TSLA’s lobbyist and general counsel, Keith Strama, foresees a legislative session filled mostly with state budget and COVID-19 pandemic concerns, and less activity on insurance matters. One tort reform issue is rising to lawmakers’ awareness, however, said Strama, who expects the measure to see action during the upcoming legislative session which convenes on Jan. 12.
Strama’s remarks came during the Texas Surplus Lines Association annual meeting held virtually on Nov. 10. In addition to his preview of the upcoming legislative session, Strama provided his political insights into the November elections in Texas. He titled his presentation Meet the New Boss, Same as the Old Boss. Strama is a partner of the Austin firm Beatty Navarre Strama.
Strama looked forward to the 2021 legislature, expecting COVID to preoccupy the members. He anticipates fewer than the usual number of bills to be considered, more focus on the budget because of the anticipated revenue shortfall, and a high likelihood of a series of special sessions as things get back to normal.
Right now, a committee of lawmakers is assessing how much access the public will have to the capitol and what rules may need to be changed to accommodate remote access to committee hearings and floor action. The situation is complicated by a legislature that “skews older,” said Strama, making members themselves a vulnerable coronavirus population. Still, there are those in the Senate who are among the very conservative wing of the party that want business to be conducted as normal.
Strama said that division has played out over the summer when the factions could not agree on how to hold interim joint committee meetings. The House wanted virtual; the Senate favored in-person. Procedures for the House will be determined by the House, and the Senate will control Senate procedures, he said. “There is a very good chance that the public and the lobbyists will not be allowed in the capitol,” said Strama.
Strama foresees some tort reform legislation that will be advanced by the trucking industry and Texans for Lawsuit Reform. The flood of litigation has led to landmark awards of damages, especially in south Texas, said Strama. He expects that legislation will be introduced to change how liability works in collision litigation. Strama has a draft of the proposal to share with agents who have trucking in their portfolio of clients and who are willing to share thoughts on how the reform can be best written. The pressure to get something done in this area is super high, said Strama.
“Nobody is against lawsuits to right real wrongs,” said Strama. People are “just against the excesses that disrupt the market… hurting everyone in the state except trial lawyers,” he continued.
Strama also predicted there will be a push for reform of judicial elections, an issue he expects that TSLA will take a position on. He said the level of knowledge the public has about judicial candidates is lacking. Strama suggested that another system, such as appointment of judges with the potential of retention elections, would be better suited for a stable business environment. “It works in other states,” he said.
From TSLA’s perspective, said Strama, the key priorities are many of the same public policies as before: protect access to markets, fend off any legislation changing diligent effort, and maintain qualified exempt purchasers, rate freedom and form freedom. Strama also expects flood insurance to continue to be a major topic.
Strama said TSLA would also be looking at ways to lessen the burden on reporting, and the new administration at the stamping office is working more closely with TSLA and receptive to the association’s input.
Commenting on the election results, Strama noted that final votes in Texas were contrary to news media predictions. Despite extraordinary campaign spending to move the state into stronger Democratic Party influence, the state legislature returns with nearly the same partisan makeup of last term. The state House Republicans gained one seat, but lost another to the Democrats; the Senate ratio went from 19 Republicans/12 Democrats in 2019 to 18 R’s/13 D’s for the 2021 legislative session.
The state’s U.S. Congressional incumbents were reelected, maintaining a 23 Republicans/13 Democrats makeup for the state’s congressional delegation; U.S. Sen. John Cornyn, R-Texas, was elected by a decisive 10 percentage point margin, and Sen. Ted Cruz, R-Texas, has four more years on his current six-year term.
This nearly unchanged election outcome came despite “super obscene campaign spending” that far exceeded prior election cycles, said Strama. Strama said that there were 20 House races where the opposing candidates each spent over $1 million. After over $100 million spent on Texas House races, “The net effect was zero. There are 83 Republicans and 67 Democrats in the House, just like there were in 2019,” said Strama.
Strama said the high level of spending in House races was driven by Democratic optimism of gaining a House majority. Democrat Beto O’Rourke won majorities in nine Republican House districts when he challenged Republican Sen. Ted Cruz in 2018. Moving eight of the nine seats into Democratic ranks would have meant a change in party majority in the Texas House and, potentially, a shift in the R/D ratio of Texas’s congressional delegation. By U.S. Constitution requirement, the decennial census calls for a congressional redistricting plan based on new population counts, explained Strama. Because the redistricting plan is drawn by the state legislature, winning a majority of state House seats became a crucial strategy for gaining Democratic representation for the next 10 years in Washington.
The Democratic National Committee saw a potential of gaining three or four Democrats in the U.S. House if Democrats could hold a majority in the Texas state House, said Strama. “The return on investment would have been huge,” he said.
“There was a real fear among Republicans that they could lose the majority in the (Texas) House,” said Strama. With election returns final, Republican held their majority in the state House and Senate. Along with all statewide offices held by Republicans, congressional redistricting remains controlled by the GOP.
As the state House members look to the term beginning in January, they know they will be electing a new speaker, as Rep. Dennis Bonnen, R-Angleton, last term’s speaker chose not to run for reelection. With the official vote to take place when the legislature convenes on Jan. 12, the Republican members appear to have settled on Dade Phelan, R-Beaumont, as the new speaker. Phelan played a prominent role in crafting the definition of industrial insured in Texas law, opening up the surplus lines market to commercial insurance buyers of sufficient financial means. Phelan spoke at the 2017 TSLA annual meeting.
Strama said that Phelan is among the top three members of the Texas legislature who understand the surplus lines market. Phelan is a commercial realtor. From this industry’s perspective, there couldn’t be a better Speaker of the House, said Strama, adding that Phelan has bipartisan support for his election as speaker.
Shifting to the state Senate, Strama said the loss of one seat in San Antonio was not unexpected. A Republican had won the traditionally Democratic seat in a special election. Strama noted that there were some heavily contested and expensive Senate races in the Dallas area, but the Republicans held on fairly easily.
Strama said that the TSLA’s Political Action Committee supported several state House candidates from both parties in this election cycle. The PAC’s support went to candidates who have shown their support for business and the surplus lines market. All supported candidates won. Likewise, the Senate candidates supported by TSLA’s PAC won. In total, TSLA’s PAC donated to 50 candidates during this election cycle.
According to Strama’s analysis of the presidential race results, suburban areas are becoming more Democratic and Hispanic voters along the border and coast are becoming more Republican. His conclusion: Republicans will have to continue to analyze how they won Hispanic support and what can be done to keep it in future elections if Texas is to remain a Republican majority state.
Strama has represented TSLA as its lobbyist and general counsel since January 2016.