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Lawmakers weigh transferring Fire & Tornado fund oversight to OMB, spotlight Naderf claims handling
Summary
Representative Brandenburg told the Government Operations appropriations committee he had questions about two bills (House Bill 1026 and 1027) proposing to transfer Fire & Tornado and state bonding fund administration from the Insurance Department to the Office of Management and Budget; Insurance Commissioner John Godfrey supported the transfer as a way to remove a regulatory/contract conflict with Naderf.
Representative Brandenburg raised two bills — House Bill 1026 and House Bill 1027 — that would transfer administration of the Fire & Tornado fund and the state bonding fund from the Insurance Department to the Office of Management and Budget (risk management). Insurance Commissioner John Godfrey said both bills were introduced at the request of the Government Finance Interim Committee and that moving administration to OMB would remove a conflict where the department must both regulate and contract with Naderf.
Godfrey described Naderf's progress administering the Fire and Tornado (F&T) fund, saying the entity identified roughly $3,000,000,000 in previously uninsured property across the state after the department partnered with it. He told the committee that Naderf has improved coverage accuracy for the F&T and bonding administration but that his staff's examination also identified shortcomings in Naderf's claims handling for political‑subdivision liability and third‑party claimants.
Committee members raised specific complaints from local officials and residents who reported denied claims or delays. Representative Kempfnick (variously referenced in transcript) and Representative Kemplnick urged that homeowners and political subdivisions have received inconsistent outcomes on claims such as water‑main break damage; Godfrey confirmed his office performed a market conduct examination and a financial examination is under way. He said the department furnished its examination and presentation to legislative leadership (Lafferty was named as a recipient in testimony) and recommended the committee request the report for broader scrutiny.
On funding and special fund mechanics, Godfrey said the Insurance Department draws operations from the Insurance Regulatory Trust Fund. He said that the trust fund currently has a statutory cap of $1,000,000 (amounts above that are swept to the general fund) and that the department intends to seek a cap increase (bill cited as “11 23”) to address cash‑flow issues. He also said the cigarette propensity fund transfer (cited as “10 86”) brought about $493,000 into the regulatory trust fund and will be considered in separate committee work.
Several committee members asked for more transparency and a regular reporting cadence for Naderf exam results and claims activity. Godfrey said his office performed a market conduct exam and would provide the report and presentation to the committee; he said financial examinations are scheduled and that the department will share findings. Several members suggested requiring a biennial or regular report to either this committee or the Legislative Audit function so the legislature has oversight data even when the department is not seeking an appropriation.
Ending
The panel asked the Insurance Department to share its Naderf examination report and to work with staff on language that would require periodic information sharing with the legislature; bills transferring F&T and bonding administration to OMB remain under consideration.
