Texas 2023 - 88th Regular

Texas House Bill HB1239 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R20406 KBB-F
2	2	By: Oliverson, Paul, Harris of Anderson, H.B. No. 1239
3	3	et al.
4	4	Substitute the following for H.B. No. 1239:
5	5	By: Oliverson C.S.H.B. No. 1239
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to consideration by insurers of certain prohibited
11	11	criteria for ratemaking and coverage decisions and the use of
12	12	disparate impact analysis regarding certain insurance practices.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Subchapter B, Chapter 36, Insurance Code, is
15	15	amended by adding Section 36.111 to read as follows:
16	16	Sec. 36.111. DISPARATE IMPACT ANALYSIS PROHIBITED. (a) In
17	17	this section, "disparate impact analysis" means an analysis of
18	18	whether a neutral practice that is not unfairly discriminatory
19	19	results in an unintentional impact on a legally protected group.
20	20	(b) The department may not require an insurer to engage in a
21	21	disparate impact analysis regarding rating, underwriting, or an
22	22	insurance practice prohibited by this code, unless specifically
23	23	required by statute.
24	24	SECTION 2. Subtitle C, Title 5, Insurance Code, is amended
25	25	by adding Chapter 565 to read as follows:
26	26	CHAPTER 565. PROHIBITED RATING AND COVERAGE CRITERIA
27	27	Sec. 565.001. PURPOSE. (a) The purpose of this chapter is
28	28	to regulate the use of environmental, social, or governance models,
29	29	scores, or standards to define acts or practices that may be unfair
30	30	discrimination in the business of insurance in this state.
31	31	(b) The legislature finds that there are numerous entities
32	32	that have developed different environmental, social, or governance
33	33	models, scores, or standards that are used to:
34	34	(1) evaluate financial risks for investments in
35	35	certain businesses or industries; or
36	36	(2) encourage or discourage business dealings or
37	37	investments with certain types of businesses or industries.
38	38	(c) To the extent that the use of such models, scores, or
39	39	standards are not based on sound actuarial principles, or do not
40	40	bear a reasonable relationship to the expected loss and expense
41	41	experience related to insurance risks, the refusal to deal with
42	42	certain businesses or risks in this state without an ordinary
43	43	insurance business purpose may adversely affect the economy, a
44	44	sector of the economy, productivity, competition, jobs, the
45	45	environment, or the public health and safety of this state or a
46	46	portion of this state.
47	47	Sec. 565.002. DEFINITIONS. In this chapter:
48	48	(1) "Disparate impact analysis" means an analysis of
49	49	whether a neutral practice that is not unfairly discriminatory
50	50	results in an unintentional impact on a legally protected group.
51	51	(2) "Insurer" means an insurance company or other
52	52	entity authorized to engage in the business of insurance in this
53	53	state. The term includes:
54	54	(A) a stock or mutual property and casualty
55	55	insurance company;
56	56	(B) a Lloyd's plan;
57	57	(C) a reciprocal or interinsurance exchange;
58	58	(D) a county mutual insurance company;
59	59	(E) a farm mutual insurance company;
60	60	(F) any insurer writing a line of insurance
61	61	regulated by Title 10;
62	62	(G) all life, health, and accident insurance
63	63	companies regulated by the department, including:
64	64	(i) a stock or mutual life, health, or
65	65	accident insurance company;
66	66	(ii) a fraternal benefit society;
67	67	(iii) a nonprofit hospital, medical, or
68	68	dental service corporation, including a group hospital service
69	69	corporation operating under Chapter 842; and
70	70	(iv) a stipulated premium company; and
71	71	(H) a health maintenance organization operating
72	72	under Chapter 843.
73	73	Sec. 565.003. APPLICABILITY OF CHAPTER. (a) Except as
74	74	provided by this section, this chapter applies only to insurance
75	75	policies issued and delivered by an insurer in this state.
76	76	(b) This chapter does not require the filing of rates for
77	77	any line, type of insurer, or type of insurance business that is not
78	78	specifically required by statute to file rates with the department.
79	79	(c) This chapter does not apply to:
80	80	(1) fidelity, guaranty, and surety bonds; or
81	81	(2) crop insurance.
82	82	Sec. 565.004. CONSTRUCTION OF CHAPTER. (a) This chapter
83	83	shall be construed and applied to promote the underlying purposes
84	84	as provided by Section 565.001.
85	85	(b) This chapter may not be construed or applied to require:
86	86	(1) an insurer to write any line or type of business
87	87	that the insurer does not write; or
88	88	(2) a material change in the insurer's current
89	89	business plans.
90	90	(c) Nothing in this chapter is intended to create any type
91	91	of private cause of action or independent basis in a civil or
92	92	criminal proceeding, including any type of cause of action based on
93	93	disparate impact in the field of insurance or in this chapter.
94	94	(d) Nothing in this chapter is intended to prohibit the use
95	95	of information that is relevant and related to the risk being
96	96	insured even if that information may also be used or considered in
97	97	developing an environmental, social, or governance model, score, or
98	98	standard.
99	99	Sec. 565.005. PROHIBITED CRITERIA. Except as provided by
100	100	Section 565.006, an insurer may not:
101	101	(1) use an environmental, social, or governance model,
102	102	score, or standard to:
103	103	(A) refuse to insure or provide insurance
104	104	coverage to a business or risk in this state; or
105	105	(B) charge a rate different than the rate charged
106	106	to another business or risk in the same class for essentially the
107	107	same hazard; or
108	108	(2) refuse to deal with, terminate business activities
109	109	with, or otherwise take action that is intended to penalize,
110	110	inflict economic harm on, or limit commercial relations with a
111	111	company or risk solely because the company or risk engages in:
112	112	(A) exploration, production, use,
113	113	transportation, sale, or manufacturing of fossil fuel-based
114	114	energy;
115	115	(B) mining;
116	116	(C) agriculture;
117	117	(D) timber; or
118	118	(E) the firearm industry.
119	119	Sec. 565.006. EXCEPTION. An insurer does not violate
120	120	Section 565.005 if the insurer's actions are based on an ordinary
121	121	insurance business purpose, including the use of sound actuarial
122	122	underwriting principles, or financial solvency considerations
123	123	reasonably related to loss experience for the different types of
124	124	risk and coverages made available by a particular insurer.
125	125	Sec. 565.007. DISPARATE IMPACT ANALYSIS PROHIBITED. The
126	126	department may not conduct or require an insurer to conduct a
127	127	disparate impact analysis under this chapter regarding rating,
128	128	underwriting, or another insurance practice unless specifically
129	129	required by statute.
130	130	Sec. 565.008. REGULATORY ACTION. Nothing in this chapter
131	131	is intended to authorize the department to adopt any rule, model, or
132	132	standard requiring an insurer to use any environmental, social, or
133	133	governance model law, regulation, or other standard that has not
134	134	been specifically authorized by statute, including:
135	135	(1) a rule, model, or standard required under any
136	136	federal law that does not preempt state law under the
137	137	McCarran-Ferguson Act (15 U.S.C. Section 1012(b)); or
138	138	(2) a rule, model, or standard required by any
139	139	national organization, including the National Association of
140	140	Insurance Commissioners, that has not been specifically authorized
141	141	by statute.
142	142	SECTION 3. Chapter 565, Insurance Code, as added by this
143	143	Act, applies only to an insurance policy that is delivered, issued
144	144	for delivery, or renewed in this state on or after January 1, 2024.
145	145	SECTION 4. This Act takes effect September 1, 2023.