Subcommittee on Interim Charge #2 
                               Tuesday, July 16, 2002 
                                     1:00 p.m. 
                           Capitol Extension, Room E1.036 
         Pursuant to a notice posted in accordance with Senate Rule  
         11.18, a public hearing of the Senate Committee on Business &  
         Commerce, Subcommittee on Interim Charge #2, was held on  
         Tuesday, July 16, 2002, in the Capitol Extension, Room E1.036,  
         at Austin, Texas. 
         MEMBERS PRESENT:                        MEMBERS ABSENT: 
         Senator Mike Jackson, Chairman          Senator Eddie Lucio, Jr. 
         Senator Troy Fraser                      
         Senator John Carona                      
         Senator Eliot Shapleigh 
         Senator Leticia Van de Putte 
         Chairman Jackson called the meeting to order at 1:10 p.m.  There  
         being a quorum present, the following business was transacted.   
         Senator Kip Averitt also attended and participated in the  
         The Chairman made opening remarks, stating that homeowners  
         insurance rates in Texas have received a great deal of attention  
         from the public, the media and Legislators during this interim.   
         According to the Texas Department of Insurance (TDI), premiums  
         have increased from 14 percent to 200 percent for some  
         homeowners in Texas.  These increases have caused a great deal  
         of concern and consumers have contacted their Legislators to  
         register their concerns.  TDI has also experienced a flood of  
         formal complaints with regard to homeowners rate increases. 
         Chairman Jackson stated that this subcommittee was charged to  
         study rate regulation of homeowners and automobile insurance,  
         the use of unregulated companies (such as county mutual and  
         Lloyd companies) to circumvent rate regulation, and the effects  
         of deregulation on insurance rates and consumers. 
         This meeting was called to hear public testimony from consumers  
         who have been affected by these increases.  The Chairman also  
         invited TDI Commissioner Montemayor to update the subcommittee  
         on the homeowners insurance market in Texas. 
         At the conclusion of the subcommittee's work during the interim,  
         the Chairman hopes a fair and equitable solution can be reached  
         that will provide affordable insurance for the people of Texas,  
         while fostering a competitive environment and providing consumer  
         choice.  The Chairman then called TDI Commissioner Jose  
         Montemayor to present his testimony.  Philip Presley, Chief  
         Actuary at TDI, also testified and responded to members'  
         Following the Commissioner's testimony and response to members'  
         questions, Chairman Jackson called for public testimony to  
         commence, as follows: 
              Bill Stinson, Texas Association of Realtors, Austin, 
              Melinda Ballard, President, Policyholders of America,  
              Johnny Zepeda, Legal Assistant, Coalition of Exclusive  
         Insurance Agents, San Antonio, 
              Ray Gonzalez, State Spokesman for American G. I. Forum, San  
              Jay Thompson, AFACT, Austin, and 
              Bruce Milligan, Texas Independent Lloyds, Dallas, Texas. 
         The Chairman then moved that public testimony be closed.  There  
         being no further business, at 4:30 p.m. Chairman Jackson moved  
         that the Committee stand recessed subject to the call of the  
         chairman.  Without objection, it was so ordered.   
         Senator Mike Jackson, Chairman 
         Barbara Henderson, Clerk