Texas Insurance Commissioner: $10 billion cost for ‘chronic underfunding’
In Texas, the state has a state agency to protect the public against the threat of catastrophic catastrophic failure, but that agency has received just $10.9 billion in revenue since 2014, according to state figures.
The shortfall has fueled criticism of the state’s insurance regulators and led some lawmakers to call for their ouster.
In a report released Tuesday, Texas Insurance Commission Commissioner John Ralston said the agency is underfunded because the Legislature, which appropriated the funds, failed to act.
“We can no longer afford to have a dysfunctional, unaccountable, and unaccountable agency that has a tendency to waste taxpayer dollars and is in a state of crisis,” Ralstonsaid.
“If you don’t want to have that crisis, you don and you don´t get to keep the agency.”
In a statement, Texas Governor Greg Abbott said he plans to introduce legislation to raise the state budget by $1 billion to help the agency.
“Texas cannot afford to continue to waste precious resources on an agency that is understaffed, underfunded, and incapable of performing its mission,” he said.
The commission was created in 2014 to oversee the state´s reinsurance program, which is used to insure the state against catastrophic failures.
But in the six years since the state implemented its reinsurance reforms, the commission has received $1.5 billion in its coffers.
The agency is expected to receive $2.3 billion in funding next year and has the option to raise funds from an existing bond issue or a new bond issue.
The state also has a reinsurance fund to pay for insurance premiums for certain individuals and businesses.
The Texas Association of Insurance Commissioners has criticized the insurance agency for being underfunded for years.
“Our members have consistently reported that the Texas Insurance Agency has not met its obligations,” the association said in a statement.
“This is unacceptable and the state needs to take immediate action to increase the funding available to the agency in order to protect Texans and businesses.”