According to the Legislative Budget Board (LBB), there is no significant fiscal impact expected at the state level. The Texas Department of Insurance (TDI), which would be responsible for implementing the bill’s provisions, is expected to be able to absorb any additional administrative duties related to reviewing rate filings using its existing budget and personnel resources.

Specifically, the bill would require TDI to conduct prior reviews of insurance rate filings that reflect increases or decreases exceeding 10% for a broad range of property and casualty insurance products, including both personal and commercial lines. While this expands the scope of regulatory oversight, the analysis assumes that the volume of filings and required administrative work will not necessitate additional appropriations or staffing increases.

Likewise, there is no expected fiscal impact on local governments. The bill does not create any mandates or responsibilities for counties, cities, or other political subdivisions, and it does not affect local revenues or expenditures.

In summary, SB 1643 is designed to enhance consumer protection without introducing new fiscal burdens to the state or local governments, making it a regulatory change that aligns with current agency capacities and fiscal constraints.

SB 1643 introduces a prior approval process for certain rate changes in property and casualty insurance, requiring that any rate increase or decrease exceeding 10% receive formal approval from the Texas Department of Insurance (TDI) before taking effect. While the bill is intended to enhance consumer protections and guard against sudden premium spikes, it imposes new procedural requirements on insurers and shifts Texas away from its historically responsive “file and use” regulatory model.

From a free-market and limited-government perspective, this bill raises several red flags. It places additional regulatory burdens on private enterprise by requiring prior approval for a broad range of insurance products, including both personal and commercial lines. While not expanding government in terms of budget or staffing, the bill nevertheless inserts a new layer of preemptive oversight into pricing decisions that were previously governed by market dynamics. This may create a chilling effect on rate-setting agility, especially during times of economic volatility, where insurers need to respond quickly to changing costs and risks.

There is also concern about the administrative complexity this bill introduces. Even if TDI can manage the workload with existing resources, insurers will likely experience slower response times and increased compliance costs. Smaller carriers, in particular, may face disproportionate burdens navigating the added regulatory process, potentially leading to a reduction in competition or a pullback from higher-risk markets. This could ultimately limit consumer choice and drive up prices—not because of insurer behavior but due to constrained supply.

Furthermore, critics may view this bill as a solution in search of a problem. Texas has not seen systemic abuse of the file-and-use system, and TDI already has the authority to review and disapprove rates that are excessive or unjustified. Imposing prior approval across a wide swath of the market may be seen as overreach, undermining a system that has historically balanced insurer flexibility with regulatory accountability.

For these reasons, while the bill’s intent is understandable, the likely effects on market responsiveness and administrative burden warrant serious concern. As such, Texas Policy Research recommends that lawmakers vote NO on SB 1643 as it would reflect a commitment to preserving competitive market principles, minimizing regulatory friction, and maintaining a policy environment that supports innovation and choice in Texas’s insurance sector.

• Individual Liberty: While the bill does not directly restrict individuals’ rights or behaviors, it indirectly limits consumer choice by potentially shrinking the availability of insurance products. If insurers face delays or disincentives in adjusting rates, they may choose to withdraw from higher-risk or less profitable markets, limiting the options available to individuals. In this way, the bill narrows the field of choices consumers have in selecting coverage that meets their needs and budgets.
• Personal Responsibility: The bill subtly undermines personal responsibility by increasing state intervention where individuals might otherwise be expected to make informed choices in a competitive market. Rather than empowering consumers to shop around and hold insurers accountable through market behavior (e.g., switching carriers), the bill inserts the state as a gatekeeper to pricing, implying that consumers require protection through regulation rather than engagement through education and free exchange.
• Free Enterprise: This is perhaps the most directly impacted principle. The bill interferes with an insurer’s ability to freely set rates in response to market conditions. While the intention is to prevent abuse, the requirement for prior approval of rate changes above 10% introduces regulatory friction into what should be a market-driven pricing mechanism. This can chill innovation, responsiveness, and competition—all essential ingredients of a thriving free enterprise system.
• Private Property Rights: By restricting how insurers can price their services—an essential expression of how they use their property (capital, underwriting models, risk pools)—the bill imposes a regulatory constraint on the use of private assets. While not a direct seizure or expropriation, it limits the discretion that private entities have over their own pricing and business strategy, which is a foundational aspect of property rights.
• Limited Government: The bill represents a departure from the limited government model traditionally favored in Texas. While it doesn’t grow the government in size or cost, it increases the scope of regulatory oversight by requiring state approval for a broader set of private-sector decisions. Liberty-oriented governance favors reactive oversight when abuse occurs—not preemptive regulation of lawful, market-based behavior.