Lawmakers Aim to Roll Back Texas’ 2003 Insurance Reforms

Reforms to the Texas insurance regulatory system put in place by Senate Bill 14 in 2003 are under attack by a coalition of state lawmakers who have filed bills to, among other things, return the rate setting process for personal lines insurance to one of prior approval as opposed to the current file and use process.

Other filed bills would:

• Standardize homeowners forms; House Bill 340 by Rep. Elliott Naishtat (Austin) and SB 102 by Sen. Eddie Lucio Jr. (Brownsville);
• Impose a 15 percent limit on the amount insurers can vary rates in a single county; SB 103 by Lucio;
• Ban the use of credit scoring in personal lines of insurance; SB 110 by Sens. Lucio, Rodney Ellis (Houston) and Van de Putte, and co-authored by Sen. Wendy Davis (Fort Worth); and
• Direct the Texas Department of Insurance to study the use of data mining techniques by insurance companies in Texas; SB 1157 by Davis.

Senate Bill 91, by Sen. Leticia Van de Putte of San Antonio, would return the state to a prior approval system, albeit one that is “streamlined,” according to Van de Putte. “The insurance commissioner would have a maximum of 60 days to either approve it or deny it. If the commissioner does not disapprove a rate before the deadline, then the insurance company can use it,” Van de Putte said at a press conference in Austin.

“A couple of sessions back the legislature was talked into a different insurance regulatory system,” Van de Putte said. “We were told if we had a file-and-use system it would make easy for competitors in the market, that there would be more products and more insurers coming to our state. … “We made an awful mistake” and rates did not go down, she added.

House Bill 1594, authored by Rep. Rafael Anchia of Dallas, is a companion bill to SB 91. It would give the commissioner 120 days to approve or deny rate filings. “There’s a 120 deemer period where if the insurance commissioner fails to act within that 120-day period, then the rate is deemed to be approved,” Anchia said. Anchia stressed that the bill is not “anti-insurance company.”

Jerry Johns, president of the Southwestern Insurance Infor-mation Service, took issue with Van de Putte’s and Anchia’s assessments. “Under the current file-and-use system, Texas consumers have more choices when it comes to the cost of insurance and the various products that are available,” Johns said. “Returning to government control of rates, discounts and products give insurers no incentive to compete in the marketplace because insurance becomes one size fits all, and that is simply not a consumer-friendly environment.”

Texas traditionally has had some of the highest homeowners insurance rates in the nation.