Texas Watch Requests Review and Reduction in Auto Rates During COVID-19 Pandemic
In April, following hundreds of activists making their concerns known, Texas Watch contacted leadership at the Texas Department of Insurance regarding the need for a comprehensive review of and reduction in auto rates. With reduced driving due to the COVID-19 pandemic, auto insurance carriers are experiencing lower losses, which should translate into lower rates for policyholders. The text of our letter follows.
From: Ware V. Wendell <firstname.lastname@example.org>
Date: Mon, Apr 27, 2020 at 4:13 PM
Subject: Correspondence from Texas Watch, auto rate review request
Dear Commission Sullivan,
Texans are facing a multitude of challenges during the COVID-19 crisis, and the Texas Department of Insurance has an important role to play in ensuring they are being treated fairly by insurers during these trying times. As we shelter in place and work from home, Texans are driving far less these days, meaning fewer miles traveled and less congested roads. This amounts to less risk for carriers to insure, which should result in lower auto insurance rates for Texas families. The appropriate amount of the reduction in rates is a question that your agency can -- and should -- answer without delay.
Our records indicate you and key staff have received a considerable amount of citizen correspondence in the last week requesting a comprehensive review of auto rates, ordering reductions wherever warranted. I imagine you will receive more correspondence in the days ahead, and I trust you value hearing the requests of Texas ratepayers whom you are statutorily directed to protect per Sec. 31.002(4) of the Texas Insurance Code. Citizen feedback is a vital component of a government of, by, and for the people.
Texas families are facing financial pressures that are unprecedented in modern times. You have likely seen the long lines at food banks around our state. Unemployment numbers are through the roof. Families need all of the help they can get as they confront this public health and economic crisis. Insurance overcharges cannot be tolerated, especially during this time. Every dollar wrongly retained by an insurance carrier through excessive rates is a dollar that can better be used by families to put food on their tables.
Your agency has published a website listing 17 auto carriers that are offering some rate relief. We have publicized this resource and will continue to do so. We are also encouraging Texans to contact their carrier directly and request a reduction in their auto insurance bill if they are driving less. While these efforts are necessary, we do not believe they are sufficient to meet the need. Only a comprehensive review of the auto rates charged by the 74 insurance groups and 184 private passenger auto insurance companies -- and appropriate rate reduction orders -- will guarantee no Texas family is being overcharged. This is the proper role of your agency in regulating this $20 billion market.
A recent analysis of auto rate relief programs by noted experts at the Consumer Federation of America and the Center for Economic Justice shows which companies must do more and indicates the need for greater rate relief. We commend this resource to you and your staff as you undertake your own industry-wide analysis.
More than a month has passed since Texans were ordered to drastically change the way they live and travel due to this dangerous disease. Families are hurting and need help.
In that effort, we respectfully request answers to the following questions:
1. Will you conduct an industry-wide review of auto insurance rates and order reductions as warranted? If so, when will you begin this analysis and when do you expect to issue orders?
2. How is your agency reviewing rate relief offered by some auto carriers? Reporting by the Dallas Morning News indicates no reductions have been ordered and one rate change was approved by your agency on the same day it was filed. If the rate filing is insufficient as proposed, what action are you taking to ensure those ratepayers are not overcharged?
3. What are you doing to protect policyholders from reductions that have strings attached? For example, if a carrier requires a policyholder to renew with the carrier before they can receive any reduction, how are you addressing such schemes from an enforcement perspective?
As the governor stated clearly in his press conference this afternoon, "many Texans are struggling to pay their bills" and "they are not alone in this fight." We respectfully urge you to take immediate action on behalf of the millions of drivers and their families across our great state. They need fair treatment from carriers and prompt action by your department so they know they are not abandoned to the tender mercies of the insurance industry when facing the fight of their lives.
Ware V. Wendell
2121 East 6th Street, Suite 201
Austin, Texas 78702