Natural Disasters to Dominate Insurance Agenda in Texas; Oklahoma’s New Commissioner Eyes Uninsured Motorists

January 7, 2019 by

The Texas Legislature meets every two years, so when state lawmakers are in Austin, they have a lot to deal with. That’s unlikely to change when the 140-day 86th Legislature’s regular session convenes on Jan. 8, 2019.

When the Texas Lege last met in 2017, it considered more than 6,600 bills during the regular session and passed more than 1,200, according to the Texas Coalition for Affordable Insurance Solutions, a lobbying group representing major property/casualty insurers in the state. TCAI has said it expects a similar volume of filed and considered bills during the 2019 session.

Texas lawmakers in 2017 passed House Bill 1774, which addressed the problem of long-tail litigation of property insurance claims following extreme weather events and natural disasters, such as wildfires. The legislation, which was supported by the insurance industry and some Texas business groups, curtails the ability of policyholders to sue insurance companies over property claims following extreme weather events.

It’s been fairly successful, according to the lobbying group Texans for Lawsuit Reform (TLR), which was instrumental in both crafting the bill and ushering it through the legislative process. TLR reported in September 2018 that in the year after HB 1774 went into effect, the number of lawsuits against insurers following natural disasters had dropped significantly.

Mark Hanna, a spokesperson for the insurer trade group Insurance Council of Texas, said he expects trial lawyers will attempt to get lawmakers during the 2019 session to water down some of the more onerous anti-litigation aspects of the bill.

Both the ICT and the TCAI expect a related issue – the licensing of roofing contractors – will once again be brought to the attention of legislature. Proponents of roofing contractor licensing, including insurance industry representatives, have tried twice — and failed –to get a licensing bill passed by Texas lawmakers. ICT’s Hanna said the third time will hopefully be the charm.

There will likely be some legislative focus on the Texas Windstorm Insurance Association, the state’s property insurer of last resort wind and hail in coastal counties. In a recent report released by the state’s Sunset Commission, staff found TWIA’s current structure to be unsustainable.

“In the aftermath of Hurricane Harvey, TWIA is broke, in debt, and facing a shrinking revenue pool,” the report states.

TWIA’s legislative mandate is to provide coverage to those who can’t find it in the private market, but it receives no funding from the state in order to do so. For funding, it relies mostly on premiums and debt that has to be repaid by policyholders. According to the Sunset staff report, the legislature needs to decide whether to allow TWIA to function as a true insurer of last resort (which likely would require some funding from general revenues) or allow it “to function like an independent insurance company with adequate (higher) rates and fewer restrictions.” The first scenario is not likely to be popular with inland lawmakers and their constituents who aren’t fond of the idea of subsidizing coastal properties. The second scenario is unlikely to find support among coastal lawmakers, who have in the past challenged TWIA’s attempts to raise policyholder premium rates. The insurance industry maintains that TWIA’s rates are inadequate, an assertion to which TWIA’s board of directors agrees. But the association’s latest attempt to raise rates was put on hold after Texas Gov. Greg Abbott effectively extended until June 16, 2019, the deadline for approval or disapproval of the rate increase filed by TWIA in August. Many coastal lawmakers had urged TDI to deny the rate request.

Oklahoma has a new commissioner, Glen Mulready, but he’s no stranger either to politics or the workings of the insurance industry in the state. He served in the House of Representatives from 2011 until he was elected as Oklahoma’s insurance commissioner in November 2018. A small business owner, he also has been involved in the insurance industry as an agent, broker, agency owner and insurance company executive.

Mulready has said one big challenge in his state and an issue on which he intends to focus is that of uninsured motorists.

“We have tried to make some changes in the legislature to address that, but we have a real problem in our state. More than one-in-four on the road today are uninsured,” Mulready said in a pre-election interview with Insurance Journal. “That’s a little scary, when you drive down the road, start counting every fourth car, so I think more work needs to be done there.”

Competitive availability of health insurance is also an issue on which Mulready intends to focus. A strong proponent of the free market in all lines of insurance, Mulready said there has been a definite lack of choice when it comes to providers in the state’s individual health insurance market. “The good news is that we are, for 2019, we’re adding a second option. We have Medica coming into our individual market, so that’s a positive step, but there’s some need there,” Mulready said.

Mulready said he recognizes that Oklahoma can “be a tough state to do some business in … we have our share of catastrophic claims with hail and tornado, but overall, I think the current state of the Oklahoma insurance market is good.”

Governor: Asa Hutchison, R, re-elected 2018

General Assembly: House Republican majority; Senate – Republican majority; Session begins Jan. 14, 2019

Insurance committees: House Insurance and Commerce; Senate Insurance and Commerce

Insurance commissioner: Allen Kerr was appointed in January 2015 by Gov. Asa Hutchison. Kerr is a former insurance agency owner and served three terms in the Arkansas House of Representatives before becoming commissioner.

Governor: Jon Bel Edwards, D

Legislature: House – Republican majority; Senate – Republican majority; Session begins April 8, 2019

Insurance committees: House Insurance; Senate Insurance

Insurance commissioner: James Donelon has served as insurance commissioner for more than 12 years. He was first appointed in February 2006 when the seat was vacated by the incumbent. He was later elected to fill the unexpired term in 2006 and has been re-elected to three consecutive full terms in 2007, 2011 and 2015. The next insurance commissioner election will be held in 2019.

Governor: Kevin Stitt, R, elected 2018

Legislature: House – Republican majority; Senate – Republican majority; Session begins Feb. 4, 2019

Insurance committees: House Insurance; Senate Retirement and Insurance

Insurance commissioner: Before being elected insurance commissioner in 2018, Glen Mulready had served in the Oklahoma House of Representatives since 2011. He has served as chair of the House Insurance Committee and most recently as House Floor Leader Emeritus. Mulready is a small business owner, has worked as an independent agent, a broker and has held executive positions at two Oklahoma health insurance companies.

Governor: Greg Abbott, R, re-elected 2018

Legislature: House – Republican majority; Senate – Republican majority. Session begins Jan. 8, 2019

Insurance committees: House Insurance; Senate Business and Commerce

Insurance commissioner: Kent Sullivan was appointed by Gov. Greg Abbott in September 2017 to lead the Texas Department of Insurance. He succeeded David Mattax, who passed away in April of that year. Sullivan has 35 years of legal experience. He previously served as a justice on the Texas Court of Appeals, as a state district court judge, and as first assistant attorney general for Texas.