Relating to own risk and solvency assessment by insurers and insurance groups; providing a penalty.
The legislation specifically impacts the regulatory landscape for insurers in Texas by formalizing the requirements for maintaining a risk management framework. Insurers are required to submit an own risk and solvency assessment summary report to the commissioner, which includes sensitive information. Importantly, the bill maintains strict confidentiality for these reports, limiting public access and providing only for specific, regulated disclosures. This reinforces the privacy of proprietary information while enabling regulatory oversight.
SB655 introduces a new chapter to the Texas Insurance Code that mandates insurers and insurance groups to conduct regular own risk and solvency assessments (ORSA). This assessment is designed to identify and evaluate risks pertinent to the insurer's business framework and the adequacy of their capital resources. The bill aims to implement a sophisticated risk management framework that can adjust to the complexities and scale of the insurer's operations, ensuring that they are prepared for potential financial emergencies.
Overall, the sentiment around SB655 appears to be supportive among regulatory bodies and insurance stakeholders who recognize the need for a structured approach to risk and solvency assessments. Many view this measure as a proactive step towards better financial stability for insurers, ultimately protecting policyholders. However, there are concerns regarding the potential administrative burden on smaller insurers that may struggle with the compliance costs associated with these new assessments.
Notable points of contention surrounding SB655 revolve around the compliance obligations it places on smaller insurers. While larger insurance groups may have the resources to easily integrate these requirements, smaller entities may face challenges in maintaining the necessary documentation and analysis related to their ORSA reports. This aspect of the legislation has raised questions about whether it might unintentionally favor larger insurance entities at the expense of smaller, regional providers.