Relating to own risk and solvency assessment by insurers and insurance groups; providing a penalty.
Impact
The legislation specifically impacts the regulatory landscape for insurers in Texas by formalizing the requirements for maintaining a risk management framework. Insurers are required to submit an own risk and solvency assessment summary report to the commissioner, which includes sensitive information. Importantly, the bill maintains strict confidentiality for these reports, limiting public access and providing only for specific, regulated disclosures. This reinforces the privacy of proprietary information while enabling regulatory oversight.
Summary
SB655 introduces a new chapter to the Texas Insurance Code that mandates insurers and insurance groups to conduct regular own risk and solvency assessments (ORSA). This assessment is designed to identify and evaluate risks pertinent to the insurer's business framework and the adequacy of their capital resources. The bill aims to implement a sophisticated risk management framework that can adjust to the complexities and scale of the insurer's operations, ensuring that they are prepared for potential financial emergencies.
Sentiment
Overall, the sentiment around SB655 appears to be supportive among regulatory bodies and insurance stakeholders who recognize the need for a structured approach to risk and solvency assessments. Many view this measure as a proactive step towards better financial stability for insurers, ultimately protecting policyholders. However, there are concerns regarding the potential administrative burden on smaller insurers that may struggle with the compliance costs associated with these new assessments.
Contention
Notable points of contention surrounding SB655 revolve around the compliance obligations it places on smaller insurers. While larger insurance groups may have the resources to easily integrate these requirements, smaller entities may face challenges in maintaining the necessary documentation and analysis related to their ORSA reports. This aspect of the legislation has raised questions about whether it might unintentionally favor larger insurance entities at the expense of smaller, regional providers.
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 consideration by insurers of certain prohibited criteria for ratemaking and coverage decisions and the use of disparate impact analysis regarding certain insurance practices.
Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a surcharge.
Relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment, a surcharge, and an infrastructure grant.
The standards and management of an insurer with an insurance holding company system and the confidential treatment of investigation and examination records of insurance holding companies.