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Texas Department of Insurance
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By the year 1876,the economy of the state of Texas was growing and the population was increasing. The increase in the number of insurance policies and the number of insurers was also dependent on this. Though there were many companies offering insurance in the state, there were no rules and regulations controlling their performance or service.
The insurance industry was going haywire. The 14th legislature in 1874 had passed a law regarding the formation, activities of the insurance companies and the coverage that they are offering. The state had by then decided to create the post of an Texas department of insurance commissioner to control all the matters related to the insurance industry. The state legislature had also given the full control of the matters related to insurance to the State Comptroller of Public Accounts. This was when records started being maintained on insurance matters in the state. And the records at that time show that most of the insurance in the state was being handled by the insurance companies from other states or even foreign insurers. Out of 61 insurers, only four were domestic companies in the state. These domestic companies had ventured into a practically new field of industry with lot of investment and against the competition of foreign insurers who were more financially strong and had all resources. The domestic companies mainly ventured into marine and fire insurance. Though, they were domestic companies, they were not as strong as their counterparts from other states and most of the companies fizzled out, due to either lack of business or bankruptcy. They were then either reinsured or taken over by the Texas department of insurance companies from other states. During the 15th legislature in 1876,a department to maintain the records of insurance, statistics and history was created. And the commissioner of insurance was in charge of regulation of the insurance industry and in addition to this duty, he also had to maintain the records of the population and he also was the state historian. During the subsequent legislatures, the duties of the state commissioner was added to his already existing duties. He was the state librarian. Then the responsibility of regulation of agriculture also became the responsibility of the department of insurance, statistics and history and the department was renamed as department of agriculture, insurance, statistics and history. All the legislatures revised the responsibilities of the department and finally in 1905,the supervision of the state banks was also added to the department of agriculture, insurance, statistics and history. In 1907, many felt the need for a department for agriculture related duties and it was created with a commissioner of agriculture as the head. Once this was done, the commissioner of the department of insurance, statistics and history was relieved of these duties. At the same time, since the commissioner was looking after the supervisory duty of the banking sector, the department came to be known as department of insurance and banking. Still the commissioner was in the officer in charge of the statistics and history of the state, but once the banking sector was added to insurance sector, the main concern of the department became these two and the functions related to statistics and history faded out over time. Later, these responsibilities were added to the duties of the state librarian. In 1909,when the fire insurance rating board was formed,the commissioner of the department of insurance and banking was made the chair person. The fire rating board was renamed as state insurance board in 1910,and the commissioner became the chair person of the board along with two other members.In 1913, the board was again renamed as state fire insurance commission with increased authority over matters of fire insurance. The first two commissioners of the department were attorneys with experience in both the
relevant fields. During the selection procedure for the insurance commissioner, the banking related experience and knowledge were considered rather than that related to insurance. Although the commissioners were insisting on separating the banking and insurance departments, this was not done till 1923,the 38th legislature created separate departments as department of Texas department of insurance and department of banking with separate commissioners as the heads. Also the rating related to workers compensation insurance which was handled by the Texas Employers Insurance Association was also transferred to state fire insurance commission. The duties were being revised all through the legislatures. In the 40th legislature,1927,a board of insurance commissioners was formed which constituted the commissioner f life insurance, fire insurance and casualty insurance. The performance of the department of insurance improved over the years and in 1951,the first insurance code was published, which contained the laws which were formed till then, regulating the insurance functions in the state. This code has a detailed mention of all the insurance sectors. In 1957,the state board of Texas department of insurance was formed which specified the duties of the members and stated the requirements expected of the members. The board had the responsibility of hiring the insurance commissioner. He also served as the state marshal, the duties were dissolved only after the state marshals office was created in 1987. Finally in 1993,the department of insurance was well formed with the commissioner who is the in charge being appointed by the governor for two years as a term. The appointment also needs to be confirmed by the state senate. All the laws and regulations were the responsibility of the department now and the insurance commissioner had the full authority of all matters related to the insurance industry in the state. The Texas Department of insurance now has the aim of creating a financially sound and responsible insurance industry in the state. It can be seen that the Texas department of insurance was evolved over the years from the haphazard department dealing with all sorts of functions like statistics and history to a well defined department controlling the performance of the insurance sector. Once this has been done, as the insurers are regulated by a department, the performance and productivity of the industry also improved.
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