Let the Games Begin

The fun and games are set to begin in Texas. No, not the Olympics nor the Super Bowl–but the Texas Legislature, of course. The legislature will open its doors Jan. 11 and bill filing started last month. Lobbyists, including those representing the insurance industry, began wearing out their expensive loafers months ago, beating paths to legislators’ doors with their pockets full of cash and causes to be peddled.

As far as insurance goes, there’s certainly going to be a lot to watch over the next few months, as state lawmakers will be considering an overhaul of the workers’ compensation system, broker compensation issues and penalties for insurers that refuse to make rate cuts ordered by regulators and lawmakers.

The House of Representatives Business and Industry Committee in mid-December submitted its report to the legislature, which includes proposals for the workers’ compensation system. Lt. Gov. David Dewhurst and State Sen. Mike Jackson, R-La Porte, on Dec. 21 unveiled a bill that proposes penalties for insurers that don’t comply with the law.

Dewhurst has been one of the most outspoken critics of insurance companies that have tried to get around lowering homeowners rates as required under the implementation of Senate Bill 14, the insurance regulatory reform measure from the 2003 session. Dewhurst and Jackson rolled out an updated SB 14 for the 2005 session, which is intended to strengthen the 2003 bill by raising the penalty paid by insurers who overcharge on homeowners premiums. It would also penalize insurers who try to use the court system to delay rate rollbacks or rebates.

The bill seems aimed at State Farm and Farmers, who fought the homeowners rate cuts for over a year via appeals to Insurance Commissioner José Montemayor, as well as court actions. Farmers finally capitulated late in 2004, agreeing to a settlement that critics say doesn’t go far enough in returning alleged premium overcharges to Farmers customers.

At a press conference to announce the legislative proposal, Dewhurst urged State Farm to “comply with the Texas Department of Insurance ordered reductions, and stop playing Scrooge.”

While State Farm maintains that its rates are reasonable and fair, Montemayor recently issued an order requiring the company to get prior approval of rate changes, even though other insurers were able to begin a file-and-use rating system on Dec. 1.

The House Business and Industry Committee report is available online at http://www.house.state.tx.us/committees/reports/78interim/business.pdf. The updated SB 14 can be accessed through the Texas Legislature’s Web site at http://www.capitol.state.tx.us/.

Until next time, happy reading!

Topics Texas Legislation