Texas Senate Bill SB2121

Texas 2019 - 86th Regular

Caption

Relating to requiring certain risk pools to conduct own risk and solvency assessments.

Impact

The implementation of SB2121 is expected to tighten financial regulations surrounding local government risk pools, ensuring they operate under stricter solvency standards. This change is designed to offer additional protection to policyholders and beneficiaries, as it enhances the reliability of these risk pools in times of financial scrutiny. By requiring local governments to assess their risk exposure and solvency proactively, the bill aims to prevent financial crises that could arise from inadequately funded risk pools, thereby promoting stability within the insurance landscape.

Summary

Senate Bill 2121 aims to enhance the oversight and stability of certain risk pools by mandating that they conduct their own risk and solvency assessments. The bill particularly focuses on risk pools that are established under Chapter 172 of the Local Government Code, providing a framework that subjects these pools to the requirements of Chapter 830 of the Insurance Code, irrespective of their annual direct written premiums. This legislative change seeks to ensure that public entities managing these risk pools maintain adequate solvency and financial health to meet their obligations.

Contention

Despite the intention to strengthen financial oversight, SB2121 may face concerns regarding increased regulatory burdens on local governments and the potential implications for smaller risk pools that may struggle to comply with the new requirements. Critics may argue that imposing such assessments could lead to higher operational costs, thereby impacting the financial resources available to local governments. Proponents, however, argue that the benefits of financial stability and greater consumer protection far outweigh the challenges associated with compliance.