Texas Senate Bill SB827

Texas 2009 - 81st Regular

Caption

Relating to the establishment and operation of urban mutual insurance companies.

Impact

One of the key provisions of SB827 provides urban mutual insurance companies with limited exemptions from existing insurance laws, meaning that many state regulations will not apply unless explicitly mentioned. This flexibility is designed to encourage the establishment of local insurance firms that cater specifically to the needs of urban populations, potentially leading to greater competition and better pricing for consumers. The bill also allows urban mutual insurance companies to have pricing flexibility for the first two years of operation, which can help them adjust to market demands and establish their presence in the insurance market.

Summary

SB827 establishes a legal framework for the creation and operation of urban mutual insurance companies in Texas. This bill amends the existing Insurance Code to include a specific chapter (Chapter 913) that focuses on the unique regulatory needs of urban mutual insurers. The intent of the bill is to enhance insurance availability in urban areas, aiming to bolster local economies by allowing these entities to operate with certain exemptions while being subject to some regulatory standards set forth by the state.

Contention

Notably, the discussion surrounding SB827 included concerns over the potential for reduced oversight of urban mutual insurance companies. Critics argue that while regulatory exemptions may incentivize new companies, they could also lead to lapses in consumer protections if not managed carefully. There is a significant emphasis on ensuring that these companies do not exploit the deregulated environment at the expense of policyholders. Furthermore, the ability for these companies to set premiums flexibly until they gain footing in the market raised questions about the long-term stability and fairness of rates charged to consumers.