According to the Independent Insurance Agents of Texas, the June 1 passage of the state’s insurance reform bill is a victory for consumers, insurance companies and independent agents. Gov. Rick Perry, who declared the insurance issue an emergency at the beginning of the session, is expected to sign the measure without delay.
IIAT President Andre Juneau and IIAT Executive Director David VanDelinder, in a joint statement, said ” We believe rates will come down under this new bill for two chief reasons: marketplace competition will increase and the state will begin implementing a new system of insurance regulation.”
Depending on the insurance company and rates a policyholder may have, Texas consumers can expect to begin seeing new, mostly lower premiums on homeowners insurance at their next renewal, as the new bill is phased in through the end of next year. Some parts of the bill will be implemented right away and others not until September 2004.
In the same measure, Senate Bill 14, lawmakers agreed to permit insurers to make limited use of credit information in setting premium rates. Essentially insurers may use credit information as long as it is not the sole criterion used in setting rates and is not used in discriminating against any group. Consumers will, for the first time, be given information about how their credit history relates to their insurance costs, arming them with the information they need to improve their credit and reduce their premiums.
Consumers may also find more coverage options available, especially in the area of water damage. One of the goals of this legislation is to offer consumers coverage options from which they can select to insure their homes. VanDelinder explained that consumers should not expect to see the return of broader coverage until insurers begin to see an improvement in claims costs from such losses.
The bill gives the insurance commissioner broad powers to make rules and impose regulations affecting homeowners insurance in Texas. Regulators will be empowered to determine whether rates and forms are fair through a new system of rate filing.
IIAT believes the bill will encourage companies currently not writing insurance in Texas to take a second look at the second largest insurance market in the country “now that the legislature has passed a bill that creates a system similar to that used in other states,” said Juneau.
“We applaud not only the Texas House and Senate in giving rate and form control back to the commissioner, but also the governor for demanding that Texans be given access to homeowners insurance that is both fair and equitable.”
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