By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – After two years of unregulated rising homeowner rates, the state Legislature is finally waking up out of their fog and getting close to taking action. I'm Maxine Shapiro with KERA Marketplace Midday.
Yesterday, some state Senators announced an agreement to regulate the homeowners' insurance market. No details yet, but here's the outline:
Premiums for homeowners' insurance would be cut by 12 to 15%. If you're one of many homeowners whose insurance went up by 200%, you might be tempted to say, "Keep your measly 12%." On an average, homeowners' insurance went up 55%.
Then there's the issue of using credit scoring to determine rates. The state is suggesting that insurers curb the practice. Companies would be required to make public the information used to determine a credit score. Some Senators agree with consumer groups that this is an unfair and discriminatory use of credit information.
Finally, Lt. Governor Dewhurst is just pleased as punch; insurers will need "prior approval" for any new rate increase. By definition, prior approval means getting a rate approval before it can be implemented. But that really isn't what the new bill is offering. Instead, the Texas Department of Insurance would have 30 days to reject an increase before it would automatically go into effect. The commissioner could then ask for an extension of 30 days to review it before it goes into effect. Clearly, this is not prior approval. If the state is bogged down with hundreds of requests simultaneously, it might not get to all of them, and then the increases will go into effect - automatically.
No doubt about it - insurance companies got hurt by the cost of mold and water-damage claims. But that's what insurance is about. As Rob Schneider of "Consumers Union," publisher of Consumer Reports, told me this morning, "When there are no hurricanes or mold and the companies make an excess of profit, we don't ask for our money back." And, as you know, mold is no longer covered by most Texas Insurers. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.