Texas Department of Insurance receives long awaited extension

Texas InsuranceLawmakers in Texas voted to extend the longevity of the state’s Department of Insurance. The department will also enjoy more authority over the insurance industry and will be able to impose stricter penalties when companies challenge the agency’s rate assertions and lose.

The relevance of the Department had been debated for some time before a decision was reached Monday. Many legislators say that the ruling was long overdue.

According to Texas law, state agencies must be evaluated for effectiveness every 12 years. Legislators determine whether these agencies provide a necessary service to citizens or if a new, more efficient method can be established to better meet the needs of the state.

The Department of Insurance was due for such a review during the 2009 legislative session, but legislators were unable to reach a verdict.

While the ruling will expand the Department’s authority, the state’s insurance companies will still be able to collect premiums from proposed rate increases before they are approved to do so. Several lawmakers that opposed the ruling hold that expanding the agency’s authority in issuing penalties for lost rate debates will not help Texas residents.

Amendments can still be made to the ruling, giving legislators time to formulate a better alternative if need be. It is unlikely, however, that any significant changes will be made to the existing system.

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