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May
16, 2003
Over-regulation
doesn’t work.
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The Insurance Journal warned that the Texas legislative session is dangerously vulnerable to ending up in the same regulatory quagmire that plagues New Jersey. “Look at the bill of goods that Texas has to offer right now, and ask yourself, if you were an insurer sitting out there with … capital, would you come into this market? What does Texas have to offer?” -Robert
Hartwig, chief economist
Click here to read full article. "The reform is designed to bring more insurers to the state by scaling back regulations that have driven companies from New Jersey. The bill does not include a major rate rollback, but sponsors said insurance costs will decrease as a result of greater competition among companies." -
New Jersey Times Click here to learn more about New Jersey’s insurance modernization effort! "It's about alternatives, choices, accessibility and with time, it will be about downward pressure on rates." - Louis
D. Greenwald, bill sponsor |
Picture this scenario: Consumers paying the highest insurance rates in the country and having difficulty finding coverage. Insurance companies citing tremendous losses and writing fewer and fewer policies. State regulators struggling to keep major insurers from pulling out of the market. Angry constituents demanding that elected officials do something to lower rates and make coverage more available! As the Legislature convenes, the governor makes insurance reform a top priority and tells lawmakers to find a solution.
Sound familiar? Not only is this a description of the problems facing Texas homeowners insurance market, it is also what happened in New Jersey this year after decades of over-regulation created a crisis. This month, through the work of New Jersey lawmakers, the state is poised to give consumers what they need - a more stable, competitive insurance market.
Strict regulation fails
Hoping to bring immediate relief to their constituents, New Jersey lawmakers over the years implemented rate rollbacks, prior approval regulation, and a host of restrictions on insurance companies. These shortsighted measures created an availability and affordability crisis.
Dozens of auto insurance companies left the state and new providers stayed away. Drivers in New Jersey pay the highest rates of any state, yet even good drivers have trouble finding coverage. Click here to see how anti-competitive reforms drove companies out of New Jersey. (PDF)
Realizing that the only way to improve the situation is to attract new companies, New Jersey’s Legislature has passed pro-competition regulation. Competition, lawmakers now realize, will stabilize rates for New Jersey's drivers.
Let’s learn from New Jersey’s mistakes
Unfortunately, while New Jersey has moved in the right direction, voices in the Texas Legislature are proposing a regulatory system very similar to the one that caused New Jersey’s problems in the first place. Some lawmakers are calling for rollbacks, which will only jeopardize the solvency of Texas insurers and dissuade new companies from entering the market. Texas has also had dozens of companies leave the state and over-regulation does nothing to encourage them to return. Texans deserve better.
Texas needs to attract new companies to the state and encourage competition. New Jersey consumers suffered for decades when lawmakers made decisions based on political pressure rather than sound public policy principles. Texas consumers shouldn’t have to do the same.
Insurance
reform:
Don’t just get mad, get it right.
Texas
Coalition for Affordable Insurance Solutions
TCAIS
has solutions - 7 guidelines to build a better
insurance system in Texas. To learn more visit:
www.TCAIS.org/solutions/guidelines_regulation.php
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