By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – What a tumultuous time it's been for the Texas homeowner. Insurance premiums skyrocketed to the highest in the country. Insurance companies found every loophole in the book to keep regulators at bay. And finally two years later, a new compromise bill is signed. I'm Maxine Shapiro with KERA Marketplace Midday.
As the last chapter on the 78th Texas Legislature is written, a little footnote should be added. No one is happy about the bill revamping the way the state regulates homeowner insurance. Since 2000, insurance rates increased an average of 45 percent. Republican Senator Troy Fraser of Horseshoe Bay, who helped draft the bill, has said this could mean a rate reduction of 12 to 18 percent. And it would occur sometime this summer. Now you can see why consumer groups are raising their voices in frustration. A 45 percent increase and about a 15 percent decrease. Pretty ugly math. Both Texas Watch and Texas Consumers Union wanted a rate rollback.
Now for the issue of credit-scoring. Last month, when the House passed their bill, it banned the use of considering a person's credit history to determine rates. But it got watered down before the final passage. With an added set of restrictions, credit scoring can be used.
So here's how new regulations on rates work. The larger homeowners' insurance companies must file the new rates with the insurance commissioner within 20 days after the bill is signed. Within 40 days after that, the commissioner can either accept the rates or reject them as being too high. Smaller companies have a little more time.
From then on, when insurers want to raise rates, they must submit the request to the state. The commissioner has 60 days to approve or reject. If the insurance companies don't hear either way from the state, the hike goes into effect right away. And starting December 2004, insurers can file the increase and start charging it immediately.
Hmmm. Doesn't sound all that consumer friendly to me, either. I'm Maxine Shapiro with KERA Marketplace Midday.
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