Texas Senate Bill SB871

Texas 2011 - 82nd Regular

• Out of Senate Committee: 3/24/11
• Voted on by Senate: 4/4/11
• Report Pass: 3/24/11
• Engrossed: 4/4/11
• Refer: 4/28/11

Caption

Relating to corrective action with regard to excessive or unfairly discriminatory residential property or personal automobile premium rates.

Impact

The introduction of SB871 is expected to have a significant impact on the insurance regulations in Texas. By enforcing a stricter protocol for managing refunds and discounts during disputes, the bill seeks to enhance consumer protection and promote fairness in the insurance market. It also reinforces the authority of the Texas insurance commissioner in overseeing rate approvals and disputes. The requirement for insurers to provide evidence of financial inability to pay refunds or discounts may also deter unjustified rate increases, thereby stabilizing pricing for residential and automobile insurance in the state.

Summary

SB871 seeks to address issues surrounding excessive or unfairly discriminatory premium rates charged for residential property and personal automobile insurance in Texas. The bill introduces a requirement for insurers who wish to contest the disapproval of their rates to take specific actions regarding refunds or discounts owed to policyholders. Insurers are required to either pay the amount owed into an escrow account or provide a bond that covers the refunds during the judicial review process. The bill aims to protect consumers from unfair practices by ensuring that insurers remain liable for refunds while their rate disputes are resolved in court.

Contention

Discussion surrounding SB871 has highlighted some notable points of contention, especially regarding the balance between consumer protection and the operational flexibility of insurance companies. Proponents argue that the bill is essential for safeguarding residents from abuse by insurance companies that impose unfair rates, effectively creating a safety net for policyholders. Conversely, opponents express concern that the requirements placed on insurers might lead to higher operational costs, which could ultimately translate into increased premiums for consumers. Critics also raise questions about the administrative burden this could place on the insurance market and whether it might stifle competition among insurers.