Texas Senate Bill SB1157

Texas 2009 - 81st Regular

Caption

Relating to a study concerning the collection and use of certain information by certain insurers.

Impact

The bill seeks to examine the potential consequences of utilizing advanced statistical methods on the fairness and accessibility of insurance. It requires the Department to evaluate whether the practices in classification lead to a negative impact on applicants for insurance, such as unjust denials, limited coverage options, or fluctuating premium costs based on risk estimation practices that might not accurately reflect the applicant's actual risk. By highlighting these issues, SB1157 aims to ensure transparency and accountability in the insurance industry, supporting consumers' rights.

Summary

SB1157 is a legislative proposal aimed at understanding the implications of data mining and certain statistical techniques used by insurance companies in the classification of risks for underwriting personal automobile and residential property insurance. The bill mandates that the Texas Department of Insurance conduct a comprehensive study analyzing how insurers utilize these technologies to alter or create new classifications, with particular emphasis on how these practices might predict risk and impact insurance premiums and coverage availability for policyholders.

Contention

While the bill appears to be aimed at protecting consumers, there may be contentions from within the insurance industry regarding the feasibility and implications of such a study. Insurers might argue that these technologies and methods have valid utility in efficient risk assessment and management. There may also be discussions around the methodology of the study, how data will be gathered and analyzed, and which stakeholders will have influence over potential legislative recommendations that could arise from the findings.

Next_steps

If enacted, the Department of Insurance will be responsible for reporting the findings of this study to the legislature, which could result in future legislation aimed at regulating the use of data mining technologies in the insurance sector. This could fundamentally influence how insurance premiums are calculated and ensure a balance between innovation in risk assessment and the fair treatment of consumers.