Texas Senate Bill SB1386

Texas 2013 - 83rd Regular

Caption

Relating to the nonforfeiture requirements of certain life insurance policies.

Impact

One of the notable impacts of SB1386 is the clarity it brings to the nonforfeiture standards set for policies issued before and after a specified operative date for the valuation manual. The bill ensures that the standard interest rates for nonforfeiture benefits are both defined and regulated as per updated valuation methods set forth in the valuation manual. This helps policyholders understand their rights and benefits under the insurance contracts they enter into, making the insurance market more transparent.

Summary

SB1386 seeks to amend the Insurance Code of Texas relating to the nonforfeiture requirements for certain life insurance policies. The bill specifically introduces provisions for the usage of statutory mortality tables that are adopted by the National Association of Insurance Commissioners (NAIC) in determining the minimum nonforfeiture standards. Such standards are crucial in calculating the minimum benefits that policyholders are entitled to upon termination of a life insurance policy.

Conclusion

In essence, SB1386 represents a significant shift in how minimum nonforfeiture standards are approached within Texas insurance law, aligning them with newer mortality tables aimed at reflecting more accurate assessments of life expectancy. However, the operational effectiveness of these changes hinges on the legislative machinery working in tandem with this bill to establish a consistent framework for its enforcement.

Contention

While the bill appears to strengthen regulatory standards, discussions around it have raised concerns regarding its implementation, specifically the dependency on the enactment of an accompanying legislation from the 83rd Legislature, to adopt a standard valuation manual. Critics of this requirement point to the potential delays and uncertainties it could introduce into the insurance market, effectively holding SB1386’s provisions contingent on another bill’s success, which some may view as an overreach of regulatory authority.