Rates, Scores & the WTC

By | March 24, 2003

It looks like changes are underway in the Texas homeowners market. The legislature seems determined to bring down rates one way or another, and Insurance Commissioner Jose Montemayor’s preliminary report—developed from data provided by homeowners insurers—showing rates as being too high, by as much as 25 percent in some cases, will certainly add fuel to lawmakers’ fire to do something to lower their constituents’ premiums. As will the recent poll conducted by Scripps Data Center that revealed 84 percent of Texans think the situation with homeowners insurance is serious. Another pessimistic 57 percent believe that legislators will fail to enact measures to effectively lower homeowners rates before they adjourn in June. In the next issue of Insurance Journal, we’ll take a look at the homeowners market to see where we are now and where we’re heading.

The majority of Texans also want a ban on the use of credit scoring by insurers, according to the Scripps poll. The study found that 67 percent of those polled want to prohibit insurers use of credit histories, but that seems unlikely since legislative movers and shakers like Lt. Governor David Dewhurst and Senator Troy Fraser, head of the Senate Business and Commerce Committee, have admitted favoring regulation of credit scores rather than a total ban. The independent study of automobile insurance data, conducted by the University of Texas’ Bureau of Business Research and commissioned by the legislature, reveals a strong correlation between consumers’ credit scores and their claims histories, which is what insurers have been saying for some time. So, the insurance companies may win at least a partial battle in the current legislative session when it comes to credit scoring.

In this issue, Charles Boyle walks the streets of lower Manhattan to report on the plan to rebuild World Trade Center, its importance to New York and the country as a whole, and the hurdles that have to be surmounted before resurrection can begin. The legal wrangling between Larry Silverstein and a variety of insurers, including a high profile group led by Swiss Re, goes on. And as Boyle found out, the outlook for settlement is bleak with the posturing on all sides leaving little or no room for compromise.

Rounding out this edition of IJ, Joseph Petrelli of Demotech Inc., examines the private passenger automobile insurance environment, taking a hard look at how the economy may be forcing insureds into the sub-standard market. Jill Bookman of American Collectors Insurance makes a case for the power of collector cars in expanding an agent’s book of business. Staff writer Kevin B. O’Reilly discovers that some agencies are hooking up with “friendly” competitors, forming cooperatives and clusters in order to strengthen their bottom line. And there’s much, much more—top 25 workers’ compensation carriers; how to manage claims; our annual workers’ comp directory; the list goes on …

Let us know how we’re doing. Fax back our “report card,” you can find it on page 10, or simply e-mail me at sjones@insurancejournal.com. I’d love to hear from you.

Topics Carriers Homeowners

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