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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.