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Seal of the Senate of the State of Texas Welcome to the Official Website for the Texas Senate
Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
May 31, 2003
(512) 463-0300

Senate and House Compromise on Homeowners Insurance Legislation

Austin -- An agreement has been reached by Senate and House conferees on how to provide Texans with more affordable homeowners insurance in a competitive environment. The Department of Insurance estimates that the proposal will provide homeowners with a twelve to eighteen percent reduction in insurance rates.

"Insurers beware," said San Antonio Senator Leticia Van de Putte, "today marks the end of your reign of charging homeowners excessive rates."

SB 14 uses a hybrid approach to increase the regulation of residential property and automobile insurance markets. Under the deal, insurance writers with ninety-eight percent of the homeowners market would have to adhere to a prior approval system in which the Commissioner of Insurance would have to approve a company's rates before they can be put into effect. The companies would then fall under a file-and-use system starting December 1, 2004, which means that they would have to file their rates with the commissioner, but they would not have to receive prior approval before they are used.

The companies that write the remaining two percent would be regulated under a file-and-use system.

Automobile insurers would remain under the current benchmark system, which allows them to set their own rates below a set limit. They would then be governed under a file-and-use system as of December 1, 2004.

Under the bill, the commissioner is given the authority to change a company to a prior approval system anytime if it is determined that it is abusing file-and-use.

Insurance companies would also have to have their forms approved by the insurance commissioner.

The first article would require all insurance companies to once again file their rates and supporting data with the commissioner because Senators say that the data requested of the companies earlier in the session under SB 310 is out of date.

The conference committee agreed with the House's version concerning the ban on discriminatory credit scoring. A collar was put on the practice by authorizing the commissioner to set the maximum increase and decrease in rates due to credit scoring.

Insurers would also be subject to the public information act concerning their underwriting guidelines under a provision in SB 14.

The bill also establishes an oversight committee consisting of three Senators and three House members to determine if the system is working.

The bill includes language originally presented by Houston Senator Rodney Ellis that prohibits insurance companies from collecting a so-called 'skin-tax'. According to Ellis, some companies are still collecting higher premiums on old policies that were based on a person's race.

One last signature is necessary before the conference committee report can be presented to both houses for their approval.

With only two days left in the 78th Legislative Session, the Senate was busy today approving amendments added to bills by the House. Meanwhile, conference committees were working out the final details on other legislation.

Flower Mound Senator Jane Nelson's bill requiring health insurance companies to pay medical claims in a timely manner is on the way to the governor's desk for his signature. The Senate today adopted the conference committee's report on the prompt-pay legislation, SB 418, which would also provide some uniformity to the claims process.

The Senate approved of House amendments added to SB 319, which would allow parents to sue for the death of an unborn child. Under Victoria Senator Ken Armbrister's measure, an unborn child would be considered an individual, and the failure for the child to be born alive would be considered death. In the final draft of the legislation, the mother of the child and abortion providers are exempt from wrongful death suits.

Additionally, the Senate passed SB 480, nicknamed the "Toyota bill" because it is a critical component of the deal to build a new Toyota manufacturing plant in San Antonio. The bill would provide a special tax exemption to the company on land used for the purpose of economic development if it receives the final approval of the governor.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.