Texas House Bill HB3673

Texas 2023 - 88th Regular

• Filed: 3/6/23
• Out of House Committee: 4/19/23
• Voted on by House: 4/28/23
• Out of Senate Committee: 5/12/23
• Voted on by Senate: 5/16/23
• Governor Action: 6/11/23

Caption

Relating to an exemption for certain life insurance companies regarding the valuation of reserves.

Impact

If enacted, HB3673 would streamline regulatory compliance for life insurance companies by ensuring their reserving practices reflect the most current guidelines set forth by NAIC. The amendments are particularly aimed at ensuring that smaller insurance entities can maintain their operations without having to navigate conflicting standards between state and national regulations. This alignment is expected to enhance the stability of the insurance market in Texas and facilitate better long-term financial planning among life insurers.

Summary

House Bill 3673 focuses on the adjustment of the qualifications for the principal-based reserving exemption for certain life insurance companies. Specifically, the bill aims to align Texas insurance code provisions with the updated National Association of Insurance Commissioners (NAIC) valuation manual. This change is intended to provide clarity and consistency in the way life insurance policies are valued, thereby promoting a more efficient regulatory environment.

Sentiment

Overall, HB3673 received bipartisan support during the legislative process, with many recognizing the need for modernization in regulatory practices to remain competitive. Supporters, including industry representatives, expressed that aligning state law with the NAIC standards would not only simplify processes but also enhance the solvency and consumer protection measures within the insurance market. However, there was also a recognition that such changes require careful implementation to ensure that protections for policyholders are not unintentionally weakened.

Contention

The discussions surrounding HB3673 primarily revolved around the implications of changing reserve valuation methods. While proponents viewed the bill as necessary for maintaining competitiveness, some concerns were raised regarding the potential impact on the financial reserve requirements of smaller insurers. Additionally, there were calls from some legislators to include specific provisions ensuring that consumer protections remained intact despite the regulatory changes.

Texas Constitutional Statutes Affected

Insurance Code

• Chapter 425. Reserves And Investments For Life Insurancecompanies And Related Entities
  • Section: 073
  • Section: 073
  • Section: 073