Insurance Companies Skimpy on Claims, Report Says
Nonetheless, the authors report, premiums continued to rise in 2004, leading to considerable overcharges to consumers homeowner policyholders were overcharged by an average of $600 per insured home, while auto policyholders overpaid by nearly $200 per vehicle. "The impact of these overcharges ripples through the entire economy," reads the report, "as consumers gave insurers $4 billion in profit most of which left the state instead of spending that same $4 billion on goods and services in Texas that would dramatically boost the Texas economy." (To read the entire report, go to www.texaswatch.org.)
The new numbers have prompted at least one lawmaker, Forth Worth Democrat Lon Burnam, to file new legislation aimed at reforming last session's insurance reform package. HB 3398 would do away with the so-called file-and-use system of rate regulation codified by lawmakers last session, and replace it with a prior approval regulatory scheme. The file-and-use system allows insurers to file proposed rates with TDI and then apply them immediately, offering TDI a limited opportunity to challenge them. Prior approval, instead, requires insurers to file proposed rates and then wait for the thumbs-up from TDI before charging those rates to consumers. In 2003, the insurance lobby scoffed at that idea, claiming it would hobble their ability to stay competitive. Over the vociferous protests of consumer advocates, lawmakers went with the file-and-use. The results as suggested by the recent Texas Watch report are "pretty damning," said Burnam spokesman Colin Leyden. Burnam has asked House Insurance Committee chair, Rep. John Smithee, R-Amarillo, for an immediate hearing on the bill which is, for all intents and purposes, a repackaging of former Dallas Democratic Rep. Steve Wolens' 2003 reform proposal but Leyden says the bill "probably won't get it." Nonetheless, Burnam is determined to keep the issue on the front burner. "These are democratic issues, and we're not going to go through a session without filing it," Leyden said.