January 14, 2003

78th Texas Legislature Convenes Today

Texas leaders have the opportunity modernize and improve the way insurance is regulated in Texas... As the 78th Texas Legislature gets underway today, everyone agrees that insurance reform will be a top priority. Our elected leaders have an opportunity to create an insurance market in Texas that will protect consumers from fraud and abuse and encourage companies to enter and stay in the market - providing consumers with more choices and competitive prices.

But quick "fixes" can make the situation worse for Texas homeowners

Some well-intentioned legislators have called for increased government regulations - such as rate rollback and freezes - to fix the problems in the insurance market, but this is the wrong approach. A new research study reports that increasing regulation and mandating lower rates could actually make the situation worse for Texas homeowners. The study by Dr. Robert Puelz, Dexter professor of risk management and insurance at Southern Methodist University's Cox School of Business, found that consumers benefit the most when insurers have the opportunity to compete on policies and rates. Read the entire study here.

Just look at other states where similar short-term proposals have resulted in higher rates and fewer choices for consumers in the long run. Legislators in New Jersey have spent decades passing laws to try and stabilize their auto insurance market. The result has left New Jersey drivers with the highest rates in the country and limited choices for coverage as more and more insurance companies announce plans to leave the state and its anti-competition regulations behind. Click here for an article on the perils of New Jersey's over-regulated insurance market.

If legislators want to create a healthy insurance market, they should make more information on insurance companies available for consumers to use and focus regulations on protecting homeowners and drivers from fraud and abuse. There is no question that insurance companies should be regulated for solvency and market conduct so consumers are protected from fraud possible abuses. And companies should be required to file their rates and policy forms with the Department of Insurance so consumers have more information in which to make informed choices regarding companies and the policies and other services they are offering. Beyond those boundaries, insurers should be able to do what all other businesses do - sell a variety of products and services at competitive prices.

In a competitive market, consumers, not the state, are the ones who rein in businesses who unwisely fail to meet their demands for more products and services at competitive prices. Competition works in well-regulated states like Illinois and South Carolina, and it can work in Texas, too.

Stay tuned for legislative updates as the 78th session gets underway.

Insurance reform:
Don’t just get mad, get it right.

Texas Coalition for Affordable Insurance Solutions
www.TCAIS.org

TCAIS is a proactive alliance of insurance providers and trade organizations committed to working with legislators, regulators, consumers and others to find public policy solutions that will improve insurance availability and affordability in Texas.