| February
14, 2003
Make
No Mistake - Rate Rollbacks Will Hurt Texans
|
"South
Carolina’s approach to auto insurance was much
like New Jersey until a few years ago. In 1997, legislation
was passed to deregulate the market. The results have
already been dramatic for consumers, the number of insurers
doing business in the state doubled over a one-year
period, and good drivers generally have seen rate decreases
of 20 percent or more."
-
"Collision Course: What Path for
Auto Insurance in New Jersey?"
The Record, Bergen, NJ, 7/1/01
|
Several
well-intentioned yet misguided groups are calling for mandated
insurance rate rollbacks in Texas. While this quick fix may
sound good in the short term, it makes no sense if Texans
want lasting insurance reform. Although consumers are frustrated
with paying higher rates, we must move beyond just being mad
and "get it right." Mandating how insurance companies
set their rates has proven to be the wrong approach in other
states.
Rates
are based on expected claims costs and expenses.
To suggest that all current insurance company rates in Texas
are unjustified and require rate rollbacks ignores a basic
reality of any business-you can’t sell a product at
a loss-at least not for very long. And costs have gone up
due to the huge number of mold claims in Texas, fraud and
frivolous lawsuits, and a number of weather-related disasters.
Click
here to learn more...
Heavy
Handed Regulations Limits Insurance Availability and Affordability
|
"Four
years ago, South Carolina lawmakers, weary of wrestling
with a system of automobile insurance regulation no
one liked, decided to scrap it and let the market set
the rates. So far, it seems to have worked
well, resulting in smaller insurance bills for many
drivers...and more than 100 new companies writing auto-insurance
policies in the state."
-
"Many S.C. Drivers Seeing
Smaller Bills, Choices Are Greater, Too,"
The Charlotte Observer, Charlotte, NC, 7/8/01 |
We know
what the end of the road looks like for those who think government
price controls are the answer. It will make the situation
for Texans even worse as seen in New Jersey and Massachusetts.
In these states, heavy-handed rate regulation means those
citizens can't find insurance and once they do, they pay among
the highest rates in the country for it!
Texans
know better than to believe that government price controls
will make insurance more available and affordable. Texans
have a history of letting a competitive market give consumers
their choice of a wide variety of products offered by companies
at competitive prices. Competition, within a regulatory framework
of consumer protections, needs a chance to work in the insurance
market, too. Texas has never had a fully competitive
market, and if these efforts are put in place, we never will.
Competition
has a proven track record for stabilizing markets and lowering
costs...
| "In
the long run, rate regulation does not significantly
reduce prices for consumers. However, it generally
reduces availability of coverage, increases price volatility,
and reduces the quality and variety of services available
to consumers."
-
Property-Liability Insurance
Price Deregulation: The Last Bastion?
J. David Cummins, 2001 |
Just look
at what happened in South Carolina when it shifted from regulatory
controls to a healthy competitive system with strong consumer
safeguards. The result was an immediate improvement in the
affordability and availability of insurance for South Carolina
consumers.
- Rates
dropped from 26th highest to 38th.
- The
number of companies in the market more than doubled.
- There
have been fewer complaints.
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. |
