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No fiscal implication to the State is anticipated.
HB 3164 would add a
new section to Chapter 423 (Transactions With Money and Other Assets) of the
Insurance Code. Specifically, this new section would allow an insurer to
deposit money—that is used as security for its policyholders—with the Texas
Department of Insurance (TDI). This deposit would have to be approved and
controlled by the commissioner.
According to the
author’s statement of intent, banks and insurers have a long-standing
arrangement “in which insurers make voluntary deposits with local banks as a
guarantee that claims will be paid in the event that the insurer becomes
insolvent.” In other words, if an insurer goes under, deposits made to the bank
would be available to cover policyholder claims.
However, the
comptroller’s office recently made a policy change that would require insurers
only to deposit that money with TDI. HB 3164 would clarify that an insurer does
not have to deposit money with TDI; instead it can continue depositing money
with the local banks.
Banks and insurers
have a mutually beneficial relationship that allows an insurer to ensure claims
are covered in the event of insolvency, in return the bank reaps the rewards of
a fee that is collected from each deposit made by an insurer.
We support HB 3164 because it would allow insurers to continue depositing money with private banks. Most importantly, the insurers would not be forced to deposit with TDI. This legislation supports our free market principle.
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