Landmarks in Texas Insurance History
The recorded history of insurance law in Texas and the predecessors of the Texas Department of Insurance date back to 1876. The Texas Constitution adopted that year authorized the Legislature to create the Office of Insurance Commissioner when it deemed necessary.
Following are key events in Texas insurance regulation:
1876 – 15th Legislature creates TDI’s predecessor-the Department of Insurance, Statistics and History. In addition to his insurance-related duties, the commissioner is charged with keeping information and statistics on the state’s population, wealth and general resources. He is also the state historian, state librarian, and superintendent of public grounds and buildings.
1887 – 20th Legislature expands the commissioner’s authority to include agriculture and renames the agency the Department of Agriculture, Insurance, Statistics and History. The commissioner also is made an ex-officio member of the Texas A&M College Board of Directors.
1905 – the first state banking act is passed, adding the regulation and supervision of state banks to the office of the Commissioner of Agriculture, Insurance, Statistics and History.
1907 – 30th Legislature creates the office of Commissioner of Agriculture and renames TDI’s predecessor the Department of Insurance and Banking.
1909 – Commissioner of Insurance and Banking is made chair of the newly created Fire Insurance Rating Board. The commissioner also becomes supervisor of all building and loan associations in Texas.
1910 – Fire rating board is replaced by the State Insurance Board and given authority to promulgate fire rates.
1913 – State Insurance Board’s name is changed to the State Fire Insurance Commission and its authority is broadened. Workers’ compensation law is passed and Texas Employers Insurance Association (TEIA) is created.
1923 – 38th Legislature separates insurance and banking functions by creating the Department of Insurance and the Banking Department, each headed by a separate commissioner. The Legislature transfers rate-making authority in the area of workers’ compensation from TEIA to the State Fire Insurance Commission.
1927 – 40th Legislature creates the Board of Insurance Commissioners, composed of the Life Insurance Commissioner, the Fire Insurance Commissioner and Casualty Insurance Commissioner. The Legislature also gives the insurance commissioner the power to approve or disapprove auto insurance rates and to promulgate uniform policy forms.
1951 – Insurance laws are codified as Texas Insurance Code.
1954 – 1958 — Insurance industry in Texas is rocked by domestic scandals. As a result, the Legislature passes at least 16 insurance-related bills, among them measures strengthening examination laws, increasing minimum capital and surplus requirements, and giving more control to the Board for the issuing of certificates of authority.
1957 – Modern Board — the State Board of Insurance — takes shape as a result of changes mandated in the agency’s operation by the 55th Legislature. The three-member Board is given responsibility for hiring a Commissioner of Insurance to serve at its pleasure as chief administrative officer.
1975 – The Legislature creates a separate State Fire Marshal’s Office (SFMO).
1987 – 70th Legislature creates the Office of Consumer Protection (OCP) under the SBI.
1988 – National County Mutual insolvency — largest ever in Texas — leads to resignation of Commissioner, many changes at SBI and reform legislation passed by the 71st Legislature in 1989.
1989 – Legislature enacts major workers’ compensation reform law.
1991 – 72nd Legislature passes the most comprehensive insurance reform legislation (HB2 and HB62) in Texas history, affecting everything from ratemaking to the compulsory auto insurance liability law. The State Board is renamed the Texas Department of Insurance. OCP is made independent of TDI, renamed the Office of Public Insurance Counsel (OPIC) and its powers broadened. The SFMO becomes part of new Texas Commission on Fire Protection.
1993 – 73rd Legislature passes legislation giving most of Board’s authority to a Commissioner to be appointed by the Governor in odd-numbered years to a two-year term and confirmed by the Texas Senate. It allows Board to continue its authority over rates, policy forms and related matters until August 31, 1994. On November 18, 1993, however, the Board votes unanimously to turn over all remaining authority to the Commissioner as of December 16, 1993.
2003 – In response to rising homeowners insurance premiums, the Legislature provides TDI with new authority to regulate all property and casualty insurance rates in Texas, eliminating exemptions for Lloyd’s and County Mutual companies. The Legislature also shifts the method of automobile and property insurance regulation from a benchmark system to a file-and-use system.
2005 – The Legislature abolishes the Texas Workers’ Compensation Commission and transfers its duties to TDI.
2008 – The Texas coast is struck by two hurricanes: Hurricane Dolly hits South Padre Island on July 23rd and Hurricane Ike, the most destructive storm in Texas history, makes landfall on Galveston Island on September 13th. Agency response includes consumer assistance with resolving claims and disputes, investigation of fraud and administrative violations by agents and companies, financial monitoring of companies, and direct informational assistance to consumers in the field at disaster response centers.
2011 – The Texas Windstorm Insurance Association is placed under Administrative Oversight following both a financial examination and a limited scope examination. The large number of Hurricane Ike claims had stretched the Association’s resources resulting in customer service problems, questionable personnel actions, and financial irregularities.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.