The past year has been a difficult one for homeowner’s insurance agents and consumers. Providers have faced spiraling claims costs, while consumers are outraged by rate hikes—leaving agents in the middle to handle the frustration. When the insurance market is failing providers, consumers and agents, I believe it is time for a change.
My 30 years of experience in business have taught me that a market works best when it is open to fair competition. With only three providers left in the homeowner’s insurance market in Texas, consumers are left without meaningful choice among policies and losses from the upturn in claims have been concentrated onto a few companies. We need to create real competition in the market by increasing the number of providers in Texas and providing a level playing field for them to compete on.
Punishing insurance companies won’t decrease rates and won’t help consumers. It will just push more providers out of the Texas market, putting agents out of work and leaving our homes uncovered. That is why I will push for a balanced and thoughtful overhaul of our insurance regulations that meets the needs of all stakeholders.
The first step will be to bring all insurance companies under the same regulatory system and eliminate the Lloyd’s loophole through which 95 percent of homeowner’s policies are exempt from regulation. We must be careful in shaping that transition to ensure that we do not lose more policy providers, but I know with commitment we can do the job right.
I will instruct the Texas Department of Insurance to develop criteria for standardizing insurance forms and policy comparisons. Creating standardized forms and side-by-side comparisons for policies will reduce complaints and allow agents to offer consumers a genuine, informed choice in coverage.
Insurance rates in Texas have rocketed to the highest levels in the nation and we need to correct that. The current rates threaten to price many Texans out of the market, cutting agents’ businesses and playing havoc with our real estate market. At the same time, it is important to acknowledge that insurance rates are prone to fluctuation with natural disasters and other factors beyond providers’ control. My plan will set effective limits on rates, while retaining a “zone of reasonableness” for providers to shift prices based on market activity.
It is my commitment to return common sense to the homeowners’ insurance market in Texas. We need to increase the number of providers to foster competition and offer consumers real choice. We need to bring all policies under a single regulatory structure that creates a level playing field for providers and agents to operate on. We need to provide consumers with simple, straightforward comparisons of policies and the ability to make informed decisions. And we need to bring rates back down so that homeowners can ensure their property.
A competitive, honest market is the right solution for agents, providers, consumers and Texas. Together, I know we can make it a reality.
Tony Sanchez is the Democratic candidate for the office of the Governor of Texas.
Editor’s note: The Republican and Democratic gubernatorial candidates were asked to provide their views on the state’s insurance market. At press time, only Sanches had responded.