Texas legislators have introduced a bill establishing a state-run auto insurance option. The bill aims to provide more affordable coverage for millions of drivers across the state.
Senate Bill 1246, introduced in the Texas Senate, proposes creating a public automobile insurance program offering both mandatory liability coverage and optional comprehensive coverage to eligible drivers. The initiative comes as the state grapples with rising insurance costs and concerns about accessibility.
Under the proposed legislation, the Texas Department of Insurance (TDI) would administer the program in collaboration with the state comptroller and Texas Transportation Commission. The program would be funded through a combination of policyholder premiums and state funding, with additional grants to support its launch and maintain a reserve fund.
"The bill aims to ensure affordability, accessibility, and competition in the auto insurance market while maintaining financial stability and consumer protections," according to the legislation's text. Eligibility would extend to all drivers required to carry auto insurance, provided they meet residency and vehicle registration requirements.
A key feature of the proposal includes a sliding scale premium structure for low-income policyholders, with the TDI tasked with studying risk-based adjustments to ensure fair pricing.
The program would require biennial assessments to evaluate its impact on premium rates, consumer satisfaction, and uninsured motorist rates.
The initiative emerges as Texas faces broader insurance industry challenges. Attorney General Ken Paxton is currently pursuing legal action against several carriers over allegations of illegal collection and sale of personal data affecting more than 45 million drivers.
Current market leaders in Texas private passenger auto insurance include Progressive Insurance Group (18.3% market share), State Farm Group (17.49%), Allstate Insurance Group (10.66%), Berkshire Hathaway Insurance Group (9.69%), and USAA Group (8.81%), according to BestLink data from 2023.
The Insurance Council of Texas and bill sponsor State Sen. Roland Gutierrez (D-District 19) have not yet commented on the proposed legislation.
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