Vote Recommendation | Economic Freedom | Property Rights | Personal Responsibility | Limited Government | Individual Liberty |
---|---|---|---|---|---|
Yes | Positive | Neutral | Neutral | Neutral | Neutral |
Relating to authorizing an
insurer's deposit of certain money and other assets with the Texas Department
of Insurance.
No fiscal implication to the State is anticipated.
SB 1427 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. SB 1427
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.