Texas House Bill HB2886

Texas 2009 - 81st Regular

Caption

Relating to insurer assessments to fund the catastrophe reserve trust fund.

Impact

The introduction of HB2886 is expected to enhance the financial robustness of the catastrophe reserve trust fund, which is crucial for managing insured losses resulting from large-scale disasters. By providing a structured assessment approach, the bill intends to stabilize the fund's finances, thereby potentially reducing the financial burden on the state during a disaster response. However, the ongoing assessment may impact insurance premiums, as insurers might pass some costs onto policyholders, raising concerns among consumer advocacy groups.

Summary

House Bill 2886 aims to modify the Insurance Code in Texas by establishing a solvency assessment for insurers to support the catastrophe reserve trust fund. The bill mandates that the members of the insurance association be assessed 0.025 percent of their net direct premiums written in Texas. This annual assessment is intended to ensure that adequate reserve funds are available to cover any obligations of the catastrophe reserve trust fund and to prepare for future disaster-related losses. The assessment will cease only when the fund is deemed sufficient to meet these requirements.

Contention

While HB2886 has received support for its aim to bolster disaster preparedness funding, it has also faced criticism. Detractors argue that such assessments increase operational costs for insurers, which could ultimately lead to higher premiums for consumers. Concerns have been raised regarding whether the benefits of a more secure catastrophe fund will outweigh the negative implications for policyholder affordability and access to insurance, particularly for those in high-risk areas. As discussions proceed, stakeholders are likely to debate the balance between preparedness and affordability.