The Texas Insurance Scam of the 21st Century

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The Texas Insurance Scam of the 21st Century. (audio) A weekly commentary on KPFT in Houston Texas concerning consumer issues. The Consumers Corner by John Cobarruvias.

This weeks commentary is on insurance rates in Texas. The commentary begins at 21:39.

http://www.kpftx.org/archives/kpftsignal/mp3/050315_173002news.MP3

Text below:

Texas #1 in home Insurance rates. Again.

Last week Forbes Magazine released a study with Texas ranked #1 with the highest insurance rates in the nation, 25% more than 2nd place Lousiana. During the last State elections, Texans were promised insurance rate relief, and yet over the last three years our rates double, tripled and our policy coverage was reduced.

So what happened, and what are our elected officials doing about it?

In 2001 the Texas Department of Insurance or TDI, held toxic mold hearings across th e state. After hundreds of homeowners pleaded for help, the commissioner relieved the insurance industry from mold damage, yet not one single penny of rate reduction was provided to consumers.

In 2002 insurance became a campaign issue with promises of lower rates yet the TDI continued to cave to the insurance lobby by allowing the use of HO-A policies. These policies removed foundation, water, and sewer damage. And yet again, not one single penny of rate reduction was provided to consumers.

In 2003 the Texas Legislature lead by Houston’s Senator Mike Jackson, passed massive insurance reforms. Under the leadership of Houston’s Representative Joe Nixon they also passed wide sweeping tort reform and limited medical malpractice awards to only $250,000.

The TDI again caving to the insurance industry, allowed the use of credit scoring, which insurers use to increase rates based upon a policyholders credit history. And again after all of these reforms, not one single penny of rate reduction was provided to consumers.

To add insult to injury, Forbes Magazine also reported that State Farm posted a $5.3 billion dollar profit for 2004. And the Washington Post has reported after analysis of the last 15 years of medical lawsuits, the medical malpractice crisis created in 2003 was nothing more than a myth.

So after three years of fighting on behalf of the consumers, we got two black eyes. Higher rates and less coverage. In short, we got ripped off, swindled, cheated, conned, deceived. Call it what you want, but in the end, the consumer, got it in the end.

And what are our elected officials doing about this? Unfortunately, not much.

Senator Mike Jackson, who filed the insurance welfare bill on behalf of the insurance industry, has filed Senate bill 14 that would penalize insurance companies if they raise their rates excessively. This bill is about three years too late and does nothing to reduce the current excessive rates.

House Bill 23 with wide support from consumer groups will finally ban the use of credit scoring. Credit scoring was overwhelmingly banned in the house in 2003, but was removed in Senate conference committee. It is hoped this bill will pass against any veto threat.

So three years of insurance reform gave Texans higher rates, less coverage, no mold, foundation, water or sewer damage, and absolutely no benefit from tort reform or medical malpractice reform based upon a malpractice myth.

Representative Larry Taylor of League City, an insurance agent, as well as a member of the House Insurance Committee recently said at a town hall meeting, “At least we are going in the right direction”.

If higher rates and less coverage is going in the right direction, I would hate to see what going in the wrong direction would be like.