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.