Commercial insurance products moved a giant step closer to deregulation when Gov. Greg Abbott signed SB 1367 into law on May 15. The bill moved through the legislative process with little fanfare and no witness testimony in committee other than favorable testimony on the House companion bill, HB 2547, from representatives of insurance industry trade groups.
The Texas Department of Insurance included the bill in its legislative package. The author of the bill, Sen. Brandon Creighton, R-Conroe, touted the bill as a measure that would offer businesses a more robust range of insurance products and competitive prices, as it removed regulatory form filing and rate filing and review requirements for a large range, but not all, of commercial products. Still the bill authorizes a path back to regulation of commercial products found to be noncompetitive.
The “bread and butter” insurance products purchased by small businesses, such as workers’ compensation and non-fleet commercial auto, remain subject to existing TDI filing and review requirements.
Senate Bill 1367 exempts from form and rate regulation surety bonds, fidelity bonds, commercial inland marine, boiler and machinery, environmental impairment or pollution liability, kidnap and ransom, political risk or expropriation, commercial excess/umbrella liability, directors and officers liability, fiduciary liability, employment practices liability, errors and omissions and professional liability other than medical professional liability, media liability, product liability, commercial cybersecurity, highly protected commercial property, commercial flood and any combination of these. Additional lines may become exempt under a TDI rule.
The catch back to regulation is limited to specific lines of insurance found by the commissioner to lack competition in the marketplace. Even then, the new law requires TDI to hold a hearing and identify the tests and test results that were used to determine the degree of competition for the specific line becoming subject to regulation.
This form of deregulation was supported in testimony by representatives of the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, and the Independent Insurance Agents of Texas. Other supporters of the legislation included the Texas Coalition for Affordable Insurance Solutions, the Texas Association of Business, Association of Fire and Casualty Companies of Texas, and the Texas Surplus Lines Association.
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