Apr
12
Written by:
Mark Lavergne
4/12/2011 3:14 PM
The House Insurance Committee today passed Texas Windstorm Insurance Association reform, and sunset bills for the Texas Department of Insurance and the Office of Public Insurance Council.
Those last two have gotten through committee with relatively few fireworks, and so have seen few permutations. No big fights on credit scoring or prior approval versus file-and-use have broken out.
But TWIA reform has been contentious. The committee substitute brought by Chairman John Smithee (R-Amarillo) sports a few changes from the originally filed HB 272. He said it is “still a bit of a work in progress.”
The new version tries to strike a balance in the tort wars by allowing litigation of TWIA claims disputes, but only after a series of alternative dispute resolution processes are exhausted.
It also removes the requirement that TWIA policyholders purchase flood insurance, removes the maximum value of a homestead insurable by TWIA, and requires TWIA to annually submit a catastrophe plan to the Legislature, explaining how it plans to assess and pay for damages for future major storms should they strike.
Also no longer in the bill are certain provisions aimed at streamlining the TWIA policy renewal process, as a means of driving down the commissions paid to TWIA-writing insurance agents. But Smithee told LSR he is still hoping to pass such reforms.
It also clarifies the state’s policy of assessing private insurers, which is a plus according to Beaman Floyd, whose Texas Coalition for Affordable Insurance Solutions represents large providers.
Under the bill, private insurers can only be assessed the maximum total amount of $800 million per year, rather than $800 million per storm. In other words, even if Hurricanes Ike, Katrina, and Andrew all hit Texas in the same year, insurance companies can be assessed only up to $800 million, not billions.
Still unresolved for the industry, however, if the question of the “drop-down” provisions, i.e., at what point precisely private insurance providers become liable for assessments if the state is unable to sell the first $1 billion of bonds immediately following a major storm.
The committee passed the bill on a vote of 7-2, with coastal Democrats Craig Eiland (Galveston) and Armando Walle voting no.
“I don’t like it,” Eiland said, surprising approximately zero people in the room.
The next step for the bill is the House calendars committee, whose job it will be to set the bill on the House floor’s calendar. Stay tuned.