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Bill would have insurance companies provide side by side comparisons to consumers

Wednesday, April 06, 2011
by Patrick Graves
Quorum Report

Texas consumers could get a clearer picture of how insurance companies change their coverages and premiums, and legislators may get a handle on insurance rates and practices under a bill headed to the Senate.

Senate Business and Commerce voted out CSSB 1655 by Sen. Kirk Watson (D-Austin) today. The committee substitute would require insurers to provide clients with detailed side-by-side comparisons of previous and renewed policies. Changes in coverages would have to be spelled out, and changes in premiums would have to be shown in dollars and percentages.

Clients could request copies of their policies denoting changes, and deductibles would have to be expressed in dollar amounts, not as percentages of coverage. Agents would have to notify customers and policyholders about helpinsure.com, the consumer information website operated by the Texas Department of Insurance (TDI).

The bill also would direct TDI and the Office of Public Insurance Counsel (OPIC) to study the Texas residential property and automobile insurance markets. The studies would have to examine regulatory changes that could lower rates sustainably over time and encourage mid-level and small companies to enter the market.

During the bill’s initial hearing Tuesday, Watson expressed satisfaction that the insurance industry was not opposing the compromise he had fashioned among the stakeholders. Spokesmen did voice some concerns, however, including their dislike of the policy comparisons. They also did not want to have to walk customers through helpinsure.com, which contains complaint information; the substitute would not require them to do so.

Texas has the highest homeowner insurance rates in the nation, which the industry largely attributes to costs associated with the state’s severe weather patterns. Nevertheless, Committee Chairman John Carona (R-Dallas) is on record that the rate issue must be resolved, perhaps this session. One company representative had some qualms about the aims of Watson’s proposed market studies.

“I don’t think the goal should be to lower rates,” said Bo Gilbert of USAA. “It should be to make insurance more available and affordable.”

Gilbert claimed that some consumers choose policies based on factors other than rates. He and other industry witnesses noted that companies already notify policyholders about changes and agents routinely explain rate increases to their clients.

Beaman Floyd of the Texas Coalition for Affordable Insurance Solutions said that customers are capable of making policy comparisons using declarations pages. Watson confessed that he, like most policyholders, probably couldn’t find his.

Fred Bosse of the American Insurance Association suggested that OPIC should be more active in consumer advocacy than regulation.

No one affiliated with the insurance industry registered against the bill, but Watson did not let their misgivings go unnoticed.

“They probably would spontaneously combust if they ever (were) in favor of a bill like this,” he quipped.