AIA: Texas Legislative Session a Success; Next Meeting in 2007

June 9, 2005

The Texas Legislature adjourned sine die last week, and the American Insurance Association (AIA) is reportedly very pleased with the end results.

“When legislators first convened in Austin in January, expectations for getting AIA’s proactive agenda enacted were tempered by an appreciation for the considerable work required on the overriding issues of school finance and taxation,” explained Fred Bosse, AIA vice president, southwest region.

“While those issues did dominate much of the legislature’s time, AIA nevertheless successfully pursued the passage of positive reform legislation in asbestos litigation and workers’ compensation, as well as the defeat of restrictive measures imposing onerous and unfair regulatory controls and prohibiting the use of credit,” Bosse said.

“Preserving the use of credit information by insurers was not an easy task this year,” he said. “While ultimately no legislation emerged from either chamber, the possibility of a floor amendment to ban the use of credit remained a constant threat during the entire session, particularly in the House.”

In spite of positive signs in the marketplace following the regulatory reform measures enacted in 2003 (though not fully implemented until 2004), there was a major threat of new regulatory restrictions being imposed on insurers this session.

“The regulatory legislation that was passed (SB 14) is not overly restrictive,” Bosse said. “It includes Rep. Craig Eiland’s (D) market conduct examination model language, which he has championed through his work with the National Conference of Insurance Legislators. The bill also includes an acceptable interest penalty provision for insurers that challenge and lose rate appeals with the Texas Department of Insurance,” he said.

“A significant accomplishment for AIA and the business community this session was the enactment of workers’ compensation reform legislation. The Senate and House each passed its own versions of the bill, and it took the intercession of Gov. Rick Perry (R) during the last days of the session to help forge a compromise measure,” said Bosse. “Following intense negotiations, the final product contains elements from both bills, with the creation of medical networks by health care providers for the treatment of injured workers being probably the most important cost-saving provision for insurers.”

“Another key success for AIA this session was the enactment of asbestos/silica reform legislation, as well as a venue reform bill. Texas was one of AIA’s target states for asbestos litigation reform this year.

“The litigation reform measure is a substantial improvement over the state’s current asbestos and silica litigation situation. In addition to establishing medical criteria that claimants must meet before filing a claim, the legislation subjects all pending asbestos claims to the state’s multi-district litigation court process, requires that each asbestos case be tried on its own merits, and shuts down the ‘mass screening’ of potential asbestos and silica claimants,” Bosse stated.

AIA worked very closely with the business community and local civil justice reform coalitions (Texas Asbestos Consumers Coalition and Texans for Lawsuit Reform) on this legislation.

“The legislature also passed a bill that will bring venue reform to the state’s civil justice system by closing a loophole and making it easier for judges to dismiss cases that should be brought in another forum,” said Bosse. “Cases from other states with only minimal connections to Texas can now be removed from Texas courts and sent to the most appropriate venue. This bill is an important companion to the asbestos/silica legislation, and both measures will go a long way toward alleviating the problems that have plagued the Texas asbestos litigation system.”

“Reflecting on the way the Texas legislative session began this year, AIA is very pleased with the way it concluded,” added Bosse.

Texas legislators will not meet again in a regular session until 2007.

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