1. SWAF 2011 Legislative Update
Panelists
David Durden, Texas Department of Insurance
Joe Woods, PCIA
Bo Gilbert, USAA
Jay Thompson, AFACT, Thompson Coe
June 10,2011
Austin, Texas

2. Numerous Difficult Issues Confronted the 2011 Legislature
INTRODUCTION
Numerous Difficult Issues Confronted the 2011 Legislature
Budget Deficit
Public School Finance
Funding for Hurricanes after Ike
Education
Health Insurance and Health Care
Immigration

3. TDI Sunset Legislation
HB 1951-Continuation of TDI
9 Issues Identified in Sunset Process
Issue 1: Rate Regulation for Homeowners Lacks Clarity, Predictability & Transparency
Issue 9: State has a Continuing Need for the TDI
Senate Amendments
House Amendments

4. Issues Discussed as Amendments to Insurance Sunset
Prior Approval for Homeowners rates
Limit use of rate differences in rating territories
Ban the use of credit scoring
Designated Driver exclusions
Appraisal Clauses in Property Policies
Require standardized homeowners policies
Data Mining
Auto insurance is a hot button with “Consumer Groups” like Texas Watch. Not sure where they get their money but seems that the only issues that interest them are issues that hurt insurers, help trial lawyers, help people that want to sue insurance companies to detriment of people that pay premiums.
BUT ONE THING THAT UNITES ALL TEXAS REGARDLESS OF AGE, CREDIT SCORE, GENDER, ECONOMIC STATUS, RELIGION, OR TERRITORY AND THAT IS ……………DEEP DOWN INSIDE…..WE ALL BELIEVE THAT WE ARE ABOVE-AVERAGE DRIVERS!!!!!

5. Other Issues Insurance Sunset
Other amendments
Regulate Silent PPO or PPO Networks
Rescission of Health policies
I AM SURE THAT TRIAL LAWYERS WILL PROBABLY WANT TO ADD SOME MORE ISSUES TO THIS EQUATION….REMINDS ME OF A STORY
JOB OPENING AT A PRESTIGIOUS PL FIRM…………SR. PARTNER ASKED BOTH FINALISTS, PAUL AND ROBERT WHY DID THEY WANT TO BE A LAWYER
AFTER THE INTERVIEW ROBT WAS BAFFLED BECAUSE HE WAS REJECTED. HE PULLED PAUL ASIDE AND TOLD HIM THAT HE SAID HE HAD THE GREATEST RESPECT FOR THE LAW AND THAT HE WOULD LAY DOWN HIS LIFE FOR THE CONSTITUTION. I TOLD HIM THAT I WANTED TO DO RIGHT BY MY CLIENTS. WHAT DID YOU TELL HIM.
PAUL REPLIED, I SAID I BECAME A LAWYER BECAUSE OF MY HANDS.
YOUR HANDS? WHAT DOES THAT MEAN?
WELL I TOOK A LOOK ONE DAY AND THERE WASN’T ANY MONEY IN EITHER ONE OF THEM!

6. Division of Workers Compensation Sunset
HB 2605 –extended until 2017
Medical Disputes
Complaint Process
Medical Examinations
Designated Doctor Certifications
Contested Supplemental Income Benefits
Medical Quality Review
Other

7. No significant changes
Other Sunset
OFFICE OF PUBLIC INSURANCE COUNSEL
SB 647
Continued for 12 years-2023
No significant changes
OFFICE OF INJURED EMPLOYEE COUNSEL
HB 1774
Continued until 2017

8. Property Casualty Insurance Issues
TWIA Funding
Tort Reform Issues
Auto Insurance
Data Mining
Rate Regulation

9. Life & Annuity Insurance Issues
Guaranty Association Model Update— SB 567
Annuity Free Look period- HB 1032
Prepaid Funeral - HB 3004, SB 579, and HB 2277
Agent CE for annuities & Medicare Supp-HB 2154
Group Life Coverage eligibility of certain Dependents- HB 2172
Suitability Of Annuities— HB 2277
Life Settlements Regulation-HB 2277
Exchanges of Annuities or Life Policies-HB 2277

10. TEXAS WINDSTORM INSURANCE ISSUES
HB 272
Funding of future claims
Governance
Claims Handling Issues
Rates and Building Codes

11. Historical Hurricane Losses TWIA
Texas Windstorm Insurance Association Losses
Hurricane Ike---$2.3B ???B 2008 Up from
Original estimated $2.1B
Hurricane Dolly--$200 M 2008
Hurricane Rita--$180 M 2005
Hurricane Alicia--$157M 1983

12. HB 4409 TWIA Funding
TWIA funds and CRTF
$1B Class 1 Bonds repaid by TWIA
$1B Class 2 Bonds; 30% repaid by TWIA members; 70% repaid by surcharges on coastal P & C policies
$500M Class 3 Bonds; Repaid by TWIA members
TWIA may buy reinsurance at any level

13. Other TWIA Issues
Rate Regulation
Use of Territory Rating
Mandatory Flood Coverage Zone V
Compliance with Building Codes
Oversight & Future Changes

14. TWIA POTENTIAL MAXIMUM LOSSES
Texas Windstorm Insurance Association/Expressed in Billions
2000
4000
6000
8000
10000
12000
2005
2006
2007
50 YR
100 YR
250 YR
500 YR
1000 YR

15. Workers Compensation, Other Property Casualty Legislation
HB 800 Data Collection
HB 528-Pharmacy Network
HB 2089 Overpayments & Underpayments
Consolidated Insurance-HB 2093
Loser Pay-HB 274

16. SB 1274-Roofing Contractor Legislation HB 3589-Extension of deadlines
Other Legislation
SB 1274-Roofing Contractor Legislation
HB 3589-Extension of deadlines
SB 1300-Towing and Auto Repairs
Other

17. Regulatory & Miscellaneous Legislation
Holding Company Act Changes-SB 1431
Surplus Lines-HB 3410
Certificates of Insurance-SB 425
Fraud Immunity Reporting-SB 918
Notices for P & C Policies:_HB 2382; HB 3570; HB 2655
Limited Purpose Life Companies-HB 3161
Title Insurance Rate Hearings
Workers Comp. Data Reporting-SB 800
HB 1 Rider 12
Other Bills & Bills that Failed

18. Oral Cancer Medication-HB 438 Exclusive Provider-HB 1772
Health Insurance
Oral Cancer Medication-HB 438
Exclusive Provider-HB 1772
Pharmacy Claim Audit-HB 2292
Privacy-HB 300
Interstate Compact & Medicaid-HB 5
Federal Health Care Implementation
Other-Medical Reinsurance Facility

19. CONCLUSIONS