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December 4, 2001     (512) 463-0300

Business and Commerce Subcommittees Examine Insurance

The Business and Commerce Committee of the Texas Senate is examining insurance practices today, Tuesday, December 4, 2001. The Committee has established two subcommittees to examine potential issues.

During the morning meeting, the Subcommittee on the Termination of Contractual Agreements between Insurers and Insurance Agents heard about problems in the industry. Senator John Carona of Dallas served as chair. Insurance Commissioner Jose Montemayor was the first witness, describing for the committee the types of agents. In Texas, there are independent agents (who sell for many companies), and captive agents (who sell for only one company). Motemayor said that usually the commission does not get involved in disputes between agents and their companies, but that it does address general issues.

After the commissioner, a panel of five insurance agents described the problems they currently have working with their companies. Several people testified that they had been treated unfairly by their companies, being cut off or fired without any recourse. Others said that many agents were scared to testify for fear of being terminated. The companies denied those charges, saying the only agents being terminated were those who had not performed.

When the invited testimony was completed, a number of insurance agents from around the state testified that they too had been unfairly terminated. The subcommittee adjourned subject to call of the chair.

During the afternoon, the Subcommittee on Interim Charge #2 met to study the rate regulation of homeowners and automobile insurance. Senator Mike Jackson of La Porte served as chair. This subcommittee is looking at how County Mutual insurance companies are used to circumvent rate regulation and the effect of deregulation on insurance rates and consumers. Commissioner of Insurance Jose Montemayor and Actuary Philip Presley testified on these issues. They were followed by Rod Bordelon, Public Information Counsel of the State Board of Insurance, who briefed the subcommittee on the board's role in the ratemaking process.

The subcommittee recessed subject to call of the chair. Both subcommittees will report their findings to the full committee for inclusion in proposed legislation to be submitted to the 78th Legislature, meeting early in 2003.

You can access the archived video webcast from the web page of the Business and Commerce Committee.

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