Texas Commissioner: Budget Cuts in Department Could Hurt Insurance Regulation
September 8, 2010 by Jesse A. Hamilton
September 03, 2010 | BestWire Services
The insurance regulator for Texas is predicting a need for a restructuring of the state’s oversight of insurers if his department is forced to make 10% budget cuts.
If the legislature, which meets in January to begin work on the two-year state budget, decides its budget-balancing efforts will mean such a significant cut to the Texas Department of Insurance’s operations, Commissioner Mike Geeslin said it “could severely impact insurance regulation in Texas.” In a budget proposal to the state legislature, the commissioner said his department “can be scaled down to a certain level, but at some point it ceases to work efficiently.”
Because of a major revenue shortfall projected for Texas, the state agencies have been requested to produce plans to lower spending below current levels. Ten percent of the department’s two-year budget would equate to about $29 million.
“If you want to cut weight from a car, and you remove two of the tires and half the transmission, it ceases to work like a car,” Geeslin argued in the summary of his legislative appropriations request for the 2012-2013 budget. His plan provides the legislature potential options for modifying the regulatory approach into one of two “alternative statutory structures.” One, “value regulation, refers to infusing a different type of information into the market. The other, principle outcome regulation, is based on regulated entities’ overall value added to the market and lives of Texas citizens.”
“The message is the same as it’s been in previous reports, that the regulation is needed and cuts in the agency’s budget would have impacts on how the agency could do its job,” said Ben Gonzalez, a department spokesman.
Gonzalez predicted that the legislature will probably finish work on this budget by next June.
(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)
