| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to consideration by insurers of certain prohibited |
|
|
criteria for ratemaking. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subtitle C, Title 5, Insurance Code, is amended |
|
|
by adding Chapter 565 to read as follows: |
|
|
CHAPTER 565. PROHIBITED RATING CRITERIA |
|
|
Sec. 565.001. PURPOSE. (a) The purpose of this chapter is |
|
|
to regulate the use of environmental, social, or governance models, |
|
|
scores, factors, or standards to define acts or practices that may |
|
|
be unfair discrimination in the business of insurance in this |
|
|
state. |
|
|
(b) The legislature finds that there are numerous entities |
|
|
that have developed different environmental, social, or governance |
|
|
models, scores, factors, or standards that are used to: |
|
|
(1) evaluate financial risks for investments in |
|
|
certain businesses or industries; or |
|
|
(2) encourage or discourage business dealings or |
|
|
investments with certain types of businesses or industries. |
|
|
(c) To the extent that the use of such models, scores, |
|
|
factors, or standards are not based on sound actuarial principles, |
|
|
or do not bear a reasonable relationship to the expected loss and |
|
|
expense experience related to insurance risks, the rating of |
|
|
certain businesses or risks in this state without an ordinary |
|
|
insurance business purpose may adversely affect the economy, a |
|
|
sector of the economy, productivity, competition, jobs, the |
|
|
environment, or the public health and safety of this state or a |
|
|
portion of this state. |
|
|
Sec. 565.002. DEFINITION. In this chapter, "insurer" means |
|
|
an insurance company or other entity authorized to engage in the |
|
|
business of insurance in this state. The term includes: |
|
|
(1) a stock or mutual property and casualty insurance |
|
|
company; |
|
|
(2) a Lloyd's plan; |
|
|
(3) a reciprocal or interinsurance exchange; |
|
|
(4) a county mutual insurance company; |
|
|
(5) a farm mutual insurance company; |
|
|
(6) any insurer writing a line of insurance regulated |
|
|
by Title 10; |
|
|
(7) all life, health, and accident insurance companies |
|
|
regulated by the department, including: |
|
|
(A) a stock or mutual life, health, or accident |
|
|
insurance company; |
|
|
(B) a fraternal benefit society; |
|
|
(C) a nonprofit hospital, medical, or dental |
|
|
service corporation, including a group hospital service |
|
|
corporation operating under Chapter 842; and |
|
|
(D) a stipulated premium company; and |
|
|
(8) a health maintenance organization operating under |
|
|
Chapter 843. |
|
|
Sec. 565.003. APPLICABILITY OF CHAPTER. (a) Except as |
|
|
provided by this section, this chapter applies only to insurance |
|
|
policies issued and delivered by an insurer in this state. |
|
|
(b) This chapter does not require the filing of rates for |
|
|
any line, type of insurer, or type of insurance business that is not |
|
|
specifically required by statute to file rates with the department. |
|
|
(c) This chapter does not apply to: |
|
|
(1) fidelity, guaranty, and surety bonds; or |
|
|
(2) crop insurance. |
|
|
Sec. 565.004. CONSTRUCTION OF CHAPTER. (a) This chapter |
|
|
shall be construed and applied to promote the underlying purposes |
|
|
as provided by Section 565.001. |
|
|
(b) This chapter may not be construed or applied to require: |
|
|
(1) an insurer to write any line or type of business |
|
|
that the insurer does not write; or |
|
|
(2) a material change in the insurer's current |
|
|
business plans. |
|
|
(c) Nothing in this chapter is intended to create any type |
|
|
of private cause of action or independent basis in a civil or |
|
|
criminal proceeding. |
|
|
(d) Nothing in this chapter is intended to prohibit the use |
|
|
of information that is relevant and related to the risk being |
|
|
insured even if that information may also be used or considered in |
|
|
developing an environmental, social, or governance model, score, |
|
|
factor, or standard. |
|
|
Sec. 565.005. PROHIBITED CRITERIA. Except as provided by |
|
|
Section 565.006, an insurer may not use an environmental, social, |
|
|
or governance model, score, factor, or standard to charge a rate |
|
|
different than the rate charged to another business or risk in the |
|
|
same class for essentially the same hazard. |
|
|
Sec. 565.006. EXCEPTION. An insurer does not violate |
|
|
Section 565.005 if the insurer's actions are based on an ordinary |
|
|
insurance business purpose, including the use of sound actuarial |
|
|
principles, or financial solvency considerations reasonably |
|
|
related to loss experience for the different types of risks and |
|
|
coverages made available by a particular insurer. |
|
|
Sec. 565.007. REGULATORY ACTION. Nothing in this chapter |
|
|
is intended to authorize the department to adopt any rule, model, or |
|
|
standard requiring an insurer to use any environmental, social, or |
|
|
governance model law, regulation, or other standard that has not |
|
|
been specifically authorized by statute, including: |
|
|
(1) a rule, model, or standard required under any |
|
|
federal law that does not preempt state law under the |
|
|
McCarran-Ferguson Act (15 U.S.C. Section 1012(b)); or |
|
|
(2) a rule, model, or standard required by any |
|
|
national organization, including the National Association of |
|
|
Insurance Commissioners, that has not been specifically authorized |
|
|
by statute. |
|
|
SECTION 2. Chapter 565, Insurance Code, as added by this |
|
|
Act, applies only to an insurance policy that is delivered, issued |
|
|
for delivery, or renewed in this state on or after January 1, 2024. |
|
|
SECTION 3. This Act takes effect September 1, 2023. |