According to the Legislative Budget Board (LBB), SB 1642, which restructures the Texas Department of Insurance (TDI) by replacing the current single Insurance Commissioner with a three-member appointed commission, has no anticipated fiscal impact on General Revenue-related funds for the biennium ending August 31, 2027. However, the bill does have fiscal implications for the Department of Insurance Operating Account (Fund 36), which is funded by the insurance industry through maintenance taxes and fees.

The Legislative Budget Board estimates that implementing the bill will require 8.0 new full-time equivalent (FTE) positions. These include two new commissioners (in addition to the existing commissioner during transition), one executive director (deputy director role), three support directors (one per commissioner), and two program specialists. The total cost associated with these roles—salaries, benefits, and operational costs—is projected at $1.15 million in FY 2026 and $1.61 million annually beginning FY 2027. The cost in FY 2026 is prorated because the commission is not scheduled to be operational until January 1, 2026. There is also a one-time onboarding cost of $16,064 in that first year.

Importantly, these expenses are not expected to impact the state’s General Revenue because the Department of Insurance Operating Account is structured as a self-leveling fund. Any increases in expenditures from this account are offset by adjustments in maintenance tax rates assessed on insurance carriers. As such, the overall revenue in the account will match the expenditures required to implement the bill. Additionally, no fiscal impact to local governments is anticipated, and the analysis indicates that any workload increases for the Governor’s Office can be managed within existing resources.

In sum, while the bill introduces administrative costs and staffing expansions, these are fully covered by regulatory fees within the insurance sector and thus do not create a burden on the general taxpayer or local governments.

SB 1642 proposes a structural overhaul of the Texas Department of Insurance (TDI), replacing the current single-commissioner leadership model with a three-member commission appointed by the governor. While the bill is framed as a modernization effort aimed at enhancing consumer representation and oversight in one of the largest insurance markets in the world, several significant concerns support a vote against the measure.

Foremost, the bill clearly expands the size and scope of government. It increases the number of top-level executive appointees at TDI from one to three, with accompanying support staff, including an executive director and additional administrative personnel. This restructuring would add at least eight new full-time equivalent (FTE) positions, resulting in over $1.6 million in new annual expenditures. Though these funds would be sourced from the Department of Insurance Operating Account—funded by industry fees rather than general revenue—the increased cost could ultimately be passed on to consumers in the form of higher premiums or administrative costs, raising concerns about indirect financial burdens.

Equally important is the consolidation of power in the executive branch. SB 1642 significantly expands the governor’s appointment authority, tripling the number of gubernatorial appointees overseeing TDI and granting the governor the discretion to name the commission’s presiding officer. This centralization of control raises concerns about political patronage and the potential appointment of ideological loyalists, undermining the independence and neutrality expected of a regulatory body. Without safeguards such as bipartisan vetting, staggered terms across gubernatorial administrations, or limits on reappointment, the bill may inadvertently politicize insurance oversight.

The bill also risks increasing the regulatory burden through a more bureaucratic governance structure. Unlike a single commissioner who can act decisively and efficiently, a three-member commission may be slower to respond to urgent issues in the rapidly evolving insurance marketplace. Consensus-driven leadership can stall policy development and complicate administrative action, potentially frustrating both industry participants and consumers seeking timely resolutions.

Further, the bill lacks sunset or oversight mechanisms to evaluate whether this expanded structure actually delivers improved regulatory outcomes, operational efficiency, or consumer benefits. Without built-in performance metrics or legislative review, the state could be locked into a larger and costlier bureaucracy without sufficient justification or accountability.

In summary, while the bill’s stated intent to enhance oversight and consumer representation is laudable, the actual effects—government expansion, executive overreach, higher operational costs, and administrative inefficiencies—argue against its passage. These issues conflict with the principles of limited government, regulatory efficiency, and taxpayer protection. For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 1642.

• Individual Liberty: The bill attempts to improve consumer protection by requiring that one of the appointed commissioners have expertise in consumer advocacy. In theory, this could strengthen individuals’ access to fair treatment in the insurance market. However, the bill grants the governor sole appointment power for all three commissioners and the presiding officer. This level of executive influence threatens the independence of the commission and diminishes the political accountability traditionally expected in single-executive models. If appointees serve more as political extensions of the governor than as neutral regulators, the result may be less responsiveness to the public and a weakening of individual representation in regulatory processes.
• Personal Responsibility: The bill does not substantially alter individual rights or responsibilities in the marketplace. It does not impose new mandates or remove existing obligations on consumers or insurers in a way that would directly impact personal responsibility. However, by centralizing regulatory authority in a less transparent and potentially slower commission model, individuals may face more obstacles navigating insurance disputes or securing timely enforcement of consumer protections.
• Free Enterprise: Texas boasts one of the largest and most dynamic insurance markets in the world. The bill risks undermining this strength by replacing an efficient, singular regulatory executive with a bureaucratic, multi-member commission. Delays in rulemaking, licensing, or dispute resolution could hinder business operations and introduce regulatory uncertainty. This is especially problematic in a competitive marketplace where speed, predictability, and clarity in regulation are essential for fostering innovation and attracting investment. Additionally, increased administrative costs—borne by the industry through higher maintenance taxes—may ultimately be passed along to policyholders or reduce competitive pressure.
• Private Property Rights: While the bill does not make direct changes to laws governing ownership or use of property, any expansion of bureaucratic power—especially in a sector like insurance that significantly affects property owners—can have indirect consequences. A slower or less responsive regulatory environment can make it harder for individuals to assert their rights in cases of property loss or insurance disputes. The lack of transparency and potential for politicization may also erode confidence in fair adjudication of claims and regulatory enforcement.
• Limited Government: The bill’s most glaring conflict with liberty principles is its disregard for the ideal of limited government. It expands the size of the regulatory bureaucracy, adds at least eight new FTEs, increases expenditures (even if not from general revenue), and consolidates more power in the executive branch without adding meaningful oversight or checks. This violates the core principle that government should be no larger or more powerful than necessary to serve the public interest. The lack of sunset review, performance benchmarks, or legislative guardrails further exacerbates this concern, leaving the door open for unchecked expansion of state regulatory authority.