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State Farm Heads To Court, Lawmakers Continue Push For Real Reform
State Farm Insurance is taking the state of Texas to court today, suing to keep the Texas Department of Insurance from publicizing documents related to their recent rate hikes. This latest attack on the state and its homeowners has prompted House and Senate lawmakers to join together to ensure that the Texas Department of Insurance Sunset process next session puts policyholders first.
“Recent news reports and rate hikes make it clear that we have a big job ahead of us, but we are committed to getting the job done,” said Leticia Van de Putte, Senate Democratic Caucus Chairwoman and Jim Dunnam, House Democratic Leader. “Texas families deserve real relief that ensures good protection and fair claims handling from their insurance company at a price they can afford.”
Comprehensive insurance reform is needed and the Sunset process provides the only opportunity to bring balance back to the insurance marketplace for hard working Texas families who are struggling to make ends meet. Texans need relief from skyrocketing insurance rates and abusive claims handling practices.
“State Farm covers 30 percent of the homeowners insurance market in Texas. Instead of worrying about the impact of drastically hiking rates on their customers, they are worried about their competitors and the public learning the true motivation behind those hikes. Rate filings are public information, and we support TDI for taking steps to bring transparency to the process and put pressure on State Farm,” said Representative Garnet F. Coleman.
The Office of Public Insurance Counsel, which is tasked with representing consumers in insurance matters, maintains that homeowner’s insurance rates in Texas are not only excessive, but that the industry is using “hidden profits” and reinsurance contracts that are both “self-dealing” and “suspect” to pad their profits.
"Homeowners insurance companies must be held accountable for charging unfair and excessive rates, especially at this time when many Texas families are struggling to put food on the table," said Senator Wendy Davis.
Under the current file and use system, insurance companies can introduce drastic rate hikes without obtaining approval from the state insurance commissioner, the Legislature, or Texas consumers. The commissioner has few tools to keep the marketplace in balance.
“There is no backstop here. The solution could not be clearer, we must give our commissioner the tools to bring these companies in line,” said Representative Jessica Farrar. “We need a system of prior approval requiring insurance companies to justify rate increases before they pass them on to their customers and TDI Sunset provides that opportunity.”
On top of the current regulatory system, or lack thereof, Texans need some relief from abusive claims handling practices. Following Hurricane Ike, we saw rampant abuses by some insurers who deliberately stalled or underpaid legitimate claims.
“Along the coast we are particularly vulnerable to claims handling abuses by the insurance industry,” said Senator Eddie Lucio. “Any comprehensive insurance reform package must include safeguards to protect Texas homeowners from the insurance industry’s deny and delay tactics.”
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