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A BILL TO BE ENTITLED
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AN ACT
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relating to consideration by insurers of certain prohibited |
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criteria for ratemaking and coverage decisions and the use of |
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disparate impact analysis regarding certain insurance practices. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 36, Insurance Code, is |
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amended by adding Section 36.111 to read as follows: |
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Sec. 36.111. DISPARATE IMPACT ANALYSIS PROHIBITED. (a) In |
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this section, "disparate impact analysis" means an analysis of |
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whether a neutral practice that is not unfairly discriminatory |
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results in an unintentional impact on a legally protected group. |
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(b) The department may not require an insurer to engage in a |
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disparate impact analysis regarding rating, underwriting, or an |
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insurance practice prohibited by this code, unless specifically |
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required by statute. |
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SECTION 2. Subtitle C, Title 5, Insurance Code, is amended |
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by adding Chapter 565 to read as follows: |
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CHAPTER 565. PROHIBITED RATING AND COVERAGE CRITERIA |
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Sec. 565.001. PURPOSE. (a) The purpose of this chapter is |
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to regulate the use of environmental, social, or governance models, |
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scores, or standards to define acts or practices that may be unfair |
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discrimination in the business of insurance in this state. |
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(b) The legislature finds that there are numerous entities |
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that have developed different environmental, social, or governance |
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models, scores, or standards that are used to: |
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(1) evaluate financial risks for investments in |
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certain businesses or industries; or |
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(2) encourage or discourage business dealings or |
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investments with certain types of businesses or industries. |
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(c) To the extent that the use of such models, scores, or |
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standards are not based on sound actuarial principles, or do not |
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bear a reasonable relationship to the expected loss and expense |
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experience related to insurance risks, the refusal to deal with |
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certain businesses or risks in this state without an ordinary |
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insurance business purpose may adversely affect the economy, a |
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sector of the economy, productivity, competition, jobs, the |
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environment, or the public health and safety of this state or a |
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portion of this state. |
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Sec. 565.002. DEFINITIONS. In this chapter: |
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(1) "Disparate impact analysis" means an analysis of |
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whether a neutral practice that is not unfairly discriminatory |
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results in an unintentional impact on a legally protected group. |
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(2) "Insurer" means an insurance company or other |
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entity authorized to engage in the business of insurance in this |
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state. The term includes: |
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(A) a stock or mutual property and casualty |
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insurance company; |
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(B) a Lloyd's plan; |
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(C) a reciprocal or interinsurance exchange; |
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(D) a county mutual insurance company; |
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(E) a farm mutual insurance company; |
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(F) any insurer writing a line of insurance |
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regulated by Title 10; |
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(G) all life, health, and accident insurance |
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companies regulated by the department, including: |
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(i) a stock or mutual life, health, or |
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accident insurance company; |
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(ii) a fraternal benefit society; |
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(iii) a nonprofit hospital, medical, or |
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dental service corporation, including a group hospital service |
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corporation operating under Chapter 842; and |
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(iv) a stipulated premium company; and |
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(H) a health maintenance organization operating |
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under Chapter 843. |
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Sec. 565.003. APPLICABILITY OF CHAPTER. (a) Except as |
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provided by this section, this chapter applies only to insurance |
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policies issued and delivered by an insurer in this state. |
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(b) This chapter does not require the filing of rates for |
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any line, type of insurer, or type of insurance business that is not |
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specifically required by statute to file rates with the department. |
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(c) This chapter does not apply to: |
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(1) fidelity, guaranty, and surety bonds; or |
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(2) crop insurance. |
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Sec. 565.004. CONSTRUCTION OF CHAPTER. (a) This chapter |
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shall be construed and applied to promote the underlying purposes |
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as provided by Section 565.001. |
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(b) This chapter may not be construed or applied to require: |
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(1) an insurer to write any line or type of business |
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that the insurer does not write; or |
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(2) a material change in the insurer's current |
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business plans. |
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(c) Nothing in this chapter is intended to create any type |
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of private cause of action or independent basis in a civil or |
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criminal proceeding, including any type of cause of action based on |
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disparate impact in the field of insurance or in this chapter. |
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(d) Nothing in this chapter is intended to prohibit the use |
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of information that is relevant and related to the risk being |
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insured even if that information may also be used or considered in |
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developing an environmental, social, or governance model, score, or |
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standard. |
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Sec. 565.005. PROHIBITED CRITERIA. Except as provided by |
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Section 565.006, an insurer may not: |
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(1) use an environmental, social, or governance model, |
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score, or standard to: |
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(A) refuse to insure or provide insurance |
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coverage to a business or risk in this state; or |
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(B) charge a rate different than the rate charged |
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to another business or risk in the same class for essentially the |
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same hazard; or |
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(2) refuse to deal with, terminate business activities |
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with, or otherwise take action that is intended to penalize, |
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inflict economic harm on, or limit commercial relations with a |
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company or risk solely because the company or risk engages in: |
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(A) exploration, production, use, |
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transportation, sale, or manufacturing of fossil fuel-based |
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energy; |
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(B) mining; |
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(C) agriculture; |
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(D) timber; or |
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(E) the firearm industry. |
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Sec. 565.006. EXCEPTION. An insurer does not violate |
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Section 565.005 if the insurer's actions are based on an ordinary |
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insurance business purpose, including the use of sound actuarial |
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underwriting principles, or financial solvency considerations |
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reasonably related to loss experience for the different types of |
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risk and coverages made available by a particular insurer. |
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Sec. 565.007. DISPARATE IMPACT ANALYSIS PROHIBITED. The |
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department may not conduct or require an insurer to conduct a |
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disparate impact analysis under this chapter regarding rating, |
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underwriting, or another insurance practice unless specifically |
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required by statute. |
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Sec. 565.008. REGULATORY ACTION. Nothing in this chapter |
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is intended to authorize the department to adopt any rule, model, or |
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standard requiring an insurer to use any environmental, social, or |
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governance model law, regulation, or other standard that has not |
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been specifically authorized by statute, including: |
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(1) a rule, model, or standard required under any |
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federal law that does not preempt state law under the |
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McCarran-Ferguson Act (15 U.S.C. Section 1012(b)); or |
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(2) a rule, model, or standard required by any |
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national organization, including the National Association of |
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Insurance Commissioners, that has not been specifically authorized |
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by statute. |
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SECTION 3. Chapter 565, Insurance Code, as added by this |
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Act, applies only to an insurance policy that is delivered, issued |
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for delivery, or renewed in this state on or after January 1, 2024. |
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SECTION 4. This Act takes effect September 1, 2023. |