The Texas insurance market is ranked the 12th largest in the world in terms of premium volume, but only an “average” number of insurance carriers call the state home, and many of the 400 insurance companies that are based in Texas are small- and medium-sized, according to state insurance regulators.
In addition, Texas is only “average” in terms of the number of large insurance companies that are domiciled in the state, the Texas Department of Insurance noted in its biennial report to the state Legislature. The report, which the department is required to provide to the Legislature every two years, defines a large insurance carrier as one that writes $500 million or more in annual premium.
Other states, TDI said, “retain a greater number of domestic insurers in relation to the size of their insurance markets and serve as the home to a disproportionately higher number of large insurance companies.”
TDI believes that the state has the opportunity to change that situation and attract more and larger insurance companies to Texas.
Texas Insurance Commissioner Eleanor Kitzman told a group of surplus lines insurance professionals last November that her “philosophy generally is to request as little legislation as possible and only when there is just absolutely no other way to accomplish what I think needs to be done.” Kitzman said she prefers to facilitate necessary changes or accomplish regulatory objectives without legislation.
Nevertheless, in this case, TDI has outlined a number of initiatives lawmakers may want to consider in order to make the state more appealing to insurers as a home base.
Those recommendations are:
- “Reduce costs borne by Texas-domestic insurers by spreading the costs of TDI’s examination overhead assessments to all insurers licensed in Texas;
- Strengthen the protection of the confidential regulatory information used by various regulators and law enforcement officials;
- Allow additional investment authority for the largest, most financially stable insurers;
- Amend regulatory approval thresholds in the Texas Holding Company Act based on the NAIC [National Association of Insurance Commissioners] model act language to enhance uniformity and consistency from state to state;
- Grant discretion to the commissioner of insurance, with concurrence from the comptroller of public accounts, to grant credits for premium or maintenance taxes for temporary periods of time for insurers who locate their physical operations in Texas;
- Appoint a study group to review Texas premium tax rates; and
- Update and streamline the incorporation and licensing statutes for insurance companies.”
The 2013 Texas legislative session began Jan. 8.