Texas Gov. Rick Perry signed Senate Bill 14, the recently passed insurance reform legislation, during a signing ceremony at a construction site in Temple. According to a statement released by the governor’s office, his signature on the bill ushers in “sweeping insurance reforms” that will “lower skyrocketing homeowner rates, end deceptive credit scoring practices and enforce tougher regulations on the industry.”
“This comprehensive reform measure will stabilize the home and auto insurance market, rid the insurance industry of fraudulent practices and ensure Texans have access to fair rates offered in a competitive market,” Perry said. “For some Texans that will mean significant rate discounts. For all Texans it will mean rate practices that are transparent and fair.”
Early on in the 78th Texas Legislature, Perry declared homeowner insurance reform an emergency issue. Lawmakers passed three pieces of legislation in an effort to stabilize the market: SB 14; House Bill 329, which protects consumers from unlicensed mold remediators and prevents repaired mold claims from being a factor in insurance underwriting; and Senate Bill 127, which requires the licensing of public adjusters and gives the Texas Department of Insurance (TDI) the authority to require more prompt response to water damage claims.
The governor had urged legislators to close loopholes in Texas law that allowed a handful of companies to dominate the state’s insurance market. Currently about 95 percent of homeowners insurance policies in Texas are written by unregulated companies, and almost two-thirds of the market is held by three companies.
“Senate Bill 14 provides that rate standards will apply to all homeowner and auto insurance companies with no exceptions, and no loopholes,” Perry said. “All future rates must be fair, reasonable and justified. If future rates are unfair, the Department of Insurance now has the authority in law to reject excessive rates out of hand and force insurance companies to offer lower rates.”
Under the provisions of SB14, some insurance companies may begin implementing rate reductions for homeowner policies within 60 days. TDI must review the homeowner rates of all companies operating in Texas within 90 days.
Other provisions of SB14 include:
· Allowing companies more flexibility to offer more coverage options, making it easier for consumers to find policies that best suit their needs at the lowest possible price. The alternative forms must be approved by the insurance commissioner.
· Providing TDI with the authority to offer rate and filing flexibility to small companies to stimulate market competition in Texas and increase consumer options in underserved areas.
· Limiting the use of geographical factors to determine rates.
Joining Perry at the bill signing ceremony was Rep. John Smithee, House sponsor of SB14.
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