By: Sparks, Middleton S.B. No. 495
(In the Senate - Filed November 22, 2024; February 3, 2025,
read first time and referred to Committee on Business & Commerce;
March 4, 2025, reported favorably by the following vote: Yeas 9,
Nays 2; March 4, 2025, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the authority of the Texas Department of Insurance to
adopt rules that implement or are based on certain environmental,
social, and governance models, ratings, or standards.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 36.004, Insurance Code, is amended by
amending Subsection (b) and adding Subsection (d) to read as
follows:
(b) For purposes of Subsections [Subsection] (a) and (d) of
this section and Section 36.008, a version of a rule, regulation,
directive, or standard is expressly authorized by statute if:
(1) the statute explicitly authorizes the
commissioner to adopt rules consistent with the rule, regulation,
directive, or standard; or
(2) that version is the latest version of the rule,
regulation, directive, or standard on the date that the statute was
enacted.
(d) In this subsection, "environmental assessment," "social
assessment," and "governance assessment" have the meanings
assigned by Section 36.008. Notwithstanding Subsection (c) of this
section or any other law, the commissioner may not require an
insurer to comply with a rule, regulation, directive, or standard,
including an accounting standard, adopted by the National
Association of Insurance Commissioners if the rule, regulation,
directive, or standard is developed using a model, rating, or
standard that measures and considers environmental, social, and
governance assessments unless application of the rule, regulation,
directive, or standard is expressly authorized by statute.
SECTION 2. Subchapter A, Chapter 36, Insurance Code, is
amended by adding Section 36.008 to read as follows:
Sec. 36.008. RULES IMPLEMENTING CERTAIN ENVIRONMENTAL,
SOCIAL, AND GOVERNANCE MODELS, RATINGS, AND STANDARDS PROHIBITED.
(a) In this section:
(1) "Environmental assessment" means an assessment of
the response by or vulnerability of an entity to climate change,
including the extent of the entity's exposure to harm from
climate-related factors.
(2) "Governance assessment" means an assessment of the
ethical or moral principles that influence the corporate governance
of an entity, including the structure and composition of the
governing board, ownership structure, employee and officer pay
policy, and accounting methodology of the entity.
(3) "Social assessment" means an assessment of:
(A) the human capital management practices of an
entity, including employment practices, employee training and
development, employee safety, and the selection of suppliers and
vendors based on preferred labor standards;
(B) the potential for an entity's products to
directly or indirectly cause physical or financial harm to persons
or to identified groups of persons, including harm caused by
quality control or safety failures and the unintentional or
unauthorized release of personal identifying information held by
the entity;
(C) an entity's willingness to invest its
earnings or reserves to improve the quality and safety of the
entity's management practices and products and mitigate any
negative effect those practices and products may have on consumers
and the environment; or
(D) any other factor relating to the social
effect of the entity's practices or products, including opposition
to those practices and products and their effect on the supply
chain.
(b) This section applies only to a rule that:
(1) implements or is based on an interstate, national,
or international model, rating, or standard, including an
accounting standard, that measures and considers environmental,
social, and governance assessments;
(2) is intended to:
(A) protect the environment;
(B) evaluate the effect of a particular entity or
industry on the environment; or
(C) encourage an entity to engage in specific
activities or behaviors in response to environmental concerns; and
(3) may materially affect in an adverse manner the:
(A) economy of this state or a sector of the
economy of this state;
(B) productivity and competitiveness of an
entity doing business in this state;
(C) number of people employed in this state; or
(D) health and safety of the residents of this
state.
(c) The commissioner may not adopt or enforce a rule to
which this section applies:
(1) that was developed by an entity that is not
licensed or regulated by:
(A) the department;
(B) the National Association of Insurance
Commissioners; or
(C) an entity of this state or of the federal
government, other than an entity described by Paragraph (A) or (B),
that regulates the practice of insurance;
(2) that may affect the authority of this state to
regulate the practice of insurance in this state; and
(3) the adoption or enforcement of which is not
specifically authorized by statute.
(d) A person may file an action for declaratory judgment
challenging the adoption of a rule on the basis that the rule was
adopted in violation of this section. An action for declaratory
judgment under this section is governed by Section 2001.038,
Government Code. If the court determines that the rule was adopted
in violation of this section, the rule is invalid.
SECTION 3. The change in law made by this Act applies only
to a proposed rule for which notice is filed with the secretary of
state under Section 2001.023, Government Code, on or after the
effective date of this Act.
SECTION 4. This Act takes effect September 1, 2025.
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