For Homeowners and Auto Insurance, Right Regulation is Right for Texas
For good reason, over the past few years debate has raged in our state and nation over the regulation of the financial sector of our economy. As Texans watch the ups and downs on Wall Street, and the collapse of large national financial firms, they are right to question the regulatory system that may have allowed such chaos.
Texas insurance regulation should not be linked to the uncertainty and instability in the financial, investment and lending markets. Interestingly, of all the corporate collapses, only one major insurer, American Insurance Group (AIG), was involved. Even more notable, regulators have determined that AIG’s insurance operations were the most stable part of its portfolio and represent the best assets of the company.
The resilience of insurance in a time of financial crisis is no accident. Insurance financial regulation has been firm, fair and focused for decades. Both regulators and insurers have embraced the idea that the most important attribute of an insurer is the ability to pay claims to its customers. The resulting body of law regulating insurer assets has led to general stability and limited insolvencies, even in these times of both financial and natural disaster.
In today’s economic climate, it’s important to understand the difference between rate regulation and financial regulation:
In the interest of consumers and companies, Texas needs to maintain its commitment to strong financial regulation and a market-based system for rates and policies.
We need to focus on regulation that ensures companies will meet their obligations, protects consumers from bad practices and unfair discrimination, and allows insurers to compete on price and product. Instead of chasing the short-sighted goal of artificial price fixing, we should stick with the goal of creating a well-regulated competitive marketplace that can handle our state’s tough climate efficiently and still attract companies and capital.
That’s not deregulation, it’s right regulation, and it’s right for Texas.
