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
April 20, 2009
(512) 463-0300


Sen. Hegar
Senator Glenn Hegar of Katy said his bill would clarify the insurance regulatory system in Texas.

(AUSTIN) — The Senate approved a measure on Monday that would continue the operation of the Texas Department of Insurance, but makes some reforms to the operation of that agency. Each state agency must go through the Sunset process, where lawmakers review the functions and roles of an agency and make necessary changes, and this year it was TDI's turn. "There is no magic formula for lowering insurance rates, and no type of regulatory system can automatically lower rates or premiums in Texas, unfortunately," said bill author Senator Glenn Hegar of Katy. "This bill better defines the file-and-use system, with stronger prior approval protections as a back drop, to bring greater stability and consistent regulation in Texas."

The bill, SB 1007, looks to clarify the process under which insurance rate changes are approved. Under the current system, insurance companies file rate changes with TDI, then implement those changes while the agency reviews them. Hegar said the current system is confusing, causing nearly all insurance writers to operate under a quasi-prior approval system, where insurers would negotiate with TDI officials to determine whether or not a rate would be approved. SB 1007 would clarify under what circumstances the commissioner could place an insurer under a prior approval system and would require him or her to approve or disapprove rate changes within 30 days.

The bill was amended to shorten the agency's sunset period, from the usual 12 years to six. Another amendment would create penalties for insurers who seek to drag out the approval process through lengthy appeals. If an insurer's rate change is rejected by TDI for being excessive or discriminatory, the company has 60 to 90 days to refile a new rate. During that time period, interest penalties equal to six percent plus the prime rate are levied on the disapproved rate. If the insurer still refuses to roll back that rate, the interest on the rates is increased to 18 percent, payable back to consumers if the hearing and appeals process confirms the state's decision.

The bill now heads over to the House for further consideration.

The Senate will reconvene Tuesday, April 21 at 11 a.m.

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