The Texas Department of Insurance recently solicited comments on a possible rule proposal that would prohibit pre-dispute mandatory arbitration provisions in insurance products, although there is no statutory prohibition of those provisions. According to the Department, the rule would apply to policy-or-contract coverages for individuals for personal noncommercial use. The prohibition would also apply to group or individual forms providing coverage in life, accident and health, annuity, credit, and property and casualty products, including home and auto. Legislation may be proposed this session to block TDI from adopting such a rule without direct authorization from the Legislature. TCJL believes that whether pre-dispute mandatory arbitration should be permissible in any contractual relationship is a policy question for the Legislature to decide. Consequently, it the League’s position that the Department should not pursue this proposal.

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