SB 655

84(R) - 2015
Senate Business & Commerce
Senate Business & Commerce
Business, Industry, & Commerce

Companion Bill

HB 1730

Vote Recommendation

  • Negative
  • Negative
  • Neutral
  • Negative
  • Neutral


Kevin Eltife

Bill Caption

Relating to own risk and solvency assessment by insurers and insurance groups; providing a penalty.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

SB 655 would add Chapter 830 in the Insurance Code relating to require insurers to conduct an internal audit through an own risk and solvency assessment (ORSA). The purpose of this chapter would be to provide each insurer with a risk management framework and provide guidelines for implementing and filing an ORSA with the commissioner of insurance.  

Chapter 830 would require insurers to conduct an ORSA annually or anytime there are significant changes to its risks.  They would have to submit a summary report of the ORSA results to the commissioner. However, the chapter would allow the commissioner to issue waivers for unique circumstances that exempts insurers from conducting ORSAs.  

Since a summary report contains sensitive information relating to an insurer’s proprietary information, a few sections of the chapter concern the confidential nature of this information by issuing requirements for the handling of this information by the commissioner. The chapter allows the commissioner to share the summary report with the National Association of Insurance Commissioners (NAIC), but the commissioner and NAIC must enter into an agreement that specifies procedures and protocols for handling this confidential information.   

Lastly, this legislation would permit the commissioner to issue an administrative penalty under Chapter 84 of the Insurance Code if an insurer fails to file the summary report in a timely manner. 

Vote Recommendation Notes

NAIC recently adopted the ORSA Model Act, which was created in response to the financial crisis of 2008. Since then, insurance commissioners from some other states have applied this model to their state’s laws. ORSA is an internal auditing process conducted by an insurer that assesses its financial condition by the amount of risk it is undertaking.

The author’s statement of intent for SB 655 says that ORSA is needed to help the commissioner of insurance better monitor the risks and solvency of insurance companies. Additionally, the author believes the complicated business structure of insurance companies requires a closer eye on these companies.

The business structures of insurance companies may be more complicated, but we cannot find justification for implementing such intrusive measures such as SB 655, especially since this bill puts an insurer’s proprietary information at greater risk of getting into the wrong hands. Furthermore, nothing is stopping insurance companies from conducting these assessments on their own if they think it is in their own best interest to do so.

We oppose SB 655 because it infringes on the free market and the private property rights of the insurers and because it expands the state government's role by applying yet another mandate to private industry.

Organizations Supporting

American Insurance Association
National Association of Mutual Insurance Companies
Stewart Title Guaranty Company
Texas Association of Health Plans