HB2518

Regular Session

Relating to the use of installment premium payment plans on Texas Windstorm Insurance Association policies.

ModeratePlan for compliance

Low Cost

Effective:2025-06-22

Enforcing Agencies

Texas Department of Insurance • Texas Windstorm Insurance Association

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: June 22, 2025 (Legal enactment).
Compliance Deadline: January 1, 2026. (Strict prohibition applies to policies with an effective date on or after this day).
Agency Rulemaking: While no specific rulemaking deadline is mandated, we anticipate the Texas Department of Insurance (TDI) or TWIA will issue operational guidance regarding "bundled" payment rejection protocols prior to Q4 2025.

Immediate Action Plan

Immediate: Contact your AMS vendor (Vertafore, Applied, etc.) to confirm their Q3 updates will support splitting TWIA premiums from bundled finance quotes.
By Sept 1, 2025: Update client fee agreements to remove references to finance origination fees for TWIA policies.
By Oct 1, 2025: Issue a directive to sales staff prohibiting the inclusion of TWIA policies in premium finance quotes for Jan 1 renewals.
By Dec 1, 2025: Run a report of all Jan 1 TWIA renewals and manually verify payment method is set to "Direct Bill/Installment."

Operational Changes Required

Contracts

Premium Finance Agreements (PFAs): You must amend workflows to ensure no Power of Attorney (POA) is granted to a finance company over a TWIA policy. Any PFA purporting to cover a TWIA policy post-deadline is voidable and legally non-compliant.
Vendor MSAs: Review Master Services Agreements with premium finance companies. If you have volume commitments, you must issue a notice of force majeure or change-in-law to exclude TWIA premiums from those targets.

Hiring/Training

Quoting Protocols: Staff must be retrained to stop "bundling" Wind, Flood, and HO policies into a single finance contract. They must present two separate payment streams: one for the financed HO/Flood, and one for the TWIA direct installment plan.
System Overrides: CSRs must be trained *not* to force-match TWIA policy IDs into finance company portals.

Reporting & Record-Keeping

Audit Trails: Your Agency Management System (AMS) must document that the client was offered the TWIA installment plan.
Negative Confirmation: Files must demonstrate the absence of third-party financing liens on TWIA policies.
System Flags: Configure AMS to block the association of a Premium Finance Company payor code with a TWIA carrier code for policies effective 1/1/2026 onwards.

Fees & Costs

Revenue Impact: Agencies will lose administrative fees previously charged for setting up third-party financing on the wind portion of the risk.
Cost Savings: Clients will no longer pay interest (APR) on the wind portion, as TWIA installment plans are interest-free.

Strategic Ambiguities & Considerations

The "Bundled Check" Problem: The statute prohibits the *arrangement*, but does not explicitly detail how TWIA will handle a single check received from a finance company intended to cover multiple policies. Risk: TWIA may reject the entire payment, leaving the policyholder uninsured.
Definition of "Arrangement": While credit card payments are technically financing, the law targets Chapter 651 entities. However, until TDI clarifies, assume strictly that *no* entity holding a POA and the right to cancel the policy may pay the premium.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsInsurance Insurance--property & Casualty Windstorm Devices & Insurance Windstorm Insurance Association, Texas

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 2518

By: Barry

Insurance

Committee Report (Unamended)

BACKGROUND AND PURPOSE

According to information provided to the committee by the bill author, despite Texas Windstorm Insurance Association (TWIA) policyholders being allowed to pay their TWIA policy premiums in 2-pay, 4-pay, or 10-pay plans with zero interest, some policyholders nevertheless use premium financing companies to pay TWIA policy premiums. These companies, as the author explains to the committee, may charge an interest fee or a flat rate fee for their services, which can negatively affect TWIA policyholders. H.B. 2518 seeks to address this issue by prohibiting the use of premium financing arrangements to pay premiums on TWIA policies due to the availability of multiple installment plans directly through TWIA at no additional cost to the insured.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 2518 amends the Insurance Code to prohibit the use of premium financing arrangements for Texas Windstorm Insurance Association (TWIA) policyholders due to the availability of multiple installment payment plans directly through TWIA at no additional cost to the insured. The bill applies to TWIA policies issued and renewed on or after January 1, 2026.

EFFECTIVE DATE

September 1, 2025.

House Authors

Rep. Jeff BarryRepublican · Primary Author

Joint Authors

Terri Leo-Wilson (R)

Senate Sponsors

Sen. Adam HinojosaRepublican · Primary Sponsor

Cosponsors (2)

Bill Text(with markup)

H.B. No. 2518

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the use of installment premium payment plans on Texas
	Windstorm Insurance Association policies.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 2210.2032, Insurance Code, is amended by
	adding Subsection (c) to read as follows:
	(c) Due to the availability of multiple installment payment
	plans directly through the association at no additional cost to the
	insured, the use of premium financing arrangements is prohibited.
	SECTION 2. The changes in law made by this Act apply to
	policies issued and renewed on or after January 1, 2026.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 29, 2025

TO:	Honorable Jay Dean, Chair, House Committee on Insurance

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB2518 by Barry (Relating to the use of installment premium payment plans on Texas Windstorm Insurance Association policies.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

454 Department of Insurance

LBB Staff:

JMc, AAL, BFa

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Frequently Asked Questions

Common questions about HB2518

What does Texas HB2518 do?

HB2518 explicitly prohibits the use of third-party premium financing arrangements (under Chapter 651, Insurance Code) for any Texas Windstorm Insurance Association (TWIA) policy issued or renewed on or after January 1, 2026. Insurance agents and brokers must immediately decouple TWIA premiums from bundled finance agreements and transition all windstorm clients to TWIA’s direct, surcharge-free installment plans. Implementation Timeline Effective Date: June 22, 2025 (Legal enactment).

Who authored HB2518?

HB2518 was authored by Texas Representative Jeff Barry during the Regular Session.

When was HB2518 signed into law?

HB2518 was signed into law by Governor Greg Abbott on June 22, 2025.

Which agencies enforce HB2518?

HB2518 is enforced by Texas Department of Insurance and Texas Windstorm Insurance Association.

How urgent is compliance with HB2518?

The compliance urgency for HB2518 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB2518?

The cost impact of HB2518 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB2518 address?

HB2518 addresses topics including insurance, insurance--property & casualty, windstorm devices & insurance and windstorm insurance association, texas.

Legislative data provided by LegiScanLast updated: November 25, 2025

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