Relating to the licensing of captive insurance companies; authorizing fees.
Impact
The provisions laid out by HB 2788 will significantly alter the insurance regulatory landscape within Texas. Initially, it is likely to increase compliance costs for businesses that wish to utilize captive insurance companies. However, by lowering the premium tax rate for captive insurance to 0.5% and capping total taxes assessed annually at $200,000, the bill aims to make this avenue more appealing for businesses. This structure will potentially encourage more companies to form captive insurers, which could lead to a more resilient insurance market oriented toward corporate needs.
Summary
House Bill 2788 seeks to establish a regulatory framework for the licensing of captive insurance companies in Texas. Captive insurance companies are entities that protect the operational risks of their corporate affiliates. This bill authorizes the Texas insurance commissioner to regulate these entities and implement necessary fees associated with their licensing. One of the key provisions is the stipulation that captive insurance companies shall not cover certain types of insurance, such as life insurance or workers' compensation, thereby clearly delineating the role and limitations of these companies in the broader insurance landscape.
Sentiment
The sentiment surrounding the bill appears to be cautiously optimistic among advocates of business interests who see the creation of captive insurance companies as a strategic way for companies to manage risks efficiently. However, some concerns have been voiced regarding the potential for reduced oversight, arguing that this could lead to regulatory gaps that may harm policyholders. The balance between providing businesses the flexibility they need while protecting consumer interests will likely be a significant focal point in discussions on the bill.
Contention
Notable points of contention include concerns over the possible implications of reduced regulatory requirements for captive insurers. Critics warn that allowing these companies to operate with a high degree of autonomy could lead to situations where risks are not adequately managed, raising the potential for financial instabilities within this segment of the insurance market. Furthermore, questions around the confidentiality of information filed by captive insurance companies have also arisen, emphasizing the need for a careful and transparent approach to manage proprietary data.
Relating to the transfer and statutory novation of insurance policies from a transferring insurer to an assuming insurer through an insurance business transfer plan; authorizing fees.
Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a surcharge.
Relating to the regulation and voluntary licensing of reroofing contractors by the Texas Department of Licensing and Regulation; providing administrative and civil penalties; authorizing fees.
Relating to small business recovery funds and insurance tax credits for certain investments in those funds; imposing a monetary penalty; authorizing fees.
Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment, a surcharge, and an infrastructure grant.
Relating to the formation, operation, and authority to engage in business of insurance companies and other entities regulated under the Insurance Code; restructuring or changing fees.
Enacting the Kansas protected cell captive insurance company act, providing for the redomestication of a foreign or alien captive insurance company and updating certain terms, requirements and conditions of the captive insurance act, reducing insurance company premium tax rates, creating parity between the insurance agent and public adjuster licensing requirements, authorizing insurers to file certain travel insurance policies under the accident and health line of insurance and authorizing the commissioner of insurance to select and announce the version of certain instructions, calculations and documents in effect for the upcoming calendar year and cause such announcement to be published in the Kansas register not later than December 1 of the current year.