Texas Senate Approves DOI Bill

A bill to continue the operation of the Texas Department of Insurance was approved by the state Senate with provisions that include the use of prior approval as a "back drop."

SB 1007 is meant to clarify the rate approval process, according to a news release from the Senate. Currently, insurers file rates with the department and use them while the rate request is reviewed. Republican Sen. Glenn Hegar of Katy, the bill's author, said the system is confusing. SB 1007 would allow the insurance commissioner to "place an insurer under a prior approval system and would require him or her to approve or disapprove rate changes within 30 days."

"There is no magic formula for lowering insurance rates and no type of regulatory system can automatically lower rates or premiums," Hegar said in a statement. "This bill better defines the file-and-use system, with stronger prior approval protections as a back drop, to bring greater stability and consistent regulation in Texas."

The bill also includes an amendment that would create fines for insurers "who seek to drag out the approval process through lengthy appeals." The company has 60 to 90 days to refile a new rate once one is rejected by the commissioner for being excessive or discriminatory.

The bill heads to the House for further consideration.

Lawmakers have yet to address funding structure concerns with the Texas Windstorm Insurance Association. TWIA used up all of the cash it had on hand after Hurricane Dolly in July 2008 and depleted the state catastrophe fund. The association assessed its member insurers $100 million before the larger Hurricane Ike made landfall in the state in September. In its aftermath, TWIA assessed insurers another $430 million in order to be able to tap into reinsurance to pay claims (BestWire, Sept. 15, 2008). TWIA expects $2.7 billion in losses from Ike.

In 2007, the top writers of homeowners multiperil in Texas, according to A.M. Best Co. state/line product information based on direct premiums written, were State Farm Group, with a 29.4% market share; Allstate Insurance Group, with 14.7%; Farmers Insurance Group, with 13%; USAA Group, with 7.6%; and Travelers Group, with 5.4%.