Texas House Bill HB2835

Texas 2011 - 82nd Regular

• Out of House Committee: 5/2/11
• Introduced: 3/10/11
• Refer: 3/17/11
• Report Pass: 4/26/11

Caption

Relating to the functions of insurance holding company systems.

Impact

The bill's core provisions are aimed at enhancing the oversight of insurance companies and their holding companies by increasing transparency regarding financial transactions and potential risks that affect the insurers. Specifically, it lays out the requirements for these companies to file annual enterprise risk reports, which must identify material risks within their structure that could adversely affect the financial condition of the insurer. The proposals target the prevention of financial instability that could arise from unmonitored risks associated with holding companies and their affiliates.

Summary

House Bill 2835 seeks to amend various sections of the Texas Insurance Code concerning the operations of insurance holding company systems. It introduces new definitions, such as 'divesting person' and 'enterprise risk', and establishes guidelines for how these entities must disclose material transactions and risks to ensure the financial health of domestic insurers. By defining terms like 'divestiture', the bill clarifies the responsibilities of those who control domestic insurers when they plan to relinquish that control.

Contention

Notable points of contention arise around the balance of regulatory oversight versus operational autonomy for insurance companies. While proponents of HB 2835 argue that the bill safeguards the interests of policyholders and the general public by promoting financial transparency and stability, opponents may view it as an excessive intrusion into the affairs of insurance companies. They argue that the regulatory requirements placed on holding companies could stifle business operations and innovation within the insurance sector, potentially leading to a less competitive market.