Texas Senate Bill SB416

Texas 2011 - 82nd Regular

• Out of Senate Committee: 3/7/11
• Introduced: 1/26/11
• Voted on by Senate: 3/17/11
• Out of House Committee: 4/20/11
• Voted on by House: 4/26/11
• Governor Action: 5/10/11
• Enrolled: 4/27/11
• Passed: 5/10/11

Caption

Relating to the amount of outstanding total liability of a mortgage guaranty insurer.

Impact

The implications of SB416 are significant for mortgage guaranty insurers operating in Texas. By redefining the parameters of liability in relation to the financial standing of these insurers, the bill aims to strengthen the stability of the insurance market. The provision allowing for a waiver of the liability limits enables insurers to adapt to changing market conditions, but it places additional responsibility on the commissioner to ensure that such waivers are justified and that the financial integrity of the insurer is not compromised. This move could potentially foster a more robust insurance environment, benefiting both insurers and policyholders.

Summary

SB416 aims to amend the Texas Insurance Code regarding the amount of outstanding total liability that a mortgage guaranty insurer can hold under its policies. The proposed changes outline specific limits on total liability based on the insurer’s capital, surplus, and contingency reserves, with provisions for the commissioner to waive these limits under certain conditions. The bill sets an intricate framework for how liability is calculated and the conditions under which insurers can operate beyond those limits, focusing on maintaining a sound financial base while servicing their insured risks.

Contention

One notable point of contention surrounding SB416 is the balance between consumer protection and business flexibility. Supporters argue that the bill provides a necessary regulatory framework to prevent overextension of mortgage guaranty insurers, thereby protecting consumers from potential financial instability. Conversely, critics may express concern that the regulatory requirements could hinder the ability of these companies to take on new business, particularly in a volatile housing market. The discretionary power granted to the commissioner to waive certain provisions may also raise questions regarding transparency and fairness in how these decisions are made.