Texas House Bill HB2147

Texas 2017 - 85th Regular

Caption

Relating to the use of certain loss and expense experience in insurance rates.

Impact

The enactment of HB2147 would amend Chapter 560 of the Insurance Code, adding Section 560.003, which expressly prohibits insurers from utilizing non-insurance related business experiences when setting premium rates. This legislative change is intended to simplify the rate-setting process and eliminate potential manipulations that could arise from considering external business expenses, ultimately aiming to create a fairer insurance market in Texas. The bill takes effect on September 1, 2017, and applies to all premium rates used or rate filings made after January 1, 2018.

Summary

House Bill 2147 addresses the parameters under which insurers may set premium rates by specifically prohibiting the use of loss and expense experience from any business outside of the insurance sector. This bill aims to ensure that the premium rates reflect only the actual insurance-related experiences, thereby making the pricing of insurance more transparent and accountable. By focusing solely on insurance-related data, the bill seeks to protect consumers from unnecessary rate increases that might occur if insurers were allowed to factor in unrelated business costs.

Contention

Notable points of contention surrounding HB2147 stem from discussions regarding the implementation of this regulatory framework. Critics may argue that there could be unintended consequences, such as reduced risk assessment flexibility for insurers, which may eventually lead to higher premiums if insurers are unable to adapt to market changes. On the other hand, supporters contend that this restriction will bolster consumer protections and ensure that prices reflect genuine risk rather than extraneous factors, thereby fostering a healthier competitive environment within the insurance industry.