Gutierrez Bill Puts The State In The Auto Insurance Business

The text as introduced · 543 words

By: Gutierrez
S.B. No. 1246

A BILL TO BE ENTITLED

AN ACT

relating to auto insurance regulation, including the creation of

the Texas Automobile Insurance Public Option.

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

SECTION 1. Chapter 1952, Insurance Code, is amended by

adding Subchapter I to read as follows:

SUBCHAPTER I. Texas Automobile Insurance Public Option

Sec. 1952.401. SHORT TITLE. This Act may be cited as the

"Texas Automobile Insurance Public Option Act."

Sec. 1952.402. PURPOSE. The purpose of this Act is to

establish a publicly administered auto insurance option in Texas to

ensure affordability, accessibility, and competition in the auto

insurance market while maintaining financial stability and

consumer protections.

Sec.1952.403. ESTABLISHMENT OF PUBLIC AUTO INSURANCE OPTION.

(a) The Texas Department of Insurance, in consultation with the

Texas Comptroller and the Texas Transportation Commission, shall

establish and administer a public auto insurance option

(hereinafter referred to as "Texas Public Auto Option") to provide

mandatory liability coverage and optional comprehensive and

collision coverage to eligible drivers.

(b) The Texas Public Auto Option shall be administered

through the Texas Department of Insurance, subject to state

guidelines and funding support.

Sec. 1952.404. ELIGIBILITY AND ENROLLMENT. (a) All

individuals required by Texas law to carry auto insurance shall be

eligible to enroll in the Texas Public Auto Option, provided they

meet residency and vehicle registration requirements.

(b) The Commissioner shall establish an annual enrollment

period, with special enrollment periods for qualifying life events

such as vehicle purchase, change of residence, or loss of private

coverage.

Sec. 1952.405. COVERAGE AND PREMIUMS.(a) The Texas Public

Auto Option shall provide coverage at levels meeting or exceeding

Texas minimum liability requirements and offer additional coverage

options, including uninsured/underinsured motorist coverage and

personal injury protection.

(b) Premiums shall be set using actuarial principles to

ensure fiscal solvency, affordability, and market competitiveness.

The Texas Department of Insurance shall implement a sliding scale

for low-income policyholders and explore risk-based adjustments.

Sec. 1952.406. FUNDING AND FINANCIAL MANAGEMENT.(a) The

Texas Public Auto Option shall be funded through policyholder

premiums, supplemented by state funding to ensure affordability and

solvency.

(b) State grants shall be available to assist in launching

and administering the Texas Public Auto Option.

(c) A reserve fund shall be established to ensure long-term

financial sustainability and claims-paying capacity.

Sec. 1952.407. CONSUMER PROTECTIONS AND FRAUD PREVENTION.

(a) The Texas Public Auto Option shall establish transparent

claims handling processes and an independent appeals system for

disputed claims.

(b) The Texas Department of Insurance shall implement fraud

detection and prevention programs, including data analytics and

interagency coordination.

Sec. 1952.408. COMPETITION AND MARKET EFFECTS. (a) The

Texas Public Auto Option shall operate alongside private insurers

to foster competition, stabilize rates, and provide consumer

choice.

(b) A biennial study shall assess the impact of the Texas

Public Auto Option on the auto insurance market, premium rates,

consumer satisfaction, and uninsured motorist rates.

Sec. 1952.409. RULEMAKING AUTHORITY. The Texas Department

of Insurance, in coordination with relevant state agencies, shall

issue regulations necessary to implement this Act.

SECTION 2. The change in law made by this Act applies only

to an insurance policy that is delivered, issued for delivery, or

renewed on or after January 1, 2026.

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