2023 Legislative Update
The 2023 88th Session of the Texas Legislature started out with great promise. The Governor, Lieutenant Governor, and Speaker of the House each had high expectations with a full coffer of an estimated $33 billion surplus as well as majority control of both houses of the legislature.
Members of the Senate & the House didn’t waste any time filing bills – they filed more bills in 2023 (8,046) than ever before – up 8% from previous record set in 2009 (7,419). The House broke the 5,000 mark for the first time ever, filing 5,413 bills. Previous high mark was 4,836 (also 2009).
IIAT closely tracked 158 bills, but roughly 500 bills generally touched insurance, so we monitored quite a lot.
What’s Important to IIAT
While there were not many bills that kept us on our toes or were “must pass bills,” we were able to help pass some insurance legislation that will be beneficial to agents and to their clients. A couple of bills that got mired down included a number of bills that would have required appraisal clauses to be included in both personal auto and homeowners' policies in Texas. While the majority of policies already include appraisal clauses, it is not required.
Major P&C Insurance Issues
- Auto repair/OEM parts
- ESG
- Appraisal
- TWIA funding
Key Bills That Passed
HB 1040 by Dennis Paul (Judith Zaffarini) – Changes a company’s ability to do business electronically from an “opt in” to an “opt out” for consumers and agents. Bill allows a person to change to a non-electronic way of doing business at any time. Effective 9/1/23
HB 1706 by Mary Ann Perez (Charles Schwertner) – Assures the consumer insured through a surplus lines policy the right to hire a public adjuster to assist in a claim. This was a direct result of some SL policies prohibiting hiring a public adjuster. Effective 9/1/23
SB 833 by Phil King (Tom Oliverson) – Prohibits the use of ESG (environmental, social or governance) in the underwriting of polices. Requires the underwriting to be based on actuarially based criteria. (Effective 9/1/23)
SB 2008 by Lois Kolkhorst (Ernest Bailes) – Under current law, farm mutual companies can only write business for “rural property.” The definition of “rural property” means a population of 2,500 & hasn’t been updated in 50 years. This bill brings the population threshold up to 6,500 & also includes a method to float up or down with the census. (Effective 9/1/23)
HB 2065 by Ed Thompson (Mayes Middleton) – Clarifies who is “an insured” vs. the “named insured” in matters pertaining to uncooperative insureds & the non-renewal of a personal automobile policy. (Effective 9/1/23)
HB 1900 by John Smithee (Lios Kolkhorst) – Under current law, if a carrier wants to non-renew a personal policy, they must provide the policyholder 30-day notice of their intent to non-renew. This bill changes that notice to 60 days. (Effective 9/1/23)
HB 679 by Keith Bell (Charles Schwertner) – This bill will prohibit governmental jurisdictions from using workers' compensation experience modifiers in their calculation for awarding contracts. (Effective 9/1/23)
HB 609 by Cody Vasut (Mayes Middleton) – This protects business owners from liability for exposure to pandemic diseases if the business owner does not require employees to be vaccinated. Effective 9/1/23
SB 1659 by Charles Schwertner (Justin Holland) – This bill (among other things) moves the Sunset Commission review of the Texas Department of Insurance until after the 2027 session. The bill to extend the life of TDI will be filed in 2029. (Effective immediately)
HB 1074 by Lacey Hull (Judith Zaffirini) – This bill will allow insurers to more clearly define a loss control device such that it won’t be considered a rebate. (Effective 9/1/23)
TWIA/FAIR Plan bills That Passed
HB 998 by Dennis Paul (Mayes Middleton) – The FAIR Plan is expanded to include commercial property coverage for property owners’ associations within 10 miles of the TWIA eligibility boundary lines. Effective 9/1/23
HB 3208 by Ed Thompson (Morgan LaMantia) – This will eliminate a TWIA policyholder from buying a policy in May & cancelling it after hurricane season unless there’s a valid reason for it. (Effective 9/1/23)
HB 3310 by JM Lozano (Mayes Middleton) – Under current law, there is a deadline to file an independent appraisal for a TWIA claim, however, there are no deadlines when the appraisal shall be completed. This bill allows TDI to adopt rules to set those deadlines. (Effective 9/1/23)
SB 2232 by Morgan LaMantia (Mary Ann Perez) – This bill allows TWIA to set minimum standards for agents to be allowed to sell a TWIA policy. Effective 9/1/23.
SB 2233 by Morgan LaMantia (Mary Ann Perez) – This bill repeals the current statute which allows a business to automatically renew a policy but leaves in place the ability for a personal homeowner to automatically renew. Effective 9/1/23.
Key Bills That Did Not Pass
HB 1321 by Travis Clardy – This bill would have prohibited carriers from determining a “prevailing rate” for body shop repair rates & also would require OEM parts in certain instances. (Left pending in House Insurance)
SB 1083 by Phil King (Jeff Leach) – this bill would require OEM parts on a vehicle owned 36 months or less. (Left pending in House Insurance)
HB 1235 by Ed Thompson – this bill would mandate that an insurance carrier consider diminished value in a claim. (Not heard in House Insurance)
HB 3365 by Caroline Harris – this bill would allow moving violations to used as a rating factor; this is currently only allowed in county mutuals. (Died on the House calendar)
There were three bills which would have required appraisal clauses in insurance policies; none of them passed. They all had varying degrees of compromises along the way.
- HB 597 by Jacey Jetton – this bill included a loser pay provision. (Died in House Calendar Committee)
- HB 1437 by Travis Clardy (Charles Schwertner) – this bill required appraisal process for home/auto. (Died on Senate Intent)
- HB 4194 by Mary Ann Perez (Charles Schwertner) – this required appraisal for all P&C policies. (Died on Senate Intent)
HB 287 by Julie Johnson – This bill would require insurers to pay 80% of a claim upfront on an RCV policy. (Passed House, not referred to Senate committee)
HB 1039 by Ed Thompson – this bill required ALE & broadened when it applies. (Died in Senate committee)
HB 1234 by Ed Thompson – this bill required cosmetic metal roof coverage. (Died in Senate committee)
SB 1268 by Nathan Johnson – this bill prohibited an insurer from paying any claim until proof of paid deductible. (Died in House committee)
HB 351 by Cecil Bell – this bill would have allowed group accident & health insurance to be packaged with workers’ comp. (Passed the House, not referred to Senate committee)
HB 2017 by Tom Oliverson – this bill was deemed as a “regulatory sandbox” allowing for innovative ideas to circumvent TDI regulation. (Died in House Calendars)
There were two TWIA bills that would have made sweeping changes to funding. In the end, the funding wasn’t changed due to complications within the office of the Comptroller.
- HB 1588 by Tom Oliverson – this would have revised funding for losses (no conference committee appointed)
- SB 1217 by Mayes Middleton – this was a TWIA omnibus which had funding changes built in. (Died on the House calendar)
Vetoed by Governor Abbott
SB 796 by Mayes Middleton (Ann Johnson) – Requires that all arbitrations be held in Texas for Texas policies written in Texas, including surplus lines policies. Direct result of language in SL policies that require arbitration in New York state. (Veto statement: these are sophisticated buyers who can negotiate their own contract terms; concerned this will drive up insurance rates.)
SB 1393 by Mayes Middleton (Dennis Paul) – For a homeowner to qualify for a policy under the FAIR plan, they must receive two declinations of coverage through the regular market. This bill allows a homeowner to count an offer of coverage that’s 10% higher than comparable FAIR plan policy as a declination. (Veto statement: unnecessary expansion of government subsidized FAIR plan when customer has access to other insurance products.)
Governor Abbott Priorities
During his biennial State of the State speech in early February, Governor Abbott named seven “emergency items,” also known as his legislative priorities:
- Cutting property taxes
- Ending COVID-19 restrictions “forever”
- Expanding school choice
- Making schools safer
- Ending “revolving-door” bail policies
- Securing the state’s border with Mexico
- Cracking down on fentanyl
Property Taxes
Before session began, all three leaders promised property tax relief but because of an inability to work together, the legislature adjourned Sine Die without passing any property tax relief. As we’ve seen in the past, each chamber has different approaches to solve problems which can lead to inaction.
Governor Abbott never really inserted his thoughts on how he’d like to see property tax relief until the first-called special session. The House & Senate, along with the Governor did finally all come to an agreement in July & passed a suite of bills that will deliver about $18B in property tax relief.
COVID-19 Restrictions
While most local governments & private businesses are operating at pre-pandemic levels, the legislature did pass SB 29 which bans local governments, including school districts, from closing or requiring masks.
School Choice
The Governor and Lieutenant Governor were strong advocates of “school choice” or vouchers for which the House had little appetite & did not pass. There are several rumors that the Governor will call a special session for vouchers after the summer.
Safer Schools
The legislature passed HB 3, a 39-page bill which takes a comprehensive approach to school choice. The bill allocates $164 million dollars per year for school districts to use to make schools safer. The bill dedicates resources to mental health, armed security, and technology.
Revolving-Door Bail
The legislature passed HB 17 which will allow the courts to remove district attorneys for misconduct if they choose not to pursue certain types of crimes. The legislation could also jump-start marijuana prosecutions in several counties that have recently declined to pursue low-level possession cases.
A constitutional amendment was needed to advance legislation on denying bail to violent offenders, but that measure did not pass.
Border Security
It’s no secret Governor Abbott wants to dedicate more resources to the Texas-Mexico border. The state budget dedicates roughly $5.1 billion to the border, coordinated through 13 state agencies. The legislature also passed six bills regarding border security.
SB 423 allows for the use of drones to surveil the border.
SB 1602 expands authority of U.S. Border Patrol agents to arrest & search; currently they can only detain.
SB 1133 creates a grant program to compensate landowners for damage due to trespassers.
SB 1403 allows the Governor to coordinate with other states without congressional approval.
SB 1484 creates DPS training for local law enforcement.
SB 1900 designates Mexican drug cartels as foreign terrorist organizations.
Fentanyl
The legislature passed HB 6 which will allow death certificates to list fentanyl poisoning as a cause of death & allows prosecutors to charge someone with murder for selling or distributing it.
Other Takeaways
State Budget
The only constitutionally required bill the legislature must pass is the budget. The House & Senate sent a $321.3 billion dollar budget to Governor Abbott. Roughly half of the state’s $33 billion surplus went towards the budget. As a reference, the last two-year budget was $248 billion.
Some Wins for Leadership
HB 5 which creates tax incentives to lure businesses to come to Texas.
SB 15 which restricts trans athletes from competing in college sports.
SB 17 bans DEI offices in public universities.
HB 2127 preempts some laws by local jurisdictions.
HB 1500 shores up the power grid.
House General Investigating Committee
This session did see two very unique procedural matters, both triggered by the House General Investigating Committee. The House expelled one of their colleagues for an inappropriate sexual relationship with one of his staff members.
The House also impeached Attorney General Ken Paxton after the committee investigated his actions dating back 10+ years. Per the Texas Constitution, he has been temporarily removed from office while he awaits a trial in the Texas Senate.
Special Session(s)
Per the Texas Constitution, the Governor can call the members of the legislature back for a special session on any topic he chooses at any time during the interim. A special session can last no longer than 30 days.
The Governor did just that & the very next day after Sine Die, members were back & were tasked with addressing two topics, property taxes and human smuggling. The 30-day clock expired with no agreement between the House & the Senate on either topic.
Governor Abbott immediately called a second special session, solely on property tax relief & this time the House & Senate reached an agreement in which all three parties (House, Senate, Governor) all got most of what they wanted.
Additionally, & as mentioned above, it’s likely the Governor will call a special session to address school choice & to allow members to pass bills that were vetoed at the end of the regular session.
Veto Statements
Governor Abbott vetoed 76 bills, a record for him but short of Perry’s record of 80+. The veto statement on many of these bills is that he feels the bill is important, but property taxes or school choice is more important & those policies need to be addressed before whatever the bill that got vetoed addresses.