Texas Watch—Consumer Protection. Corporate Accountability. Citizen Advocacy.

Texas will have to consider less regulation of insurance companies and their rates if the Department of Insurance sees its funding cut 10 percent to help balance the next state budget, Insurance Commissioner Mike Geeslin said in documents filed this week with the governor and legislative leaders.

Consumer groups and other critics are calling on the Legislature to ramp up regulation of the insurance industry next year. But the commissioner warned that deep funding cuts could force the state to switch to a new regulatory system, such as one that is more concerned with giving consumers information about insurance products than keeping tabs on rates.

“If reductions of $29 million (10 percent of the agency’s budget) were implemented, TDI cannot predict the effectiveness of the current regulatory structure in Texas,” Geeslin said in a summary of his legislative appropriations request for the next two-year budget.

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Regarding a potential 10 percent reduction, the commissioner said the impact “would critically impair [the department's] ability to effectively regulate the insurance industry and workers’ compensation system under current Texas law.”

Alex Winslow of Texas Watch, a consumer group active in insurance issues, said that the suggestion to weaken oversight of companies as a way to pay for budget cuts “takes Texas in the wrong direction.”

“We need stronger oversight to ensure rates are fair and claims get paid in full and on time – not weaker standards that allow insurance companies to abuse Texas homeowners even more than they already are,” he said.

Read More: The Dallas Morning News