2021 Legislative Updates

As the end of the year approaches, SLTX would like to reflect on Legislative updates for 2021.  

The Wholesale & Specialty Insurance Association (WSIA) recalls that the Texas Department of Insurance (TDI) issued Bulletin No. B-0022-21 earlier this year. The changes related to SB 1367 became effective for insurance policies delivered, issued for delivery, or renewed on or after September 1, 2021. For more information regarding this change, please refer to the Diligent Effort Updates infographic or Diligent Effort page on our website.  

The National Flood Insurance Program (NFIP) also underwent an additional extension from December 3, 2021, to February 18, 2022. This will be the eighteenth short-term extension since 2017.  

For more information on State, Federal, and NAIC Legislative Updates, please visit the WSIA website. 

Senate Bill 1367 Changes the Requirements for Certain Lines of Insurance

The 87th Legislature passed Senate Bill 1367, which makes changes to certain lines of insurance. The changes are effective on or after September 1, 2021, for an insurance policy that is delivered, issued for delivery, or renewed.

The bill eliminates rate and form filing requirements for certain lines of commercial insurance. These exempt lines can be found on Commissioner’s Bulletin # B-0022-21.

Texas Senators Named to TWIA Oversight Board

Lt. Gov. Dan Patrick has appointed four Texas senators to the Windstorm Insurance Legislative Funding & Funding Structure Oversight Board. The board is responsible for gathering information on the Texas Windstorm Insurance Association’s (TWIA) current funding and funding structure, along with reviewing how catastrophic risk pools operate in other states.

Senators Kelly Hancock, Juan “Chuy” Hinojosa, Larry Taylor, and Charles Schwertner were named to the oversight board. These senators join a group of four state representatives, who have been appointed to the oversight board by Texas House Speaker Dennis Bonnen. The board will create a report for review by the legislature by November 15, 2020.

“I am proud to appoint these senators to the Windstorm Insurance Legislative Funding & Funding Structure Oversight Board,” said Lt. Gov. Patrick. “Responsible stewardship of Texas Windstorm Insurance Association (TWIA) is vital to our vibrant coastal communities, and I am confident these senators will focus their serious attention on this oversight task.”

The oversight board was created during the 2019 legislative session. Lt. Gov. Patrick has yet to name senators to the Windstorm Insurance Legislative Oversight Board, a second board created during the 2019 session to make recommendations for legislation related to TWIA’s funding structure.

State Representatives Appointed to TWIA Oversight Boards

Texas House Speaker Dennis Bonnen has appointed state representatives to two Texas Windstorm Insurance Association (TWIA) oversight boards that will make recommendations for future legislation.

Representatives Abel Herrero, J.M. Lozano, Geanie Morrison, and Ed Thompson were named to the Windstorm Insurance Legislative Oversight Board. The board was originally created by the Texas Legislature in 2009 but was charged during the 2019 legislative session with evaluating a merger of TWIA and the Texas FAIR Plan Association. The members will report their recommendations to the legislature by January 1, 2021.

The Windstorm Insurance Legislative Funding & Funding Structure Oversight Board was also created during the 2019 session. The board will make recommendations for legislation to ensure the sustainability of TWIA’s funding structure and will report its findings by November 15, 2020. Speaker Bonnen has appointed Representatives Greg Bonnen, Alex Dominguez, Todd Hunter, and Eddie Lucio III to this board.

Each oversight board will also include four members of the Texas Senate, who will be appointed by the lieutenant governor.

Spending Bill Includes NFIP, TRIA Reauthorizations

Congress has passed a major spending bill that includes renewals of the National Flood Insurance Program (NFIP) and Terrorism Risk Insurance Act (TRIA). The bill was first passed by the US House of Representatives on December 17, 2019, before it was voted on and passed by the Senate on December 19, 2019, the eve of the NFIP’s expiration.

The bill renews the NFIP until September 30, 2020, and TRIA for an additional seven years. TRIA originally would have expired on December 31, 2020.

Members of the insurance industry from organizations such as the American Property Casualty Insurance Association (APCIA) and National Association of Mutual Insurance Companies (NAMIC) have applauded the TRIA extension.

“This is a great example of how Congress got their job done, on time, with the interest of the American people at the forefront,” said Nat Wienecke, Senior Vice President of Federal Government Relations for APCIA. “Because TRIA is critical to the stability of the nation’s economy, businesses of all sizes, and the insurance markets, Congress enacted the Program well before it was set to expire. This is a job well-done.”

The bill will now be sent to President Donald Trump, who is expected to sign the legislation and enact it into law.

Texas House Insurance Committee to Hold Interim Hearing on TWIA

State Rep. Eddie Lucio III, Chairman of the Texas House of Representatives Committee on Insurance, has announced a hearing for the committee to discuss its interim charge related to the Texas Windstorm Insurance Association (TWIA) and implementation of House Bill 1900. The hearing will be held January 15, 2020, in Rockport, Texas.

The Texas legislature passed HB 1900 at the end of the 86th legislative session in May 2019. It is meant to modify TWIA operations and funding practices to prevent perpetual rate increases for coastal residents and businesses.

The TWIA Actuarial and Underwriting Committee recommended a 5 percent rate increase for commercial and residential risks in November, but the association’s Board of Directors voted against the rate hike at a meeting on December 10, 2019. About 40 people, including elected officials, county judges, and city politicians, spoke against the increase during the meeting’s public comment period.

In November, several state legislators issued a letter to the TWIA board in opposition of the Actuarial and Underwriting Committee’s recommendation, stating that many in Hurricane Harvey-affected areas are still recovering from the catastrophe.

“We encourage you to look at other ways to achieve the goal of generating revenues to pay claims that will not put recovering communities at a disadvantage,” said the legislators in the letter.

The TWIA board voted during its meeting to assess member insurance companies $90 million based on losses from Hurricane Harvey, which must be approved by Insurance Commissioner Kent Sullivan. The board will defer further consideration of TWIA rates until its next statutorily required rate filing in August 2020. TWIA’s next quarterly board meeting will be held in Austin in February 2020.

NFIP Extended as Part of Government Funding Bill

The National Flood Insurance Program (NFIP) was reauthorized for an additional month on November 21, 2019, the day it was set to expire. The program is now funded until December 20, 2019.

The extension was included in a larger government funding bill that will keep the government operational until a longer-term funding agreement can be made in Congress. The bill was presented to and signed by President Trump on November 21, 2019.

Several bills that would extend the NFIP for a longer period and introduce reforms to the program have been proposed by members of Congress. Members of the insurance industry have spoken out in support of a long-term extension of the NFIP, as some proposed bills would extend it for several years, but none have yet passed both chambers.

Despite the program undergoing multiple short-term extensions over the past two years, the Federal Emergency Management Agency (FEMA) notes that it has never failed to honor insurance contracts in place with NFIP policyholders. In the event that the NFIP lapses, FEMA would still have authority to ensure that claims are paid, though new and renewal policies would not be sold until the NFIP was re-funded.

US House Passes TRIA Extension

A bill that would extend the Terrorism Risk Insurance Act (TRIA) for an additional seven years has been passed by the US House of Representatives with a vote of 385-22. The TRIA program was first created following the terrorist attacks of September 11, 2001, and has been reauthorized three times since in 2005, 2007, and 2015.

The reauthorization bill was first introduced in the House on October 11, 2019, and was referred to the House Committee on Financial Services, which introduced and passed an amended version.

A companion bill was introduced in the US Senate on November 14, 2019, and is scheduled for a hearing by the Senate Banking, Housing, and Urban Affairs Committee on November 20, 2019.

The National Association of Professional Insurance Agents (PIA National) has issued a statement in support of the bill’s passage.

“The House passage of TRIA over a year in advance of its expiration is a breath of fresh air and will be welcomed by policyholders and the market,” said Jon Gentile, PIA National Vice President of Government Relations.

Without the extension, the TRIA program would expire on December 31, 2020.

TRIA Extension Bill Passes US House Committee

The US House Financial Services Committee unanimously voted to pass an amended version of the Terrorism Risk Insurance Program Reauthorization Act of 2019 on Thursday, October 31, 2019, which would extend the Terrorism Risk Insurance Act of 2002 (TRIA).

The amended bill will require a report by the U.S. Government Accountability Office on cyber terrorism risks and Treasury reporting with disaggregated data on places of worship. The amendment also extends the bill for seven years instead of the originally proposed 10 years.

The American Property Casualty Insurance Association (APCIA) has spoken out in support of the bill’s passage.

“We applaud Chairwoman Waters, Ranking Member McHenry, and the House Financial Services Committee for making TRIA reauthorization a top priority,” ACPIA said in a statement. “The risk of terrorism is still very real, and the TRIA program is still needed to promote economic stability both before and after an attack. We urge the full House to take up and pass this bill quickly.”

TRIA in its current form will expire in December 2020. The extension bill will next be recommended for consideration by the full US House.

US House Introduces TRIA Extension Bill

Congresswoman Maxine Waters has introduced a bill in the US House of Representatives to reauthorize the Terrorism Risk Insurance Act (TRIA) until December 2030. The act is currently scheduled to expire on December 31, 2020.

The bill, H.R. 4634, was introduced on October 11, 2019, and was considered by the Housing, Community Development, and Insurance Subcommittee, a part of the US House Committee on Financial Services, on October 16, 2019.

TRIA was enacted following the September 11, 2001, terrorist attacks in the US. The bill created a federal backstop for terrorism insurance to keep coverage affordable in the event of another attack. The act has been reformed over time so that the private sector would bear 100% of the losses if another terrorist event like September 11 occurred.

“Nearly two decades after TRIA was enacted, TRIA has thankfully never been triggered, and the program is working as intended, effectively protecting our economy from the costs of a terrorist attack and providing security for many of our nation’s hospitals, stadiums, schools and small businesses,” said Waters, Chairwoman of the House Financial Services Committee.

The bill is sponsored by 27 other representatives and is supported by more than 300 organizations, including the American Property Casualty Insurance Association (APCIA).

“We applaud Chairwoman Waters for introducing a bipartisan bill that would reauthorize TRIA for ten years in its current form,” said David Sampson, president and CEO of the APCIA, in a statement. “We urge Congress to take up and pass H.R. 4634 as soon as possible.”

Following its subcommittee hearing, Waters said that she intends to move forward with full committee consideration of the bill at a markup in October before working to bring it to the floor.

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