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Texas Department of Insurance

Texas Department of Insurance

doiAgency History

The Texas Department of Insurance (TDI) regulates the Texas insurance industry. The department seeks quality insurance products for all Texans at reasonable prices and under reasonable terms and strives to protect consumers’ insurance assets. The TDI enforces solvency standards and promotes competition in the industry while protecting consumers from fraud, misrepresentation and unfair practices. It also educates the public about insurance so that Texans can make informed choices and works to protect the lives and property of the citizens of Texas from fire and fire-related hazards.

The history of state regulation of insurance in Texas dates from 1874, when the 14th Texas Legislature passed a law regulating the life and health insurance business in the areas of company formation, activities and coverage (Chapter CXLV, Regular Session). This act also gave the State Comptroller of Public Accounts supervisory authority over insurance (as there was not a state insurance department in existence), including issuing yearly renewal of certificates to companies. In the early days of statehood, practically all insurance business in Texas was written by companies organized in other states and foreign countries. According to State Comptroller’s records, out of 61 companies doing business in Texas in 1874, only four were Texas-based. Until the 1876 State Constitution was adopted, Texas insurance corporations were created by special acts of the legislature. These domestic companies ventured into the business—mostly fire and marine insurance—in competition with financially stronger and more experienced out-of-state companies. As a result, most of them either went bankrupt or had to be reinsured and taken over by their out-of-state counterparts.

The Texas 1876 Constitution authorized the legislature to create the office of Insurance Commissioner. Later that year the 15th Legislature passed a bill creating the Texas Department of Insurance, Statistics and History (Chapter CXXXIII, Regular Session). The department had the responsibility to file and maintain insurance company charters; determine net value of all insurance companies in the state annually, to see that companies maintained an amount equal to their net value in safe, legal securities; calculate re-insurance reserves for unexpired fire risks; and suspend or close the operation of companies in non-compliance with insurance regulations. Insurance companies had to furnish a certificate to the Insurance Commissioner on the valuation of the company. If the commissioner determined the net value was below the state-determined safety net, he was to notify the company to cease doing business and suspend or close their operations. The commissioner had access to all books and papers of companies and could revoke or modify certificates of authority, call witnesses to testify, and initiate suits and prosecutions. In addition to his insurance-related duties, the commissioner was charged with keeping information and statistics on the state’s population, wealth, and general resources. He also served briefly as the state historian, the state librarian, and superintendent of public grounds and buildings.

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