Overall Vote Recommendation

Neutral

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

SB 1455 amends provisions of the Texas Insurance Code related to the funding of the Texas Department of Insurance (TDI), specifically regarding maintenance taxes and surcharges that support the regulation of workers' compensation and workers’ compensation insurance. The bill updates various sections of Titles 3 and 5 of the Insurance Code to reflect modernized terminology, broaden the scope of surcharge applicability, and streamline the administrative and enforcement processes managed by the Commissioner of Insurance and the Comptroller.

Key provisions of the bill authorize the Commissioner to determine the assessment rate for maintenance taxes and workers’ compensation surcharges annually and to notify the Comptroller of the applicable rate at least 45 days before the due date. If the Commissioner fails to notify the Comptroller by that deadline, the rate reverts to the previous year’s rate unless adjusted later. In such cases, the Comptroller is responsible for issuing either a refund for overpaid surcharges or a notice of additional taxes due. The bill consolidates and clarifies the financial sources that may be deposited into the TDI operating account, including public information fees, sales of surplus property, and reimbursements from various government transactions.

The bill’s administrative changes aim to improve efficiency and reduce ambiguity in the collection and use of regulatory funds while ensuring continued support for the state’s oversight of the workers’ compensation insurance system. By consolidating language and responsibilities under Titles 3 and 5, the bill strengthens the statutory foundation for how regulatory surcharges are determined and enforced across the state.

The Committee Substitute for SB 1455 builds upon the originally filed version by refining its language, improving its structural organization, and clarifying the bill’s implementation. While both versions share the goal of updating the funding mechanism for regulating workers’ compensation and insurance through surcharges, the substitute presents a more polished and administratively streamlined approach. It standardizes terminology throughout the Insurance Code and Labor Code by replacing “maintenance tax” with “surcharge,” a shift that better reflects the nature of the charge and distinguishes it from general taxation. This change improves conceptual clarity and aligns the bill’s language with modern regulatory practice.

Structurally, the Committee Substitute reorganizes and consolidates provisions for improved readability and legislative clarity. Where the originally filed version amends numerous sections in a more segmented manner, the substitute integrates these updates in a more cohesive format, often combining related provisions and eliminating redundancy. It also emphasizes procedural transparency by reinforcing the process for setting, adjusting, and communicating surcharge rates. For example, it retains the requirement for the Commissioner of Insurance to notify the Comptroller of the rate 45 days in advance but offers clearer guidance on what happens if this deadline is missed—providing steps for issuing refunds or collecting additional charges if necessary.

Additionally, the Committee Substitute gives more attention to the mechanisms by which insurers can recover surcharge costs. While the original bill allowed for recovery through rate filings or policyholder charges, the substitute reiterates these provisions in multiple sections, signaling legislative intent to ensure that recovery pathways are consistently available across the insurance market. Lastly, the substitute improves the effective date transition language by clarifying that the new surcharge framework applies only to premiums or liabilities incurred on or after January 1, 2026, and that previous obligations remain governed by the old law. Overall, the Committee Substitute refines the original bill without altering its fundamental policy goals, creating a clearer, more implementable funding model for Texas’s workers’ compensation regulatory system.

Author

Brent Hagenbuch

Contact the Author

Sen. Brent Hagenbuch

Capitol Phone:

(512) 463-0130

Capitol Office:

CAP GE.7

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), no significant fiscal impact to the state is anticipated as a result of the bill’s implementation. The analysis assumes that any administrative costs incurred from updating the surcharge collection framework or adjusting internal systems could be absorbed within the existing budgets and operational capacity of relevant state agencies, such as the Texas Department of Insurance and the Comptroller of Public Accounts.

Furthermore, the bill does not require new appropriations or create new programs; rather, it modifies the funding mechanism used to support existing regulatory functions related to workers’ compensation insurance. By transitioning terminology from "maintenance taxes" to "surcharges" and clarifying the procedures for rate assessments and collections, the legislation aims to improve financial and administrative efficiency without increasing the overall cost burden on state resources.

The bill is also not expected to have a significant fiscal impact on local governments. Since the changes pertain to state-level insurance regulation and surcharge collection from private insurers and certified self-insurers, local entities are not directly responsible for implementing or funding any new requirements under this legislation. Therefore, SB 1455 is seen as a fiscally neutral update to Texas’s insurance regulatory funding structure.

Vote Recommendation Notes

SB 1455 proposes a reclassification of existing “maintenance taxes” as “surcharges” for the purpose of reducing the retaliatory tax burden imposed by other states on Texas-based workers’ compensation insurers. This change is intended to improve the competitiveness of Texas-domiciled insurance carriers when operating across state lines, particularly in states like California and Illinois, which calculate retaliatory taxes based on a company’s home-state tax structure.

The legislation does not increase the total amount paid by insurers to the state, nor does it impose new fees or taxes on policyholders. It also does not materially alter the state’s regulatory oversight or funding levels. According to the Legislative Budget Board, the bill is fiscally neutral, with any implementation costs expected to be absorbed using existing agency resources. The bill's technical adjustments align Texas with common practices in other states, helping protect Texas companies without undermining regulatory funding.

However, from a limited government and free enterprise perspective, the bill is largely a semantic workaround that maintains the existing level of regulatory financial burden without introducing structural reform. It does not reduce regulatory costs or materially streamline administration, and it shifts further rate-setting discretion to the Commissioner of Insurance without new oversight mechanisms. As such, while the bill has a rational policy justification, it does not significantly advance—or impair—core liberty principles.

Given its neutral fiscal impact, targeted scope, and lack of direct impact on individuals or local governments, Texas Policy Research remains NEUTRAL on SB 1455. The bill is a strategic technical adjustment with benefits to Texas-based insurers, but it neither clearly strengthens nor weakens core liberty principles in a meaningful way.

Individual Liberty: The bill does not directly affect the rights or freedoms of individuals. It pertains to regulatory funding mechanisms for insurance companies, specifically those involved in workers’ compensation. There are no provisions that expand or restrict personal liberties, nor does it affect individuals' access to insurance or legal remedies.

Personal Responsibility: While the bill helps Texas-based insurers avoid punitive retaliatory taxes from other states, it doesn’t encourage greater personal or corporate responsibility in terms of reducing costs or streamlining regulation. Instead, it effectively re-labels existing obligations to shield insurers from out-of-state penalties. While strategic, it avoids a more direct confrontation with structural inefficiencies and regulatory burdens.

Free Enterprise: This is where the bill has its strongest liberty-aligned justification. By reclassifying regulatory fees as "surcharges," Texas-based insurers can reduce or avoid retaliatory taxes imposed by other states. This makes Texas a more competitive domicile for insurers, which aligns with free enterprise principles by promoting open markets and reducing distortions caused by interstate tax disparities. However, it does so through a workaround rather than through true deregulation or tax relief.

Private Property Rights: There is no significant effect on property rights. The bill neither infringes upon nor expands property rights for insurers or individuals. However, by allowing insurers to pass surcharges on to policyholders or incorporate them into rate filings, it does raise minor questions about transparency in pricing—but this is consistent with current practice and fully allowed under regulatory oversight.

Limited Government: On one hand, the bill doesn’t expand the size or scope of state government. It repurposes existing administrative structures and keeps funding levels steady. On the other hand, it maintains—and potentially entrenches—a regulatory funding model that still allows broad discretion to the Commissioner of Insurance without introducing new limits or legislative oversight. A more liberty-aligned approach might have reduced these fees or created a sunset review for surcharge authority. Thus, while not expansive, the bill does not actively shrink or restrain government power.

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