Major Issues not ‘There for Insurance’ in Texas Legislative Session

With regard to insurance issues, the 2007 Texas legislative session was fairly uneventful, with one major bill favored by the industry going down in the waning days of the session and many “bad” bills failing to make the cut early on.

“I guess I would describe it as the session that wasn’t,” said Rep. Larry Taylor, R-Friendswood, and principal in the Truman Taylor Insurance Agency in Friendswood. “We did have some good things that needed to be done that obviously weren’t done. The major issues weren’t there for insurance.”

Taylor was speaking as member of a panel discussing legislative issues at the Independent Insurance Agents of Texas’ 110th Annual Conference & Trade Show, held in early June in San Antonio. Other panel members were TDI Associate Commissioner for Public Affairs David Durden; James Langford, with the Texas Windstorm Insurance Association/Texas Fair Plan and a vice president at Texas Farm Bureau Insurance Company; and Joe Woods, assistant vice president of State-Government Relations and Southwest regional manager for the Property Casualty Insurance Association of America. IIAT Government Affairs Director Lee Loftis moderated the panel.

Taylor explained that because a motion to suspend the state constitution to allow legislators to take up bills in the first 60 days of the session — a suspension that has been routine in the legislature for many years — failed, no committees other than appropriations committee were allowed to hear bills for the first two months. In addition, the last days of the session were taken up by a failed effort to oust current Speaker of the House Tom Craddick. So for a significant portion of the 140 day session, consideration of legislation was hampered.

With legislators unable to consider bills at the outset, “people had a lot of free time to think of other things,” Taylor said. “Bills came through the insurance committee that were, frankly, quite scary. … We had the opportunity to keep those off the floor.”

Langford agreed there was some “creativity going on” in developing legislation. He said between the House and Senate more than 6,500 pieces of legislation were filed, including bills and resolutions. The House filed around 4,500 bills, equivalent to about 30 per member, and the count in the Senate was approximately 2,150. Langford said from the industry’s perspective, that not many insurance bills got passed was a “silver lining,” considering the fact that industry-supported legislation that would have bolstered funding for the Texas Windstorm Insurance Association was not approved. He said he would characterize this year’s session as one in which “a lot of bad bills were introduced that were not passed, which is a positive.”

Woods noted that one of the “bad” bills that didn’t pass was one that would have allowed employees to bring their guns to work and keep them in their cars. He said similar bills had been rejected in other states but in Texas “it moved through the session very quickly and came very close to getting passed.”

Durden said a number of bills that grew out of TDI’s biennial report to the legislature were approved. Before every legislative session “the department is required by statute to submit a report to the legislature of changes that we would like to see to improve the regulation of insurance in the state,” Durden explained. “Our report was a little bit different this session. Not only did we have recommendations for legislative changes but we also discussed other things we described as emerging issues — things that the legislature was likely to confront — and tried to lay out a framework of what those issues might be.”

Including recommendations, around 32 items were discussed in the biennial report, out of which were generated 16 bills. “Of those 16 items, 11 of those were enacted into legislation.” Durden said. “A couple of those, if we had more time to reach a consensus with the industry we would have [gotten them passed] and then there were about three of them that I think … were going to be difficult under any circumstance.” He added he would put those three bills “in the category of the right view of the world from a regulatory standpoint” but which were stymied by practical and business issues.

He said one “difficult” bill would have allowed all auto insurers to add a surcharge on policies for minor traffic violations or convictions. “Currently the law allows for County Mutuals to charge for those kinds of violations but not other insurers,” Durden explained. “So our recommendation was to allow companies to charge for that.”

Another unsuccessful bill would have given TDI the authority to regulate the writing of commercial property insurance. “Regulate it like we do other forms of insurance, which is file and use,” Durden said. “Currently they are not subject to department regulation.

He said the last piece of failed legislation, “the one my phone rang the most about, was the one we called data mining.” He noted that Insurance Commissioner Mike Geeslin is interested in positioning “the department to be ahead of the curve on issues that we think might come up and might be used by companies as they innovate and develop new ways to underwrite business.” The data mining bill would have helped the department in keeping “informed about what’s happening out there, what things are being applied,” Durden said. “And if necessary, if it seems like the market is going to be disrupted, to require the insurer to phase in the new criteria.”