Texas Gubernatorial Hopefuls Target Homeowners Insurance

Two Texas gubernatorial candidates—current Republican governor, Rick Perry, and Tony Sanchez, who’s seeking the Democratic spot on the ballot next November—announced separately that they want to investigate and contain rising homeowners insurance rates in the state.

According to the Austin American Statesman and the Governor’s Office, Gov. Perry deemed the rate increases unacceptable, and asked state Attorney General John Cornyn to investigate the marketing conduct and practices of Texas’ three largest carriers, Farmers, Allstate, and State Farm. He is also urging state insurance commissioner Jose Montemayor and the Texas Legislature to consider new laws to address the issue.

“In recent months, there have been troubling trends in the homeowner’s insurance market in Texas,” the governor said, in a statement. “In too many cases, homeowner’s insurance is getting more expensive, coverage is becoming harder to get, and instead of more companies stepping up to meet the demand, some companies have stopped writing comprehensive policies altogether. It’s time for the homeowner’s insurance market to get a correction. And if the insurance companies do not do it, the state will do it for them.

“To make sure Texas consumers are protected, I am asking the Attorney General to investigate the market conduct and marketing practices of our state’s biggest homeowner’s insurance companies,” Perry continued. “I’m concerned that the big insurance companies may be misleading Texas families about the changes in homeowner’s coverage and costs.”

The Statesman also reported that Sanchez advocates a new system that would require carriers, especially those not regulated, to justify any proposed premium increases.

The Texas Department of Insurance is now administering market conduct and credit-scoring examinations, and the agency and the state legislature are considering various legislative options to get a grip on the problem. Those include: the adoption of national forms: a “file and use” rating system; and a prior approval rating system, which would require the commissioner to approve certain rate increases before customers are asked to pay.

Insurance industry trade group, Southwestern Insurance Information Service (SIIS), said it would welcome an inquiry into why insurance rates in Texas are rising. “Insurers have reported staggering…losses to the Texas Department of Insurance and anyone who takes the time to review that information should understand the financial crisis facing the insurance industry,” stated Jerry Johns, president of SIIS.

In a statement, Rita Nowak, assistant vice president of property/casualty at the Alliance of American Insurers, was less enthusiastic: “While I understand Gov. Perry’s empathy for his constituents, I would urge him not to jump to conclusions… The simple fact is that this situation was not of insurers’ making.

The American Insurance Association (AIA) said it shares the governor’s concern over rising costs. “We believe the best—indeed, the only—real solution is to deal directly with the underlying cost drivers which have gotten out of control,” stated Ron Cobb, AIA vice president southwest region. “These cost drivers include increased litigation and jury awards related to residential water damage and mold claims.”

Topics Carriers Texas Homeowners Market