Which statement correctly describes membership requirements for the FAIR Plan Association's authority to transact residential property insurance in Texas?

Which statement correctly describes membership requirements for the FAIR Plan Association's authority to transact residential property insurance in Texas?

• A. Members must be part of the Association to transact residential property insurance in Texas, and they do not have to write only policies underwritten by the Association.
• B. Members must be part of the Association and must write exclusively policies underwritten by the Association.
• C. Members are not required to be part of the Association.
• D. Members must be licensed but do not need to join the Association.

Answer: (A)

The key idea is that the Texas FAIR Plan Association operates through its member insurers, and you must be a member to participate in transacting residential property insurance under the Plan. Being a member gives an insurer access to write policies within the FAIR Plan, which is designed to provide coverage for risks that the standard market won’t insure. Importantly, joining the Plan does not force an insurer to write exclusively policies underwritten by the Association; member insurers can still write other lines of business outside the FAIR Plan. In short, membership is required to transact FAIR Plan residential property coverage, but it does not restrict insurers to only writing policies through the Plan.

The key idea is that the Texas FAIR Plan Association operates through its member insurers, and you must be a member to participate in transacting residential property insurance under the Plan. Being a member gives an insurer access to write policies within the FAIR Plan, which is designed to provide coverage for risks that the standard market won’t insure. Importantly, joining the Plan does not force an insurer to write exclusively policies underwritten by the Association; member insurers can still write other lines of business outside the FAIR Plan. In short, membership is required to transact FAIR Plan residential property coverage, but it does not restrict insurers to only writing policies through the Plan.