Texas Bill Stops Insurers from Considering ESG Criteria in Setting Rates

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.

‘In the real world, we believe that any legislation of this type will put insurers in a Catch-22 situation, where they are forced by some states to utilize certain business models and quite possibly very different business models in other states,’ Lee Ann Alexander, vice president of state government relations for the American Property Casualty Insurance Association, told Floodlight after the bill was approved.