Texas Legislature passes bill prohibiting insurers from considering ESG factors (2023)
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The Texas Legislature passed a bill last month prohibiting insurance companies from setting rate policies using ESG factors. The bill, which still needs the signature of Gov. Greg Abbott (R) to become law, is part of the state’s ongoing opposition to ESG policies throughout various industries:
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Insurers in Texas can no longer account for environmental, social or governance criteria when setting rates for almost all forms of insurance under a bill passed by the Legislature last month. While the measure, Senate Bill 833, has no penalties and still allows companies to consider factors that are “relevant and related to the risk being insured” — even if those risks include ESG factors — insurers who testified about the bill called it an overreach, with potential negative consequences to the state’s and the nation’s insurance market. The bill is part of a broader, national push by the Republican Party to limit the effectiveness of ESG measures. After Texas passed an anti-ESG investing bill in 2021, four other states followed suit, with more considering putting similar laws on the books. When introducing the bill in a March House hearing, state Rep. Tom Oliverson, R-Cypress, the chair of the House Insurance Committee, said he expected that in the near future, some states would mandate ESG policies while others would prohibit them. “That’s something that insurers will have to adapt to,” Oliverson said. “The state of Texas is taking a position on this, and it is, we are not in favor of it. And furthermore you won’t be doing this if you are doing business in the state of Texas.” The bill, which still needs Gov. Greg Abbott’s consent to become law, was introduced in response to groups including the Sunrise Movement, a youth-led climate organization that advocates for divestment from fossil fuel investments, according to bill analyses. In a letter to the White House, Abbott also touted the bill as part of an effort to curtail the Biden administration’s “war on the American energy sector.” … Several organizations representing the insurance industry opposed the bill in hearings in March, saying that the bill proposed a broad definition of ESG that would be hard to apply, and that it would interfere with the ability to accurately calculate risks and create insurance coverage policies. The bill applies to almost all forms of insurance, including property, health and life insurance. The only types of insurance not covered by the measure are crop insurance and fidelity, surety and guaranty bonds. In a statement, the Texas Department of Insurance said that the agency is “currently reviewing all enacted legislation related to TDI and preparing for implementation,” but offered no further details on how it would enforce the new law, which will apply to all policies beginning Jan.1 unless Abbott vetoes it.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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