Insurance Department in Limbo as Texas Legislature Adjourns

While the Texas Legislature managed to pass a long sought bill, HB4409, that addresses funding for the state’s insurer of last resort for wind and hail along the Texas coast, lawmakers failed to decide on other legislation impacting the insurance industry in the state.

State legislators adjourned the session without reauthorizing the continuation of five states agencies, including the Department of Insurance (TDI) and the Office of Public Insurance Council.

Those agencies and the Texas Department of Transportation (TxDOT) could be shut down Sept. 1 under the provisions of the Texas Sunset Act unless lawmakers reconvene for a special session, which many observers believe is likely.

At a press conference, Sen. Leticia Van de Putte called this session one of “missed opportunities.” She said lawmakers had failed the people of the state of Texas in not securing real insurance reform. “We still have the highest rate of homeowners insurance in the country and nothing we did this session changes it,” Van de Putte said.

Van de Putte and a coalition of other lawmakers had filed that would have, among other things, returned the rate setting process for personal lines insurance to one of prior approval as opposed to the current file and use process. Other bills would have standardize homeowners forms, banned the use of credit scoring and directed the Texas Department of Insurance to study the use of data mining by insurance companies.

She said the failure of the House and Senate to address bills that would continue the existence of agencies like TDI and TxDot was due to lack of effective leadership. “If we have to be called in for a special session, we have had a complete and total failure of leadership,” Van de Putte said.

The Texas House of Representatives on the night of May 31 passed a House-Senate compromise bill that addresses funding for the Texas Windstorm Insurance Association, which saw its reserves depleted after Hurricanes Dolly and Ike slammed opposite ends the coast last year.

The compromise bill relies in part on bonding to replenish the windstorm’s reserves.

Sen. Troy Fraser, R-Horseshoe Bay, told the Associated Press that one provision of the compromise plan calls for the state to provide a bridge loan of sorts to the windstorm fund until 10-year bonds can be issued after a major hurricane strikes.

Reaching an agreement on overhauling the windstorm insurance fund was one of the trickiest issues this legislative session. Coastal and inland representatives had trouble for months finding common ground that they thought would be fair to all their constituents.

Topics Texas Legislation