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

Yesterday, we released our statewide poll showing strong support across all partisan, ideological, and geographic boundaries for comprehensive homeowners insurance reform among voters in our state.  The poll also found the governor’s race is a dead heat and that 74% of voters are more likely to support candidates that back reforms like prior approval of rates, tougher penalties for companies that engage in abusive claims handling, and providing consumers with uniform policies to encourage price competition.  Here’s a sampling of the news clips. Read More »

A statewide public opinion survey conducted by Republican polling firm Hill Research Consultants on behalf of the Texas Watch Foundation reveals an electorate divided between incumbent Republican Governor Rick Perry (42%) and Democratic challenger Bill White (41%), with a significant bloc of voters (14%) still uncommitted to either candidate. Additionally, across partisan, ideological and geographic lines, broad support is expressed for homeowners’ insurance reform proposals. Read More »

Texas will have to consider less regulation of insurance companies and their rates if the Department of Insurance sees its funding cut 10 percent to help balance the next state budget, Insurance Commissioner Mike Geeslin said in documents filed this week with the governor and legislative leaders.

Consumer groups and other critics are calling on the Legislature to ramp up regulation of the insurance industry next year. But the commissioner warned that deep funding cuts could force the state to switch to a new regulatory system, such as one that is more concerned with giving consumers information about insurance products than keeping tabs on rates.

“If reductions of $29 million (10 percent of the agency’s budget) were implemented, TDI cannot predict the effectiveness of the current regulatory structure in Texas,” Geeslin said in a summary of his legislative appropriations request for the next two-year budget.

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Regarding a potential 10 percent reduction, the commissioner said the impact “would critically impair [the department's] ability to effectively regulate the insurance industry and workers’ compensation system under current Texas law.”

Alex Winslow of Texas Watch, a consumer group active in insurance issues, said that the suggestion to weaken oversight of companies as a way to pay for budget cuts “takes Texas in the wrong direction.”

“We need stronger oversight to ensure rates are fair and claims get paid in full and on time – not weaker standards that allow insurance companies to abuse Texas homeowners even more than they already are,” he said.

Read More: The Dallas Morning News

Customers of Nationwide Property and Casualty in Texas will see an average 2 percent rate increase in their homeowners insurance starting Sept. 13.

The rate change will affect about 98,000 customers statewide, though 37,000 others will see a decrease.

Those who see an increase will see rates climb 2 percent to 11 percent, spokesman Mike Switzer said.

Read More: San Antonio Express-News

Watch out for the high-pressure insurance sale.

You might not need the policy and if you do, you might be paying more than you need to.

If you’re buying a car, a home, furniture, electronics or travel — even if you are borrowing money — there is often someone trying to sell you “add-on” insurance for it.

But consumers often are paying inflated prices because of commissions that one consumer group calls kickbacks.

“When you’re not on the make for insurance and someone else is approaching you, then someone is approaching you because they are making a kickback,” said J. Robert Hunter, insurance director for the Consumer Federation of America, a nonprofit association of 300 groups. “That’s a red flag. Slow down. Research. Call a few other people.”

Hunter, a former Texas insurance commissioner and federal insurance administrator during the Ford and Carter administrations, said “reverse competition” is rampant in the add-on insurance business.

Insurance companies, he said, compete to give agents the biggest “kickbacks” to sell their policies, which drives up the price of the products, whether a car or a camera.

In some cases, Hunter said, “reverse competition can more than double the price of insurance.”

Which kinds of insurance might be unnecessary or so bloated with high commissions that they become too costly? The CFA and other groups list these: credit or debt cancellation insurance; title insurance; travel insurance and collision damage waivers for rental cars.

Read More: Atlanta Journal-Constitution

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.” Read More »

TDI says it’ll start reviewing health insurance rate hikes deemed “unreasonable.”  Last year, lawmakers gave the insurance commissioner time to review windstorm insurance rate hikes.  Yet, homeowners insurance companies can hike rates without any justification.  Shouldn’t we at least be consistent? Read More »

AUSTIN – Just because Texas has the second-highest average home insurance rates in the nation doesn’t mean that a Dallas-area homeowner has to pay such high premiums.

A new comparison of rates in the area by The Dallas Morning Newsfound that premiums vary widely, and that the five largest companies don’t necessarily offer the best prices, despite their dominance of the market.

The analysis also indicated that average premiums have risen less than 2 percent from a year ago, based on recent filings by the 27 largest insurers with the Texas Department of Insurance. Average auto rates were mixed, with prices up slightly in some areas and down moderately in others.

Insurance company filings showed that average rates in several ZIP codes in Dallas County ranged from $1,250 to $1,311 for coverage on a 10-year-old brick veneer home valued at $150,000 – excluding the lot. Those prices reflect an average credit rating and no claims in the last five years.

The actual rates charged by individual companies ran from as low as $761 a year in some areas to a high of $1,929, although some differences in policies contributed to the gap.

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Consumer groups cautioned that deregulation of policy forms in Texas has made it more difficult to compare policies that have different prices.

“You can save money, but the caveat is to make sure the policy fits the need of the individual homeowner,” said Alex Winslow of Texas Watch. “Homeowners who shop based only on price do so at their own peril. A lot of policies are cheap for a reason – they don’t have the level of coverage a homeowner needs.”

Winslow said it has become “extremely difficult” for the average consumer to shop the insurance market because of all the variables in policies and the fact that most offer less coverage than they did a few years ago, when Texas had standard policies for all companies. The Legislature deregulated policy forms in 2003.

If the state required all companies to offer a handful of standard policies that could be compared more accurately, he argued, prices would be more competitive – and lower.

“By and large, the rates are still too high in Texas,” he said, noting that only Florida has higher insurance premiums among the 50 states.

Read More: The Dallas Morning News

Homeowner’s insurance in Parker County has been raised for some residents, not once, but twice in a year.

State Farm Insurance has raised its homeowner insurance rates twice in six months and for Parker County, the price has increased from $1,617 to $1,786.

Jerry Hagins, a spokesman for the Texas Department of Insurance, which keeps track of rate regulations and complaints, said two rate hikes in six months is too frequent and communicated that to State Farm.

“We are in review of those rates and that review is open and has not been completed,” Hagins said.

The reason for the rate increase is because Texas is different than other states because of weather related occurrences, and Parker County is not “unique” in the rising cost in the state, State Farm spokesman Kevin Davis said.

“We have eight different types of natural disasters in our current state,” he said. “Insurance is prospective so we have to look at trends.”

State Farm maintained its rate cost for five years throughout natural catastrophes like hurricane Rita, Ike and Gustav.

“Rate increases are not just subject to catastrophes, and with the uprising costs of building materials and labor, insurance companies make predictions about costs and make adjustments in order to meet future obligations,” Davis said.

The rise in cost of homeowners insurance raises serious questions about the stability of the market, and a company as large as State Farm could destabilize the market and encourage other companies to follow suit, said Alex Winslow, executive director of Texas Watch, an advocacy group for residents in the state.

“State Farm is the bully on the block,” Winslow said. “They’re the largest carrier in our state and they have continually thrown their weight around to bully and intimidate the state Department of Insurance and unfortunately for consumers they’ve gotten their way by and large.”

Winslow said consumers deserve a level of protection against raising rates, and State Farm could still make a healthy reasonable profit if the company submitted its rates before imposing them on state homeowners.

Read More: The Weatherford Democrat

After Hurricane Ike swept away the first floor of Donald Box’s Bayou Vista home, he and his wife made a list of 376 missing items for their flood insurer, which quickly paid the claim.

A few months later, they compiled another list of things they’d missed or didn’t have time to estimate values for the first time around: guns, a drill press and 126 other items. But the insurer wouldn’t pay that claim unless the couple could provide receipts to prove they owned the items, Box said.

The new requirement puzzled Box, who has been trying to get payment for nearly two years and filed a related lawsuit last December.

He and others say the requirement could make it more difficult for home-owners to recover insurance proceeds in the future.

“They set their own precedent on what they needed for documentation, and now they want to change it?” Box said. “That would mean you have two standards of doing business.”

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Receipts and pictures can help speed a claim along, especially for bigger-ticket items. But consumer advocates say that if insurers were to start requiring receipts, it could make it more difficult for policyholders to collect on claims, especially in a case such as the Boxes’ situation, where pictures and documents were swept away by floodwaters.

“If they do this, and they get away with it, it sets a terrible precedent moving forward,” said Alex Winslow, executive director of Texas Watch, an Austin-based consumer group. “Certainly homeowners should take steps to provide whatever documentation they have, but for the company to require receipts of every item is just unreasonable.”

Read More: Houston Chronicle