bill letting the insurance commissioner waive rules for 12 months

The text as introduced · 1,842 words

89R6190 RDS-D

By: Bhojani
H.B. No. 4457

A BILL TO BE ENTITLED

AN ACT

relating to innovation waivers for certain insurance laws,

regulations, and requirements; authorizing a fee; creating an

administrative penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle B, Title 2, Insurance Code, is amended

by adding Chapter 87 to read as follows:

CHAPTER 87. REGULATORY SANDBOX AND INNOVATION WAIVERS

Sec. 87.001. AUTHORITY TO GRANT WAIVERS. (a) The

commissioner may grant a waiver, including a variance, with respect

to any specific insurance law, regulation, or requirement if a

person subject to that law, regulation, or requirement demonstrates

to the commissioner's satisfaction that:

(1) application of the law, regulation, or requirement

would prohibit the introduction of an innovative or more efficient

insurance technology product or service, including an insurance

technology product or service that may enhance outcomes related to

pricing, coverage, or consumer experience, that the applicant

intends to offer during the period for which the proposed waiver is

granted;

(2) the public policy goals of the law, regulation, or

requirement will be or have been achieved by other means;

(3) the waiver will not substantially or unreasonably

increase any risk to consumers; and

(4) the waiver is in the public interest.

(b) The commissioner may not grant a waiver under this

chapter with respect to:

(1) any law, regulation, or requirement that is not

subject to the commissioner's jurisdiction;

(2) any law, regulation, or requirement concerning the

assets, deposits, investments, capital, surplus, or other solvency

requirements applicable to insurers;

(3) the required participation in any assigned risk

plan, residual market, or guaranty fund;

(4) any applicable provisions of this code related to

insurer authorization requirements or insurance trade practices;

(5) any law, regulation, or requirement required for

the department to maintain its accreditation by the National

Association of Insurance Commissioners unless the law, regulation,

or requirement permits variances or waivers;

(6) the application of any taxes or fees; or

(7) any other law, regulation, or requirement

determined ineligible by the commissioner.

(c) The authority granted to the commissioner under this

section may not be construed to:

(1) allow the commissioner to grant or extend a waiver

that would abridge the recovery rights of consumers; or

(2) limit or otherwise affect the authority of the

commissioner to exercise discretion to waive or enforce

requirements as permitted under any other law.

Sec. 87.002. APPLICATION FOR WAIVER. An application for a

waiver described by Section 87.001 must be in the form and manner

prescribed by the commissioner and include:

(1) the identity of the person applying for the

waiver;

(2) the identity of the directors and executive

officers of the applicant, any persons who are beneficial owners of

10 percent or more of the voting securities of the applicant, and

any individuals with authority to direct the management and

policies of the applicant;

(3) a description of the product or service to be

offered if the waiver is granted, including how the product or

service functions and the manner and terms under which it will be

offered;

(4) a description of the potential benefits to

consumers of the product or service;

(5) a description of the potential risks to consumers

posed by the product or service or the approval of the proposed

waiver and how the applicant proposes to mitigate such risks;

(6) an identification of each statutory or regulatory

provision that prohibits the introduction, sale, or offering of the

product or service;

(7) a filing fee in an amount determined by the

commissioner; and

(8) any additional information required by the

commissioner.

Sec. 87.003. PUBLIC NOTICE. (a) Not later than the 30th

day before the date the commissioner grants a waiver under this

chapter, the commissioner shall provide public notice of the

proposed waiver by publishing:

(1) each specific law, regulation, or requirement to

which the proposed waiver applies;

(2) the proposed terms and limitations of the proposed

waiver;

(3) the proposed duration of the proposed waiver; and

(4) any additional information considered appropriate

by the commissioner.

(b) If a waiver is granted under this chapter, the

commissioner shall provide public notice of the existence of the

waiver by providing:

(1) each specific law, regulation, or requirement to

which the waiver applies;

(2) the name of the person who applied for and received

the waiver;

(3) the duration of and any other terms or limitations

of the waiver; and

(4) any additional information considered appropriate

by the commissioner.

(c) The commissioner may satisfy a public notice

requirement under this section by publishing the information on the

department's Internet website.

Sec. 87.004. WAIVER LENGTH; EXTENSION. (a) The

commissioner may grant a waiver under this chapter for an initial

period not to exceed 12 months.

(b) Before the end of the initial waiver period, the

commissioner may grant a one-time extension of the waiver not to

exceed an additional 12 months.

(c) Not later than the 30th day before the end of the initial

waiver period, the person who received the waiver may apply to the

commissioner for an extension of the waiver in the form and manner

prescribed by the commissioner. The extension application must

include the length of the extension period requested and specific

reasons why the extension is necessary.

(d) The commissioner shall grant or deny an extension

request before the end of the initial waiver period.

Sec. 87.005. CONTESTED CASE PROVISIONS NOT APPLICABLE. The

commissioner's decision to grant or deny a waiver or extension

under this chapter is not subject to the contested case provisions

of Chapter 2001, Government Code.

Sec. 87.006. WAIVER TERMS AND LIMITATIONS. (a) A waiver

granted under this chapter must include any terms and limitations

determined appropriate by the commissioner, including limits on the

amount of premium that may be written in relation to the underlying

product or service and the number of consumers that may purchase or

use the underlying product or service.

(b) A violation of the terms and limitations described by

Subsection (a) is considered a violation of this chapter for

purposes of enforcement under this subtitle.

(c) A person who receives a waiver under this chapter may

not sell or provide a product or service subject to the waiver to

more than 10,000 consumers.

Sec. 87.007. WRITTEN DISCLOSURES. A product or service

offered under a waiver granted under this chapter must include the

following written disclosures to consumers in a clear and

conspicuous form:

(1) the name and contact information of the person

providing the product or service;

(2) that the product or service is authorized under an

innovation waiver for a temporary period of time and may be

discontinued at the end of the waiver period, the date of which must

be specified;

(3) contact information for the department, including

the method for a consumer to file a complaint with the department

regarding the product or service; and

(4) any additional disclosures required by the

commissioner.

Sec. 87.008. FINANCIAL RESPONSIBILITY REQUIREMENTS. A

person who receives a waiver under this chapter shall possess or

obtain one or a combination of the following forms of security in an

amount and subject to conditions and purposes determined by the

commissioner to be necessary for the protection of consumers:

(1) a contractual liability insurance policy;

(2) a surety bond issued by an authorized surety;

(3) securities of the type eligible for deposit by

authorized insurers in this state;

(4) evidence that the person has established an

account payable to the commissioner in a federally insured

financial institution in this state and has deposited United States

currency in an amount equal to the amount required by the

commissioner that is not available for withdrawal except by direct

order of the commissioner;

(5) a letter of credit issued by a qualified United

States financial institution; or

(6) another form of security authorized by the

commissioner.

Sec. 87.009. REVOCATION OF WAIVER; ADMINISTRATIVE PENALTY.

(a) The commissioner may revoke a waiver if:

(1) the person who obtains the waiver fails to comply

with this chapter, a rule adopted under this chapter, or any terms

or limitations for the waiver prescribed by the commissioner; or

(2) the waiver is causing consumer harm.

(b) A person who obtains a waiver and fails to comply with

this chapter, a rule adopted under this chapter, or any terms or

limitations for the waiver prescribed by the commissioner is

subject to an administrative penalty imposed under Chapter 84 of

not more than $1,000.

Sec. 87.010. ADOPTION OF RULES. (a) The commissioner by

rule shall adopt procedures for the submission, granting, denying,

monitoring, and revocation of a waiver under this chapter.

(b) The rules must:

(1) provide requirements for the ongoing monitoring,

examination, and supervision of, and quarterly reporting by, each

person granted a waiver under this chapter;

(2) permit the commissioner to impose reasonable terms

or limitations on the conduct permitted under a waiver;

(3) provide for an expedited application process for a

product or service that is substantially similar to one for which a

waiver has previously been granted by the commissioner; and

(4) include an opportunity for public comment on

proposed waivers under consideration by the commissioner.

Sec. 87.011. EFFECT OF WAIVER EXPIRATION OR REVOCATION. On

the expiration or revocation of a waiver granted under this

chapter, the person who received the waiver shall cease all

activities that were permitted only as a result of the waiver and

comply with all applicable laws.

Sec. 87.012. REPORT. Not later than January 1 of each year,

the commissioner shall submit a report to the governor, lieutenant

governor, speaker of the house of representatives, and chairs of

the house and senate standing committees with primary jurisdiction

over the department providing:

(1) the total number of applications for waivers under

this chapter that have been received, granted, and denied by the

commissioner;

(2) the information specified by Section 87.003(b) for

each waiver granted;

(3) a list of any regulations or requirements that

have been adopted or amended as a result of or in connection with a

waiver granted under this chapter;

(4) with respect to each law to which a waiver applies,

the commissioner's recommendation as to whether that law should be

continued, repealed, or amended to promote innovation and establish

a uniform regulatory system for all regulated entities; and

(5) a list of any waivers that have lapsed or been

revoked, and, if revoked, a description of other regulatory or

disciplinary actions, if any, that resulted in, accompanied, or

resulted from that revocation.

Sec. 87.013. RECIPROCITY. The commissioner may enter into

agreements with other states that have enacted laws that are

substantially similar to this chapter to:

(1) advance the purposes of this chapter; and

(2) facilitate the consideration of applications for

waivers under this chapter from persons who have:

(A) satisfied the requirements of this chapter;

and

(B) received similar waivers in other states.

SECTION 2. As soon as practicable after the effective date

of this Act, the commissioner of insurance shall adopt rules

necessary to implement this Act.

SECTION 3. This Act takes effect September 1, 2025.