of law. Tex.. Att'y Gen.
Op. No. JM-1098 (1989) at 3. Thus, we cannot provide an answer to yow· first question.

       ln your second question, you ask whether "any provision of the Texas Insurance Code ...
would prohibit TWIA from using future premiums to pay prior obligations if all available
funding had been exbau ted by an event or series of events?" Request Letter at 1. Through
chapter 221 0 of the Insurance Code, the Legislature has provided a framework for the operation


        1
         See Letter from Honorable Todd Hunter, Chair, Comm. on Calendars, to Honorable Greg Abbott, Tex.
Att'y Gen. at I (July 3, 2013), http://www.texasattomeygeneral.gov/opin ("Request Letter").
The Honorable Todd Hunter - Page 2           (GA-1033)




ofTWIA and the use of its funds. TEX. INS. CODE ANN. §§ 2210.001- .654 (West 2009 & Supp.
2012). Section 2210.056 addresses TWIA's "use of association assets" and states:

       The association's assets may not be used for or diverted to any purpose other than to:

                 (1) satisfy, in whole or in part, the liability of the association on
                     claims made on policies written by the association;

                 (2) make investments authorized under applicable law;

                 (3) pay reasonable and necessary administrative · expenses
                     incurred in connection with the operation of the association
                     and the processing of claims against the association;

                 (4) satisfy, in whole or in part, the obligations of the association
                     incurred in connection with Subchapters B-1, J, and M,
                     including reinsurance, public securities, and financial
                     instruments; or

                 (5) make remittance under the laws of this state to be used by this
                     state to:

                          (A) pay claims made on policies written by the
                              association;

                          (B) purchase reinsurance covering losses under those
                              policies; or

                          (C) prepare for or mitigate the effects of catastrophic
                              natural events.

/d. § 2210.056(b) (West Supp. 2012). Nothing in the language of section 2210.056 limits
TWIA' s authority to use association assets to satisfy prior obligations with current or future
premiums.

        Furthermore, Insurance Code section 2210.071 addresses the payment of excess losses,
stating, in relevant part:

              (a) If, in a catastrophe year, an occurrence or series of occurrences
                  in a catastrophe area results in insured losses and operating
                  expenses of the association in excess of premium and other
                  revenue of the association, the excess losses and operating
                  expenses shall be paid as provided by this subchapter.

              (b) The association shall pay losses in excess of premium and
                  other revenue of the association from available reserves of the
The Honorable Todd Hunter - Page 3           (GA-1033)




                  association and available amounts in the catastrophe reserve
                  trust fund.

!d. § 2210.071(a)-(b). While section 2210.071 addresses how TWIA should fund losses that
exceed available premiums and other revenue, nothing in this provision restricts TWIA's use of
available premiums, current or future, to satisfy prior obligations. !d. Moreover, after reviewing
chapter 221 0 in its entirety, we find no other provision expressly prohibiting TWIA from using
future premiums to pay prior obligations.
The Honorable Todd Hunter - Page 4          (GA-1033)



                                    SUMMARY

                      Whether it is negligence by the TWIA organization, TWIA
              Board, or the Texas Department of Insurance to not make
              assessments against insurance carriers involves questions of fact
              that are inappropriate for the opinion process.

                   No provision in Insurance Code chapter 2210 prohibits
              TWIA from using future premiums to pay prior obligations.

                                            Very truly yours,




DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee
