The Texas Windstorm Insurance Association (TWIA) has a new operations plan and laws that affect it, assuming Governor Perry signs the legislation. The good news for TWIA policyholders is that the consumer protections of Chapter 541 are still in place. The bad news is that I predict rates are going to increase substantially.

A news article,Insurance Department in Limbo as Texas Legislature Adjourns, correctly notes that the Legislature did not get its entire job done. The Department of Insurance and Office of Insurance Council will no longer exist on September 1, 2009, unless a special session is held to prevent the laws that created these entities from expiring. Of course, with talk from Governor Perry about the status of Texas in the Union, anything is possible in Texas.

Florida Governor Charlie Crist was finally provided the proposed Surplus Lines Bill–a month after the legislation was passed. He now has until June 16th to sign or veto the bill. He can also allow it to become law by doing nothing.

In an earlier Post, I explained why this bill is flawed. It will hurt the carriers admitted in Florida. It is overbroad and will have unintended consequences for consumers, surplus lines carriers, and the admitted carriers. I predict that even if signed by Governor Crist, the Legislature will have to revisit the bill next year. I also predict the surplus lines carriers and the small admitted carriers will be the first to call on the Legislature to do so.

I suggest that those interested in the insurance market note how many large personal lines carriers currently do business through wholly owned surplus lines subsidiaries. The large carriers are escaping regulations, in part, by simply doing business in surplus entities. What a great strategic position for the large carriers. They can decide not to sell policies in certain areas of Florida where they think they can get higher premiums if they sell through a surplus line subsidiary and with unregulated forms which will probably offer much less coverage.

Our newly admitted carriers had assistance from the State. Now, one year later, the same legislature passed a surplus lines law which favors the large carriers and allows surplus lines carriers to unfairly compete with the newly admitted carriers. If public policy favors the smaller admitted carriers, why has the current legislation been passed?

Governor Crist has two remaining insurance bills before him. He should veto both.