"A step forward for homeowners"

Canyon News (Canyon, TX)
June 15, 2003

How Texas Homeowners will make out with availability of insurance policies and competitive rates still is to be seen.

But with last week’s signing into law of reform legislation, Gov. Rick Perry and his Republican crew made good on their promise to do something about the state’s insurance crisis.

Texans for years have paid the highest rates in the nation, and those rates rapidly increased between the 77th and 78th legislative sessions. The reasons included the lack of regulation, competition and the rise of mold claims judged valid or bogus. State Rep. John Smithee, the Amarillo Republican who has been on the front lines of the insurance issue, said some companies overcharged customers as much as 25 percent. Many companies stopped renewing homeowner policies and/or writing new policies.

Republicans campaigned on the promise that this runaway horse would be corralled.

Well, at least the fence has been put up and a latch put on the gate.

The new legislation is intended to make companies more accountable for their rates. By the end of the month, companies will have to file new rates with the state’s Department of Insurance. The department now has more bite behind its bark; its commissioner can approve or reject rate increases.

In 90 days, new rates for Texans could be in effect.

Prior approval of rates will remain in effect until December 2004, when a file and use system would begin. The commissioner still would have the power to deny rate hikes that could be instituted. Companies then would have to issue rebates or roll credits into renewed policies.

Also helping consumers is that in most cases, companies will not be able to use a person’s credit history as an excuse to set higher rates.

This is a two-way street. Companies now are aware of the playing rules in this state and that they will be protected from lawsuits. Also, the smaller companies will be able to compete on a more level playing field with the larger firms. This should help more insurers do business in Texas. Competition is good for businesses and the consumer.

How much rates will drop is to be seen. Canyon insurance agent Randy Croslin expects rates to go down but said “there still is a lot of uncertainty.” He is worried that the commissioner has been given too much power, which could result in an immense amount of pressure.

But as an agent and a homeowner, simply addressing the situation is good news.
Smithee said relief and reorganization could be a two-year process, but we think that perhaps the bleeding has been stopped. For those of us who were running out of Band-Aids, that’s good news.