Texas Watch—Consumer Protection. Corporate Accountability. Citizen Advocacy.

Texas Watch, the state’s leading organization on homeowners insurance issues, applauded gubernatorial candidate Bill White for his announcement today that if elected he will work to enact legislation to require home insurance companies to justify their rates.  White committed to pursuing homeowners insurance reform during next year’s legislative session.

“Texas homeowners have been beaten up by the insurance industry for too long, paying 76% more than the national average.  We applaud Bill White for committing to support real insurance reform,” said Alex Winslow, executive director of Texas Watch.  “Texans need comprehensive homeowners insurance reform.  Requiring insurance companies to justify their rates is a key part of ensuring that rates are fair and coverage is adequate for all Texans.”

Texas Watch has long advocated providing Texas homeowners a higher level of protection from unwarranted insurance rate hikes by enacting a “prior approval” system which simply requires that insurance companies justify rate changes before they could go into effect.

“Texans are paying more and more while getting less and less when it comes to homeowners insurance,” added Winslow.  “Politicians in Austin have promised to help homeowners for years, but the so-called ‘reforms’ they’ve passed simply benefitted the insurance industry without helping Texas homeowners.”

Some key statistics:

• 22 states currently require prior approval of insurance rates.  15 states require prior approval for all homeowners insurance rate changes; another 7 require it in certain circumstances like a steep hike or non-competitive marketplace. (source: NAIC) [NOTE: This post has been updated to reflect more recent information from NAIC]
• 75% of likely Texas voters expressed support for prior approval of homeowners insurance rates in a statewide, scientific public opinion survey conducted last year. (source: Hill Research/Texas Watch poll)
• Texans pay among the highest homeowners insurance rates in the nation – 76% higher than the national average. (source: NAIC)
• Homeowners insurance companies have taken in $12.4 billion in gross profits since 2004 when the lax “file and use” scheme was adopted, allowing insurers to raise rates without any prior justification.  That is more than double the $5.6 billion they pocketed between 1998 and 2003 when Texas regulators had a much more active role in overseeing the industry. (source: OPIC)

“Providing homeowners with relief from abusive insurance companies is not a partisan issue.  We hope that all candidates will promise to support Texas homeowners by committing to enact comprehensive insurance reform,” said Winslow.

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For Immediate Release
August 26, 2010
Contact: Alex Winslow, 512-381-1111