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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB3689

Regular Session

Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a surcharge.

Government Affairs & Regulatory Compliance Analysis

HB3689: Government Affairs Overview

HB3689 fundamentally restructures Texas Windstorm Insurance Association (TWIA) funding, replacing public securities with direct state financing repaid via mandatory surcharges on all Texas property insurance policies, not just coastal lines. Effective September 1, 2025, this law mandates that insurers update billing systems to collect these pass-through charges and requires business policyholders to pay them or face immediate policy cancellation for non-payment of premium.

Rep. Todd Hunter·House Bill·Regular Session

Critical
High Cost
Effective:2025-06-20
Enforcing Agencies

Comptroller of Public Accounts • Texas Department of Insurance • Texas Windstorm Insurance Association (Board of Directors)

Business Impact

Who HB3689 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

🏦

Banking & Finance

Affected business types:

  • Banks
  • Credit unions
  • Financial services firms
  • Insurance companies
View all banking & finance legislation

Key Operational Considerations

  • 1MGA/TPA Agreements: Contracts with third-party administrators must be amended to explicitly require the collection, segregation, and remittance of the new Catastrophe Surcharge.
  • 2Policy Documents: All policies subject to the surcharge must include the statutory disclosure statement: *"A CATASTROPHE SURCHARGE HAS BEEN INCLUDED ON YOUR POLICY..."*

Estimated Cost Impact

highSignificant operational investment may be required.

Enforcing Agencies

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HB3689
Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a sur...
Critical Urgency
Passed with Opposition
House Vote131 - 12
YEA
92% in favor143 voting
Senate Vote29 - 2
YEA
94% in favor31 voting
14
Total Opposition Votes
Cost Impact
High
Effective
2025-06-20
Enforcing Agencies
Comptroller of Public AccountsTexas Department of InsuranceTexas Windstorm Insurance Associ...
Primary Author: Rep. Todd Hunter
89th Texas Legislature
jdkey.com
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Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: January 1, 2026 (The new funding structure applies to catastrophe years beginning on this date).
  • Agency Rulemaking: The Texas Department of Insurance (TDI) must adopt implementation rules by December 1, 2025.
  • *Regulatory Gray Zone:* Between Sept 1, 2025, and Dec 1, 2025, insurers must prepare systems without final technical specifications regarding remittance frequency.

Immediate Action Plan

  • 1. Budget for IT Overhaul: Allocate funds now for Q4 2025 billing system updates to accommodate the "Catastrophe Surcharge" line item.
  • 2. Draft Disclosures: Legal teams must draft the mandatory policy disclosure text immediately to have it ready for deployment.
  • 3. Review Reinsurance: Insurers must audit reinsurance treaties for coverage of the $1B assessment tier.
  • 4. Update AP Protocols: Business owners should factor a potential 5-15% insurance cost variance into 2026+ pro formas to account for potential surcharges.

Operational Changes Required

Contracts

  • Reinsurance Treaties: Member insurers must review treaties immediately. You must verify if current reinsurance covers the new statutory $1 billion member assessment tier or if a specific buy-back is required.
  • MGA/TPA Agreements: Contracts with third-party administrators must be amended to explicitly require the collection, segregation, and remittance of the new Catastrophe Surcharge.
  • Policy Documents: All policies subject to the surcharge must include the statutory disclosure statement: *"A CATASTROPHE SURCHARGE HAS BEEN INCLUDED ON YOUR POLICY..."*

Hiring/Training

  • Billing & Collections Staff: Train staff on the "Cancellation Trap." Personnel must understand that under HB3689, a policyholder's failure to pay the surcharge constitutes failure to pay the premium. Partial payments (premium only) must be rejected or treated as non-payment, triggering cancellation protocols.
  • Accounts Payable (Policyholders): Business owners must update internal payment protocols to ensure full payment of insurance invoices, as disputing a surcharge while paying the base premium will result in loss of coverage.

Reporting & Record-Keeping

  • Mandatory Disclosure: Insurers must draft and integrate the statutory surcharge disclosure form into policy generation systems.
  • Board Notification: Member insurers purchasing reinsurance to cover potential assessments must notify the TWIA Board *before* an occurrence.
  • Fund Segregation: Insurers must establish separate accounting ledgers for collected surcharges; these funds are state property and cannot be commingled with general premium revenue.

Fees & Costs

  • Catastrophe Surcharge: A variable percentage of the premium (capped at the amount needed to repay state financing over 3 years) applied to all policyholders post-event.
  • Member Assessment: Insurers face an aggregate assessment liability of up to $1 billion per catastrophe year.
  • IT Development Costs: Insurers must budget immediately for billing system reconfigurations to handle a tax-exempt, pass-through surcharge line item.

Strategic Ambiguities & Considerations

The statute leaves critical operational mechanics to TDI rulemaking (due Dec 1, 2025). Watch for:

  • 1. Surcharge Percentage & Cap: The specific percentage is not defined in the statute; it will be set by the Commissioner post-event.
  • 2. Remittance Frequency: The law does not specify if insurers must remit collected surcharges to the Comptroller monthly or quarterly.
  • 3. The "1-in-50" Probability: The Commissioner's method for determining this actuarial threshold will dictate how easily the surcharge trigger is pulled. A lower threshold increases the frequency of surcharges.

Need Compliance Guidance on This Legislation?

JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 4, 2025
Passed House
May 1, 2025
Passed Senate
May 26, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsDisaster Preparedness & ReliefFees & Other Nontax RevenueFees & Other Nontax Revenue--stateInsuranceInsurance--property & CasualtyState FinancesState Finances--appropriationsState Finances--management & ControlWindstorm Devices & InsuranceInsurance, Commissioner ofTreasury Safekeeping Trust Company, TexasWindstorm Insurance Association, TexasComptroller of Public Accounts
03

House Authors

Rep. Todd HunterRepublican · Primary Author
Joint Authors
Coauthors (18)

Senate Sponsors

Sen. Lois KolkhorstRepublican · Primary Sponsor
Cosponsors (2)

Bill Text(with markup)

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Rep. Todd Hunter

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Related by Topic

View more Disaster Preparedness & Relief legislation
Quick Reference

Frequently Asked Questions

Common questions about HB3689

Q

What does Texas HB3689 do?

HB3689 fundamentally restructures Texas Windstorm Insurance Association (TWIA) funding, replacing public securities with direct state financing repaid via mandatory surcharges on all Texas property insurance policies, not just coastal lines. Effective September 1, 2025, this law mandates that insurers update billing systems to collect these pass-through charges and requires business policyholders to pay them or face immediate policy cancellation for non-payment of premium.

Q

Who authored HB3689?

HB3689 was authored by Texas Representative Todd Hunter during the Regular Session.

Q

When was HB3689 signed into law?

HB3689 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB3689?

HB3689 is enforced by Comptroller of Public Accounts, Texas Department of Insurance and Texas Windstorm Insurance Association (Board of Directors).

Q

How significant are the changes in HB3689?

The regulatory priority for HB3689 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB3689?

The cost impact of HB3689 is estimated as "high". This may vary based on industry and implementation requirements.

Q

What topics does HB3689 address?

HB3689 addresses topics including disaster preparedness & relief, fees & other nontax revenue, fees & other nontax revenue--state, insurance and insurance--property & casualty.

Q

What are the key dates for HB3689?

Key dates for HB3689: Effective date is 2025-06-20. Rulemaking: Adopt rules necessary to implement Subchapters B-2 (Payment of Excess Losses), M-1 (State-Funded Financing), and M-2 (Catastrophe Surcharge). (2025-12-01); Provide the adopted or approved method for determining the 'one in 50' probability for association risks to TWIA. (Annually (Feb 1)). Consult with legal counsel regarding applicabi

Q

What are the penalties under HB3689?

HB3689 establishes the following penalties: administrative penalty of Policy Cancellation for Failure by a policyholder to pay the assessed Catastrophe Surcharge (treated as failure to pay premium).; civil penalty of Defendant's costs and attorney's fees for Bringing a civil action against the state, Comptroller, or Treasury Safekeeping Trust Company regarding the investment decisions for the financing arrangement.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by HB3689?

HB3689 primarily affects insurance companies and financial institutions, property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026