Texas Senate Bill SB1777

Texas 2021 - 87th Regular

Caption

Relating to credit for reinsurance governed by certain covered agreements and ceded to certain assuming insurers.

Impact

The bill introduces standards for reinsurance transactions involving parties from domestic and reciprocal jurisdictions, potentially including those jurisdictions connected with the United States through covered agreements. By establishing clear criteria for what constitutes an eligible assuming insurer, the legislation intends to protect the financial interests of ceding insurers by ensuring that only those reinsurance arrangements that meet stringent regulatory standards can qualify for the credit. Furthermore, it grants the Texas Commissioner of Insurance the authority to publish lists and oversee the compliance of assuming insurers with these standards.

Summary

Senate Bill 1777 addresses the issue of credit for reinsurance governed by specific covered agreements when ceded to certain assuming insurers. The primary focus of the bill is to amend the Texas Insurance Code to articulate the conditions under which ceding insurers can receive credit for reinsurance that they cede to assuming insurers. It emphasizes the requirement for assuming insurers to maintain specific qualifications, including authorization, accreditation, and financial stability comparable to the standards set by the National Association of Insurance Commissioners (NAIC). This aims to enhance the security and robustness of reinsurance transactions within the state.

Contention

Debates surrounding SB1777 may include conversations on the balance between regulatory oversight and the flexibility of the insurance market. Proponents argue that the stringent conditions are necessary to safeguard the stability of the insurance industry and to prevent defaults that could arise from less robust reinsurance agreements. Conversely, critics might contend that these regulations could deter some insurers from engaging in reinsurance activities, thereby limiting options for ceding insurers and potentially increasing costs for consumers. The bill could result in a more structured framework but may also lead to concerns about market accessibility and competitiveness.