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DFW RIMS External Affairs Committee | September Update
Tracking Policy, Courts & Advocacy Shaping the Risk Landscape

The External Affairs Committee continues to track legislative discussions in the run-up to the 90th legislative session. As more information is received, we will continue to report to members on any new headlines. Here is a recap of what is going on in the political environment down in Austin.

⚖️ Texas Tort Reform at a Crossroads

At RIMS Texas Regional 2026, Allan Kirsh, Head of Claims Judicial and Legislative Affairs for Zurich American Insurance Company gave a presentation titled, How to Mitigate the Risk of Runaway Verdicts, where he outlined current tort reform discussions occurring on the House floor in Austin. He touched on a few issues being discussed that could be brought for a vote in 2027. These issues include a multipart bill for reasonable damages including anchoring, letters of protection, medical necessity, and non-economic damages caps. These reforms are being met by staunch resistance per a recent Texas Tribune article highlighting how trial lawyers are gaining access to the political sphere in Austin, backed by big money political action coalitions (PAC) such as the Texans for Truth and Liberty Pac, one recently infused with $10 million dollars to counteract tort reform efforts pushed by Texans for Legal Reform (TLR). This will be something to watch for as we approach the 90th legislative session. If trial lawyers continue to gain a larger foothold inside the state’s legislative chambers, relief for corporations and businesses from litigation risks and the stabilization of the casualty insurance market could be a hill growing in stature, slowing the ability for tort reform to create positive actions moving forward. 

🏛️ Texas Legislative & Regulatory Updates

Texas Governor Greg Abbott has issued a directive to the Texas Department of Insurance (TDI) aimed at reducing soaring residential property and casualty insurance costs following a reported 79% average premium surge over the last six years. Under the new measures, TDI must ban "price optimization," prohibit insurers from denying or refusing to renew policies based solely on the age of a property, and require carriers to factor fortified roof certifications into rate-setting calculations. Additionally, the directive mandates the establishment of a state Insurance Fraud Task Force and orders a study on the impact of inflated and unnecessary claims on commercial auto, personal auto, and homeowners insurance markets. Although these measures appear to provide relief mainly to homeowners, the focus on insurance affordability at the highest level could provide the momentum needed to expand to commercial casualty reforms needed to address litigation risks driving up insurance rates for businesses.

🏛️ Supreme Court Decisions

In In re State Farm Lloyds, the Texas Supreme Court addressed discovery boundaries in property insurance disputes, reinforcing that policyholders cannot conduct broad fishing expeditions into an insurer’s underwriting guidelines without a specific showing of relevance to the underlying loss. The Court conditionally granted mandamus relief, establishing that overbroad discovery orders constitute an abuse of discretion when they compel internal corporate manuals standard across unrelated claims. For commercial property insurers and corporate risk managers, these ruling limits runaway pre-trial discovery costs and prevent policyholders from leveraging costly compliance burdens to force premature settlements in routine coverage disputes.

💥 Nuclear Verdicts - Texas

For August 2026 we highlight two cases involving large jury awards that occurred in the state. One involving an industrial accident back in 2020 and the other a defamation suit related to the Sandy Hook school shooting fourteen years ago. 

In re: Watson Grinding Explosion Litigation - A Harris County jury ordered 3M Co. to pay $61.5 million to twenty-four homeowners over the catastrophic 2020 Watson Grinding plant explosion in Houston that killed three people and damaged over 450 properties. The plaintiffs successfully argued that 3M was negligent in inspecting and maintaining the facility's gas detection and alarm system, which failed to alert workers to a massive overnight propylene leak. Marking another successful bellwether trial against 3M in this multi-district litigation—bringing total awards past $220 million—the company announced immediate plans to appeal as thousands of additional claimants await trial.

Alexander E. Jones and Free Speech Systems, LLC v. Neil Heslin and Scarlett Lewis - The Texas Third Court of Appeals drastically reduced the punitive damage award conspiracy theorist Alex Jones must pay to two Sandy Hook parents from over $45 million down to $1.5 million. While the three-judge panel upheld the jury's defamation verdict and $4 million in compensatory damages, it ruled that the trial judge improperly allowed the parents to bypass Texas’s statutory $750,000-per-person cap on exemplary damages after the trial had concluded. The appellate decision provides a massive reduction in Jones' direct civil liabilities in Texas, though it leaves intact his separate $1.5 billion judgment in Connecticut. Punitive damages are a major concern for corporations in tort litigation, the state’s ability to properly apply exemplary damages caps is a positive sign as these types of damages can be excluded under casualty policies creating a significant financial risk for businesses. 

⚡ Data Center Risk & Implications

In August 2026, Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and ERCOT to execute an immediate pause and audit on pending data center grid interconnection requests. With ERCOT evaluating over 474 gigawatts in large-load interconnect requests—90% of which stem from data centers—state officials are requiring every project to undergo site-by-site verification of power demand, water usage efficiency, and public incentive compliance before gaining grid access. For project developers and underwriters, this regulatory pivot alters risk profiles: interconnection delays now introduce project financing friction, extended capital-at-risk windows, and complex off-grid backup generation requirements. Commercial risk managers must re-evaluate supply chain delay insurance (e.g., builder’s risk), power purchase agreement (PPA) default terms, and local community environmental exposure across new Texas buildouts.

The External Affairs Committee will continue to report on data center development news in Texas as this is a rapidly evolving area spanning economic, societal, and political debate.

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Interested in getting involved?

The External Affairs Committee welcomes insurance professionals and attorneys who want to stay engaged in legislative, regulatory, and legal developments impacting the industry. Join us as we continue to monitor key issues and help shape meaningful dialogue across Texas.

Cory Mangum  
DFW RIMS External Affairs Committee Chair
[email protected]