Insurance Bills Discussed in Senate Committee

Apr 13, 2017 | Archive News

As this year’s legislative session continues, bills related to the excess and surplus lines industry are progressing through both the Texas House of Representatives and the Senate.

Senate Bill 1491, which would allow domestic surplus lines insurers in the state of Texas, was discussed Tuesday, April 11, by the Senate Business & Commerce Committee. The committee held a public hearing to discuss and hear testimony on 25 different bills, including SB 1491.

Filed by Sen. Judith Zaffirini, the bill adds a provision to the Texas Insurance Code allowing surplus lines insurers to domicile in the state of Texas. Currently, a surplus lines insurer must be domiciled in another state to write surplus lines business in Texas as an eligible insurer.

The bill was requested by the Texas Department of Insurance (TDI) and was included in its biennial report, which contains recommendations from the department on legislation that should be considered regarding the insurance industry.

Under the proposed legislation, a property and casualty insurance company that has capital and surplus of at least $15 million may apply to become a certified domestic surplus lines insurer in Texas. If approved, the bill could lead to increased revenue, employment opportunities, and more direct oversight by TDI.

Luke Ledbetter, Executive Vice President and Chief Underwriting Officer of Program Services for State National Companies, was the only witness to testify. Ledbetter was in favor of the bill, and explained how the bill would benefit companies such as his if passed.

In addition to SB 1491, the committee heard two further bills related to the insurance industry. SB 1449, filed by Sen. Larry Taylor, would allow legislative oversight before any changes to a model law are adopted in the state. The National Association of Insurance Commissioners (NAIC) has put forth model laws, including a law on credit for reinsurance that must be adopted this session to retain NAIC accreditation, that include the language “or the current model” in the text. With this language, the NAIC could introduce changes to its model law that would automatically become law in Texas without legislative oversight. SB 1449 would require this type of change to be reviewed and approved by the state legislature before it becomes law.

After hearing testimony on the bill, Sen. Taylor stated that he would amend the bill to allow the Texas Commissioner of Insurance the ability to temporarily approve changes to a model law before they are ratified in the following legislative session.

Sen. Taylor also presented SB 1450, which seeks to prohibit any rule set forth by the Commissioner of Insurance to implement an interstate, national, or international agreement that infringes on the state’s authority to regulate insurance. Sen. Taylor is concerned with the power to regulate the insurance industry remaining with the state. No public testimony was heard on the bill.

Other bills discussed include the following:

  • SB 1490. Corrects language relating to the premium surcharge certain automobile insurers are required to assess against an insured convicted of certain offenses
  • SB 83. Relates to the protection of energy critical infrastructure from electromagnetic, geomagnetic, terrorist, and cyber-attack threats
  • SB 1339. Adjusting the licensure requirements of Licensed Psychological Associates (LPA) and their ability to provide care without supervision
  • SB 1059. Provides that a residential parking permit may not be terminated or suspended while a tenant’s lease is still valid