The Politics of Mold

The politicians have gotten into the fray. Sounding off on the twin issues of severe rate hikes for homeowners insurance and the scourge of mold/water damage claims that insurers insist are threatening their very existence in the state, several candidates for governor of Texas are saying they’re ready to do something about the problem.

In an editorial commentary that appeared in the Feb. 17 edition of the Austin American Statesman, and presumably other newspapers across Texas, Gov. Rick Perry called for efforts to stem the rising tide of homeowners insurance costs. Perry stated that the rate hikes, some of which represent 200 percent increases, can’t be solely attributed to recent increases in mold claims, despite the insurance industry’s assertions to the contrary.

He noted that the rate increases are forcing consumers to either pay the higher premiums, for which they are getting less coverage, or go without comprehensive homeowners insurance. Perry also decried the fact that the situation puts a strain on the state’s 230,000 independent insurance agents, leaving them with fewer product offerings and little response to their clients’ complaints.

Perry stated that as a conservative, he dislikes having to consider increased state regulation of insurance companies, but warned that the state will step in if those “companies do not correct themselves soon.”

Tony Sanchez, aiming to move into the governor’s mansion as a Democrat, has called for major property insurance reforms. “We need to put consumers on a level playing field with insurance companies,” said Sanchez, in a statement. “Our current system is dramatically unfair to consumers, and as Governor I’m going to fix it.”

Reforms proposed by Sanchez include new state laws that would force insurance companies to justify any proposed premium hikes—especially insurance companies that are not currently regulated. Sanchez’s campaign literature stated that he would also work to pass laws to requiring all insurance companies writing policies in Texas to offer regulated HO-B policies to Texas homeowners and close current loopholes that allow companies to force policyholders into unregulated companies.

A spokesman for Dan Morales, also running for the Democratic spot on ballot, told the Statesman that “the former attorney general has a long history of ‘suing numerous insurance companies for rate abuse.'” He also indicated that as governor, Morales would appoint an insurance commissioner from a consumer advocacy background.

With the three major gubernatorial candidates coming out in favor of consumer-oriented reforms to put a lid on rising rates for residential insurance policies, it seems certain that the winner in November will be looking closely at current practices of homeowners insurers in the state.

Lacking a crystal ball, it’s difficult to say what that actually means for the insurance industry in Texas, but it does indicate that come November, insurers and consumers alike should be expecting changes in the way homeowners insurance is offered and priced in Texas.

Meanwhile, the Texas Department of Insurance has invited consumers to share their homeowners insurance stories or to let the department know of perceived unfair treatment by insurance companies. Saying consumer input would help “put the brakes on runaway homeowner’s insurance costs,” TDI asked consumers to write to “Homeowner’s Stories” c/o Texas Department of Insurance Consumer Protection Division, P.O. Box 149091, Austin, Texas 78714-9091, or to call the consumer protection hotline at (800) 252-3439.

Topics Carriers Texas Homeowners