Texas House Bill HB1588

Texas 2023 - 88th Regular

• Filed: 1/24/23
• Out of House Committee: 4/27/23
• Voted on by House: 5/2/23
• Out of Senate Committee: 5/18/23
• Voted on by Senate: 5/24/23

Caption

Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a surcharge.

Impact

The legislation proposes a transition away from a funding structure heavily tied to public debt, allowing the association to manage its financial obligations via assessments in conjunction with other funding methods. As such, HB1588 introduces a new approach towards handling excess losses and operating expenses which, if adopted, will enable TWIA to respond more efficiently in catastrophic situations while ensuring that funds are allocated prudently. The expected outcome is a more resilient insurance model that reduces strain on state finances.

Summary

House Bill 1588 aims to reform the funding mechanisms of the Texas Windstorm Insurance Association (TWIA), addressing longstanding concerns about the association's heavy reliance on public debt to settle insurance claims. This bill seeks to develop a more sustainable and effective system that can withstand significant storm events without incurring debts that can span decades. By proposing a model that builds reserves and utilizes assessments effectively, HB1588 emphasizes the importance of financial independence for TWIA in the face of catastrophic events.

Sentiment

The sentiment around HB1588 appears to be cautiously optimistic among supporters, including the bill's sponsors and various stakeholders in the insurance sector, who see it as a necessary adjustment to ensure TWIA's long-term sustainability and operational effectiveness. However, skepticism exists in opposition circles, particularly regarding the implications of reliance on surcharge assessments and the effectiveness of the proposed fiscal measures in protecting policyholders and ensuring claims can be paid in times of need.

Contention

Notable points of contention stem from concerns about the language surrounding the catastrophic surcharge implementation. Critics worry that frequent assessments and surcharges may disproportionately impact policyholders, potentially making insurance unaffordable over time. Furthermore, discussions regarding the transition away from public securities to more complex funding structures raise debates on accountability and the efficacy of financial oversight, especially during unforeseen disaster scenarios.

Texas Constitutional Statutes Affected

Insurance Code

• Chapter 2210. Texas Windstorm Insurance Association
  • Section: 452
  • Section: 453
  • Section: 612
  • Section: 6132
  • Section: 614
  • Section: 452
  • Section: 453
  • Section: 355
  • Section: 363
  • Section: 0715
  • Section: 075
  • Section: New Section
  • Section: New Section
  • Section: New Section

Government Code

• Chapter 404. State Treasury Operations Of Comptroller
  • Section: New Section
  • Section: New Section