So, this may be just a little bit self serving, but I really think the Texas legislature would benefit from sponsorship of an independent think tank on insurance law and regulation. I previously served as a director of the University of Houston Law Center’s Health Law and Policy Institute, which was under a modest contract with the legislature to provide briefings on issues of importance as well as provide trained interns to work with key legislators. It didn’t — and doesn’t — cost very much and, in my view, has provided the legislature with valuable service over the years. The legislature doesn’t have a comparable research arm in the vital field of insurance law .
The absence of an independent research arm means that the Texas legislature sometimes flies in the dark on critical issues of insurance regulation. Yes, staffers can get up to speed eventually, but many start as generalists, leave before achieving insurance Nirvana or, quick study notwithstanding, do not always have the technical expertise or experience needed to understand a complex field in which a mistake can have huge consequences on individuals and the economy. The Department of Insurance, particularly in recent years, tries to be proactive but that agency is often understandably focused on the problems of the day rather than having a lot of resources to think strategically about the future. The legislature can also use assertions of advocates for clients, be they the insurance industry, chambers of commerce, consumer groups, or others with an agenda such as the Texas Public Policy Foundation. But these groups are at least somewhat constrained in the positions they can take and the agenda they promote. And, while it is unrealistic to think that a think tank can be completely apolitical, still, having a think tank that starts with an approximation of neutrality can, I believe, be very useful.
What would such a think tank look like? It would need to have at least one certified actuary and probably some students of actuarial science. It would need to have at least two attorneys or faculty members with expertise in insurance law and regulation, and, again, some students to assist in research and writing. It would probably also be well served by having expertise in the field of insurance intermediaries, accounting, finance and statistics. All of this could, I believe, be housed within a university setting or, potentially outside one, with a budget of about $1 million per year. The think tank could also act as a screener for those seeking the opportunity to work directly for legislators whose committee assignments include insurance.
What kind of problems could the think tank address? The legislature could provide direction and the think tank could, as the Health Law & Policy Institute has done, provide custom research for legislators with concerns on a particular issue. For starters, however, I believe a good look at the remedies in Texas for breach of an insurance contract would be useful, as would a study of laws regulating insurer solvency. It could examine implementation of federal health insurance programs such as Medicaid and Obamacare within Texas. The think tank might study ways in which the complexity of Texas insurance regulation with its grab bag of types of insurers each subject to different subsets of regulation might be simplified. The think tank might bring trends in other jurisdictions to the attention of the Texas legislature as well as provide it information on the effects of growing insurance regulation at the federal level. And, of course, it could think rigorously and creatively about ways of transferring catastrophic risk in Texas that keeps property insurance prices up.
Right now, to be frank, one of the only reasons I am listened to at the state legislature, is that I am one of the few “independent” voices on insurance law and regulation. I have my own political views, to be sure, but no one pays me to say what I do. Instead, what lets me be effective is the happy coincidence of having the time and freedom of a tenured professor, trying to stay as “objective” as I can, and having considerable accumulated expertise in insurance law and actuarial science. But my time, perhaps like others in Texas with similar inclinations, is limited. So, while the absence of special funding does not and would not prohibit other citizens from making their voices heard on important issues of insurance law and policy, the reality is that the barriers to entry into this complex and technical area are rather high. That’s why you may hear dozens testify on roofing regulation but far fewer come to speak with knowledge on regulatory schemes involving billions of dollars. I believe the legislature would benefit from more independent voices. And supporting an insurance think tank here in Texas is one way to increase the chance of that happening.