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Bill

SB 1151

Relating to an insurer's responsibility to review and audit a third-party administrator.

89th Legislature (2025) Introduced by César Blanco and 1 co-sponsor

Texas law now requires insurers to regularly review and audit third-party claims administrators to ensure regulatory compliance and protect policyholder interests, effective September 1, 2025.

Effective on 9/1/25
#audits&auditors(s4334) #insurance--general(i0445) #insurance--insurers&agents(i0425)
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Bill Summary · SB 1151

Legislative bill overview

SB 1151 establishes new requirements for Texas insurers to conduct regular reviews and audits of third-party administrators (TPAs) who handle claims processing and other administrative functions on their behalf. The bill mandates specific oversight procedures and accountability standards to ensure TPAs comply with applicable laws and regulations. This measure became effective September 1, 2025, following the Governor's signature in May.

Why is this important

Third-party administrators handle millions in insurance claims annually, making oversight critical to protect consumers from mishandled claims, delayed payments, and regulatory violations. Without formalized audit requirements, insurers could inadequately monitor TPAs, leaving policyholders vulnerable to poor service or claims denials. This legislation establishes a regulatory framework to hold both insurers and TPAs accountable for proper claims administration.

Potential points of contention

  • Compliance costs: Insurance companies may face increased expenses conducting audits, potentially passed to consumers through higher premiums
  • Audit standards ambiguity: The bill may lack specificity on audit frequency, scope, and methodology, creating inconsistent implementation across insurers
  • Enforcement mechanisms: Questions remain about how regulators will monitor compliance and what penalties apply to insurers failing to adequately audit their TPAs

Compiled from official sources — confirm details with the bill’s official record.

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