Texas House Bill HB2839

Texas 2023 - 88th Regular

• Filed: 2/24/23
• Out of House Committee: 4/4/23
• Voted on by House: 5/3/23
• Out of Senate Committee: 5/19/23
• Voted on by Senate: 5/24/23
• Governor Action: 6/13/23

Caption

Relating to a liquidity stress test for certain insurance companies.

Impact

The implementation of HB 2839 is expected to enhance the regulatory oversight of insurance companies in Texas, promoting greater financial stability in the insurance market. By requiring insurers to perform and report on liquidity stress tests annually, the bill seeks to ensure that these companies follow standardized procedures across different states. This measure is seen as a proactive approach to safeguarding the interests of policyholders and maintaining confidence in the insurance industry during times of financial stress.

Summary

House Bill 2839 aims to establish a standardized liquidity stress test framework for certain insurance companies, primarily focusing on life insurers. This legislation is driven by recommendations from the Texas Department of Insurance (TDI) and aligns with the models proposed by the National Association of Insurance Commissioners (NAIC). The bill amends the existing holding company acts and mandates annual reports from insurers, ensuring they demonstrate adequate liquidity to handle potential crises, similar to the financial challenges faced during the 2008 liquidity crisis. Representative Smithy, the bill's sponsor, emphasized its intent to prevent liquidity issues that could jeopardize the financial stability of insurers operating within Texas.

Sentiment

The sentiment surrounding HB 2839 appears to be largely positive, with broad support indicated during legislative discussions and voting. The bill passed with an overwhelming majority in both the House and Senate, suggesting that stakeholders view it as a necessary step towards enhanced regulatory standards in the insurance sector. However, there may still be concerns regarding the additional regulatory burden on insurers and how these new requirements will be effectively implemented without unforeseen complications.

Contention

While there seems to be little opposition to HB 2839, discussions revealed a potential area of contention regarding the adequacy of the proposed stress testing framework. Critics may argue that imposing rigorous standards could strain smaller insurance providers who might lack the resources to comply fully. Nevertheless, the consensus during committee hearings was that the benefits of preventing liquidity crises outweigh the potential drawbacks of increased regulatory demands.

Texas Constitutional Statutes Affected

Insurance Code

• Chapter 823. Insurance Holding Company Systems
  • Section: 0596
  • Section: 0596
  • Section: 0596
  • Section: 0596
  • Section: 0596