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Bill

HB 3508

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

89th Legislature (2025) Introduced by Trey Wharton

Texas bill requiring insurers to regularly audit third-party administrators to ensure consumer protection and compliance with state insurance laws.

Laid on the table subject to call
#insurance--general(i0445) #insurance--insurers&agents(i0425)
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Bill Summary · HB 3508

Legislative bill overview

HB 3508 would require insurance companies to conduct regular reviews and audits of third-party administrators (TPAs)—entities that handle claims processing, benefits administration, and other functions on behalf of insurers. The bill establishes oversight responsibilities to ensure TPAs comply with applicable laws and properly manage policyholder funds and claims.

Why is this important

Third-party administrators handle millions of dollars in claims and sensitive policyholder information across Texas, yet operate with minimal direct regulatory oversight. Requiring insurers to audit their TPAs could protect consumers from mismanagement, fraud, and improper claim denials, while also holding insurance companies accountable for their agents' conduct.

Potential points of contention

  • Regulatory burden and costs: Insurance companies may argue that mandatory audits increase operational expenses that could be passed to consumers through higher premiums
  • Scope and standards ambiguity: The bill may lack specific requirements on audit frequency, methodology, and qualification standards, creating compliance uncertainty
  • Overlap with existing regulation: State regulators already oversee some TPA activities, raising questions about whether this creates redundant requirements or clarifies fragmented oversight

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

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