The Texas House of Representatives Committee on Insurance held a hearing on Tuesday, March 19, 2019, where it discussed HB 1940, which would allow eligible surplus lines insurers to write windstorm and hail insurance, even if coverage is available from the Texas Windstorm Insurance Association (TWIA).
Rep. Eddie Lucio III, the sponsor of the bill, stated that TWIA is only authorized to write coverage for loss resulting from windstorm and hail perils. He said that policyholders insured by TWIA must obtain the balance of their property insurance through private insurers or the Texas FAIR Plan. He noted that there is confusion in the marketplace as to whether surplus lines insurers may lawfully provide insurance coverage to residents in TWIA’s coverage area.
“HB 1940 would make it clear that surplus line insurers may provide insurance coverage to the residents of these counties, without regard to the availability of TWIA coverage,” Lucio said. “Under 1940, the resident would be free to purchase coverage from TWIA or a surplus line insurer willing to insure their property.”
Beaman Floyd, Director of the Texas Coalition for Affordable Insurance Solutions, also spoke in favor of the bill. He said that it was a way to clarify the existing law and secure additional underwriting capital for the coastal area.
Members of the committee had no questions on the bill and it was left pending.
As bills proposing reform to the National Flood Insurance Program (NFIP) are filed in Congress, the US House Financial Services Committee held a hearing on Wednesday, March 13, 2019, to gather information from experts on the reauthorization of the program.
Chairwoman Rep. Maxine Waters (D-CA) recognized a group of House members who expressed concern over the program’s current structure and advocated for major reforms. Members of the panel acknowledged that a portion of the program’s debt was previously forgiven by Congress, while also recognizing that it should take a deeper dive to reduce future loss.
“Building a more resilient and cost-effective NFIP are goals that would benefit all consumers,” said Committee Ranking Member Rep. Patrick McHenry (R-NC). “One thing we are committed to is having an effective National Flood Insurance Program. One that can weather the storm to ensure all impacted Americans and taxpayers are protected.”
The committee also heard testimony from the following experts:
- Maria Cox Lamm – South Carolina Department of Natural Resources, on behalf of the Association of State Flood Plain Managers
- Christopher Heidrick – Heidrick & Company Insurance and Risk Management Services, LLC, on behalf of the Independent Insurance Agents and Brokers of America
- Velma Smith – Senior Officer, The Pew Charitable Trusts
- Mabél Guzmán – Broker, @properties, on behalf of the National Association of Realtors
- Collin O’Mara – President and CEO, National Wildlife Federation, on behalf of the SmarterSafer Coalition
- Raymond J. Lehmann – Director of Finance, Insurance and Trade Policy, Street Institute
The NFIP is currently set to expire on May 31, 2019. Congress has passed several short-term extensions, but many members of the legislature are now encouraging an extended solution.
HB 3076, filed by Rep. Ken King, proposes the establishment of the Texas Tornado and Wildfire Insurance Association, which would serve as a residual insurer of last resort for tornado and wildfire insurance in Texas.
Under the bill, admitted insurers would be incentivized to write tornado and wildfire insurance on a voluntary basis, minimizing the burden on the association. All property insurers authorized to write property insurance in Texas would be subject to membership in the association and would remain a member throughout the duration of the association.
The organization would be overseen by a nine-member board of directors, with directors serving staggered six-year terms. Under the bill, the Texas Tornado and Wildfire Insurance Association would issue insurance policies no later than January 1, 2020. The bill takes effect immediately if it receives a two-thirds vote in the Texas House and Senate. Otherwise, it would take effect September 1, 2019.
State Rep. Eddie Lucio III has filed HB 1940 in the Texas House of Representatives, which would allow an eligible surplus lines insurer to provide windstorm and hail insurance, despite available coverage from the Texas Windstorm Insurance Association (TWIA). Under the bill, a diligent effort for coverage in the admitted market would still be required. However, available insurance through TWIA would not preclude an eligible surplus lines insurer from providing coverage.
Lucio III, who serves as Chairman of the Texas House Insurance Committee, filed the bill on February 19, 2019. It has not yet been assigned to committee.
If the bill receives a two-thirds vote in the House, it will take effect immediately. If it passes and does not receive a two-thirds vote, it will take effect on September 1, 2019.
The Texas House of Representatives Committee on Insurance held its first meeting of the 86th Legislative Session on Tuesday, February 12, 2019.
Rep. Eddie Lucio III, committee chair, stated that the purpose of the meeting was informational. No specific bills were discussed.
Texas Insurance Commissioner Kent Sullivan provided testimony, along with Chief Deputy Commissioner Doug Slape, regarding the Texas Department of Insurance’s (TDI) purpose and initiatives since his appointment. Members of the committee asked questions about the organization’s resources and plans moving forward.
Following this presentation, Melissa Hamilton, Public Counsel for the Office of Public Insurance Counsel (OPIC), and Kara Mace, OPIC Deputy Public Counsel, provided an overview of the organization and answered questions. Texas Windstorm Insurance Association (TWIA) General Manager John Polak wrapped up the hearing by sharing information about TWIA.
The hearing in its entirety can be viewed online.
Following nationwide flood disasters, there has been a push to expand private flood insurance. A new bill could demonstrate that the surplus lines market is healthy and able to take on additional flood risk.
Rep. John Frullo filed HB 1306 in the Texas House of Representatives on February 1, 2019. The bill would carve out a diligent effort exclusion for those purchasing flood coverage under a surplus lines insurance policy.
Currently, Sec. 981.004 of the Texas Insurance Code holds that an eligible surplus lines insurer may only provide surplus lines insurance if the full amount of insurance required cannot be obtained from an admitted insurer in the state. Further, the coverage provided may only be in the amount that exceeds the coverage obtained from an admitted insurer.
This bill states that these two requirements do not apply to flood coverage under an insurance policy issued by an eligible surplus lines insurer. If the bill is passed by the Legislature, it would apply to all new and renewal insurance policies effective on or after January 1, 2020.
With the 86th Texas Legislature underway, both the House of Representatives and Senate have taken up the Texas Department of Insurance’s (TDI) recommendation to require property policies to disclose if the policy does not protect against flood damage.
Rep. Mary Ann Perez filed HB 283 in the House, which requires an insurer that issues a residential or commercial property policy to disclose if the policy does not provide coverage against flood loss. Sen. Kelly Hancock, Chair of the Senate’s Business & Commerce Committee, filed a similar bill in the Senate, SB 442.
HB 970, filed by Rep. Armando Walle, requires a seller to disclose whether a dwelling, manufactured home lot, or commercial property with a prospective tenant is located in a floodplain or is at risk of flooding. SB 339 and HB 993, filed by Sen. Joan Huffman and Rep. Garnet F. Coleman, respectively, require comparable disclosures.
In the wake of Hurricane Harvey and widespread flooding events over the past two years, state lawmakers have filed several bills related to floods. In addition to those regarding insurance, bills to create a state flood plan and conduct a comprehensive study on flood control infrastructure for Harris County have also been filed. While the state experienced loss as a result of natural disasters, lawmakers are now responding to prevent future loss on a similar scale.
Speaker of the House Dennis Bonnen announced House committee appointments for the 86th Texas Legislature on Wednesday, January 23, 2019. Those named to the House Insurance Committee include the following:
- Eddie Lucio III, Chair
- Tom Oliverson, Vice-Chair
- Dennis Paul
- Chris Turner
- Hubert Vo
- Greg Bonnen
- Sarah Davis
- Julie Johnson
- Stan Lambert
This announcement came following Lt. Gov. Dan Patrick’s Senate committee appointments on Friday, January 18, 2019. The Senate Business & Commerce Committee includes the following members:
- Kelly Hancock, Chair
- Robert Nichols, Vice Chair
- Donna Campbell
- Brandon Creighton
- Jose Menendez
- Angela Paxton
- Charles Schwertner
- John Whitmire
- Judith Zaffirini
Each committee hears bills related to insurance in its respective house, and committees will become more active as the session continues. SLTX will keep the surplus lines insurance community informed of any impactful bills and will serve as a resource to the legislature as requested.
Rep. Joe Straus, Speaker of the Texas House of Representatives, issued interim charges to each committee in the House on Monday, October 23, 2017. The charges list areas that the committees will study and discuss prior to the 86th legislative session, which begins in January 2019. Of the 35 committees that received charges, 31 will consider issues related to Hurricane Harvey.
The House Committee on Insurance is tasked with assessing Harvey’s impact on the insurance market in Texas, including an evaluation of the Texas Windstorm Insurance Association (TWIA) and Texas FAIR Plan Association. The committee is also responsible for clarifying common homeowners’ insurance policy forms and examining the status of the health insurance market in Texas, among others, but no charges specifically related to the surplus lines market were assigned.
Due to the devastating floods caused by Harvey, the House Committee on Natural Resources has been tasked with examining projects designed to control flooding and mitigation efforts, as well as studying available data related to flood risk and determining the best methods to provide state funds for flood infrastructure needs.
Each committee will present their findings to the House prior to the next legislative session. A list of the charges in their entirety can be viewed online.
The House Financial Services Committee met Thursday, June 15, 2017, to mark-up bills that could reauthorize and reform the National Flood Insurance Program (NFIP). The program, which provides almost 5 million flood insurance policies, is set to expire on September 30, 2017, unless it is reauthorized by Congress.
Seven (7) bills have been introduced to address the NFIP, and two (2) of the bills, H.R. 2868 (the National Flood Insurance Program Policyholder Protection Act of 2017) and H.R. 2874 (the 21st Century Flood Reform Act of 2017), were passed by the committee during the markup. An additional meeting will be held Wednesday, June 21, 2017, to mark-up the remaining five (5) bills.
The passage of these reforms could create new opportunities for private sector insurers. This may positively impact the excess and surplus lines industry by allowing surplus lines insurers to open and expand their business in the flood market.