Legislatures in Texas have enacted a new law directly affecting the surety bond industry. When one looks at the changes included in the bill, it’s hard to see what it actually accomplishes; it raises the question of whether the legislators writing laws affecting the world of surety have adequate knowledge of the industry.
The new bill is named HB 1951 and allows non-Treasury listed surety companies to issue bonds up to $1,000,000 without proof of reinsurance. Although Texas sureties don’t need to be registered with the Department of Treasury now, they need to write bonds within the limits of 10% of their capital and surplus and still must write within state regulatory limits. The new bill doesn’t seem to hurt or improve anything, so what’s the reason for it?
The main issue here is legislators writing laws for industries they no little to nothing about. This kind of ignorance can create negative repercussions and can affect any industry in the country. Whatever the reasons are that made the authors write this bill are it seems that they don’t have enough knowledge of the surety business to be doing so. A close eye should be kept on legislatures and officials when they are making changes that affect whole industries.