The bill, H.B. No. 3983, introduces Chapter 172A to the Local Government Code, which establishes regulations for risk pools primarily consisting of political subdivisions. This chapter outlines the applicability of the regulations, stating that they apply specifically to such risk pools. It also clarifies that in the event of a conflict with other laws, the provisions of this chapter will take precedence. The commissioner of insurance is granted the authority to adopt rules for implementing the chapter, and specific insurance laws are identified as applicable to the coverage provided by these risk pools.

Additionally, the bill mandates that risk pools offering health or property and casualty coverage must provide annual disclosures to their members. These disclosures include a written statement clarifying that the risk pool is not insurance and is not regulated like traditional insurers, a copy of the coverage declarations, the risk pool's budget, a financial status report, and an explanation of any claim denials from the previous year. The enforcement of these regulations will be managed by the commissioner of insurance and the Texas Department of Insurance, with provisions for private actions against risk pools. The new regulations will apply to contracts entered into on or after January 1, 2026, and the act is set to take effect on September 1, 2025.

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