Houston State Representatives Garnet Coleman, Kristi Thibaut, Hubert Vo and Ellen Cohen joined calls in support of homeowner insurance reforms in the wake of recent rate increases by Texas’ largest insurance provider, State Farm Insurance. Last October, the company raised homeowner insurance rates by 8.8 percent. In May, the company will again increase rates by another 4.5 percent. The legislators agreed that the biggest problem is that the state insurance department does not have the authority to block rate hikes by insurance providers.
“As the Insurance Commissioner pointed out, one rate hike almost immediately after another is harmful to consumers,” said Representative Coleman. “I filed a bill that would have protected homeowners and kept this from happening. Governor Perry and his allies in the Legislature are content to let insurance companies run roughshod over homeowners during the worst recession in a generation.”
“The timing of this rate hike raises even more concern,” said Representative Thibaut. “Houstonians deserve some stability in this volatile economy. Texas already has a state agency in place that could easily protect consumers. We just need to give them the tools to do so.”
The Texas Department of Insurance (TDI) currently operates under a “file and use” system that only requires insurance providers to report rate increases to the department.
Representative Vo added, “Because TDI lacks the authority to block rate increases by insurance companies, Texas homeowners pay the second highest insurance rates in the country. These skyrocketing rates will add another burden and more stress to already struggling homeowners.”
Although numerous bills have been filed over the past several sessions to move TDI to a “prior approval” system and grant them the opportunity to approve or deny major rate increases by an insurance provider, the bills have not passed. Consequently, insurance companies are able to freely raise rates without meaningful department or public input.
“Our priority is to protect Texas families.” said Representative Cohen. “We can easily give the insurance commissioner the means to protect homeowners from egregious and continuous rate increases that hurt both homeowners and the economy.”
Representatives Coleman, Thibaut, Vo and Cohen are available for comment.