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June 21, 2005 CONSUMERS WIN AS 79th LEGISLATURE MAKES POSITIVE STRIDES IN INSURANCE COMPETITION Consumers are the winners as the 2005 Texas Legislature made positive strides in the insurance marketplace, allowing competition to continue to strengthen and addressing important issues for Texas consumers and insurers. This legislature sustained the move toward a competitive insurance market, which has led to more companies coming into Texas and lower insurance rates for policyholders. The Legislature passed important legislation to address:
Sound public policy is critical to the emerging competitive insurance marketplace. Reforms passed in 2003 and additional measures passed by this Legislature create the groundwork for competition to flourish. TCAIS looks forward to working with our elected officials, the Texas Department of Insurance, and Texas consumers to ensure that progress continues. Signs of progress have already appeared. The lion's share of the reforms passed in 2003 just went into effect on December 1, 2004, only six months ago. Even in the early stages of reform, the promise of this new regulatory structure, called "file and use," has attracted nearly 50 new insurance companies to Texas and led existing insurers to offer significantly more policies and choices than in prior years. "File and use" allows insurers the flexibility to offer a variety of products, prices and services, encouraging competition among companies. Under the old rules, Texas insurers couldn't really compete because government mandates forced them to essentially offer one-size-fits-all policies for similar prices. As a result of the reforms and corresponding marketplace activity, consumers are beginning to see discounts in their homeowners and auto insurance premiums. In some cases, insurers filed rates with the Texas Department of Insurance reflecting rate reductions for Texas homeowners of up to 14.5%, according to the Associated Press. Similar progress is evident in the auto insurance marketplace as reported recently by the Fort Worth Star-Telegram: "The effects of auto insurance deregulation are starting to be felt by Texas consumers as insurers begin to offer more choices and bigger discounts on their polices." The paper went on to say "More than ever, it's become worthwhile to shop around." New companies in Texas, rates that have stabilized or even dropped, and expanded choices are all definitive signs of progress and budding insurance competition. With public policies in place to help the marketplace flourish, Texans will continue to reap the benefit. TCAIS will continue to work with regulators and Texas lawmakers in the pending special Legislative session on ensuring a stable, competitive auto and homeowners insurance marketplace that will best serve both buyers and sellers of insurance. Sincerely, |
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