Relating to the authority of the Texas Department of Insurance to adopt rules that implement or are based on certain environmental, social, and governance models, ratings, or standards.

89(R) SB 495 - House Committee Report version - Bill Text

By: Sparks, et al.

S.B. No. 495

(Paul)

A BILL TO BE ENTITLED

AN ACT

relating to the authority of the Texas Department of Insurance to

adopt rules that implement or are based on certain environmental,

social, and governance models, ratings, or standards.

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

SECTION 1. Section 36.004, Insurance Code, is amended by

amending Subsection (b) and adding Subsection (d) to read as

follows:

(b) For purposes of
Subsections
[
Subsection
] (a)
and (d) of

this section and Section 36.008
, a version of a rule, regulation,

directive, or standard is expressly authorized by statute if:

(1) the statute explicitly authorizes the

commissioner to adopt rules consistent with the rule, regulation,

directive, or standard; or

(2) that version is the latest version of the rule,

regulation, directive, or standard on the date that the statute was

enacted.

(d)

In this subsection, "environmental assessment," "social

assessment," and "governance assessment" have the meanings

assigned by Section 36.008. Notwithstanding Subsection (c) of this

section or any other law, the commissioner may not require an

insurer to comply with a rule, regulation, directive, or standard,

including an accounting standard, adopted by the National

Association of Insurance Commissioners if the rule, regulation,

directive, or standard is developed using a model, rating, or

standard that measures and considers environmental, social, and

governance assessments unless application of the rule, regulation,

directive, or standard is expressly authorized by statute.

SECTION 2. Subchapter A, Chapter 36, Insurance Code, is

amended by adding Section 36.008 to read as follows:

Sec.

36.008.

RULES IMPLEMENTING CERTAIN ENVIRONMENTAL,

SOCIAL, AND GOVERNANCE MODELS, RATINGS, AND STANDARDS PROHIBITED.

(a) In this section:

(1)

"Environmental assessment" means an assessment of

the response by or vulnerability of an entity to climate change,

including the extent of the entity's exposure to harm from

climate-related factors.

(2)

"Governance assessment" means an assessment of the

ethical or moral principles that influence the corporate governance

of an entity, including the structure and composition of the

governing board, ownership structure, and employee and officer pay

policy.

(3) "Social assessment" means an assessment of:

(A)

the human capital management practices of an

entity, including employment practices, employee training and

development, employee safety, and the selection of suppliers and

vendors based on preferred labor standards;

(B)

the potential for an entity's products to

directly or indirectly cause physical or financial harm to persons

or to identified groups of persons, including harm caused by

quality control or safety failures and the unintentional or

unauthorized release of personal identifying information held by

the entity;

(C)

an entity's willingness to invest its

earnings or reserves to improve the quality and safety of the

entity's management practices and products and mitigate any

negative effect those practices and products may have on consumers

and the environment; or

(D)

any other factor relating to the social

effect of the entity's practices or products, including opposition

to those practices and products and their effect on the supply

chain.

(b) This section applies only to a rule that:

(1)

implements or is based on an interstate, national,

or international model, rating, or standard, including an

accounting standard, that measures and considers environmental,

social, and governance assessments;

(2) is intended to:

(A) protect the environment;

(B)

evaluate the effect of a particular entity or

industry on the environment; or

(C)

encourage an entity to engage in specific

activities or behaviors in response to environmental concerns; and

(3) may materially affect in an adverse manner the:

(A)

economy of this state or a sector of the

economy of this state;

(B)

productivity and competitiveness of an

entity doing business in this state;

(C) number of people employed in this state; or

(D)

health and safety of the residents of this

state.

(c)

The commissioner may not adopt or enforce a rule to

which this section applies:

(1)

that was developed by an entity that is not

licensed or regulated by:

(A) the department;

(B)

the National Association of Insurance

Commissioners; or

(C)

an entity of this state or of the federal

government, other than an entity described by Paragraph (A) or (B),

that regulates the practice of insurance;

(2)

that may affect the authority of this state to

regulate the practice of insurance in this state; and

(3)

the adoption or enforcement of which is not

specifically authorized by statute.

(d)

A person may file an action for declaratory judgment

challenging the adoption of a rule on the basis that the rule was

adopted in violation of this section.

An action for declaratory

judgment under this section is governed by Section 2001.038,

Government Code.

If the court determines that the rule was adopted

in violation of this section, the rule is invalid.

SECTION 3. The change in law made by this Act applies only

to a proposed rule for which notice is filed with the secretary of

state under Section 2001.023, Government Code, on or after the

effective date of this Act.

SECTION 4. This Act takes effect September 1, 2025.