Texas Legislature can ensure
that insurance crisis is ended

     Texas is in the midst of an insurance crisis that is spiraling out of control, and addressing the various proposals for correcting the problem will be the No. 1 task of the 2003 Texas Legislative Session, which convenes in mid-February.
      Major reform of insurance industry practices in Texas are needed to get grossly inflated premiums for homeowner's coverage under control and institute fair, uniform underwriting practices.
     There will be numerous bills introduced during the 2003 Legislative Session that address the insurance crisis, but those that will best serve Texas consumers and families and exert the proper sort of control over the insurance industry will address key issues in the following ways:

     Insurance rates should be regulated through a prior-approval or benchmark system. These two methods are the only ways to control insurance rates before they are passed on to Texas consumers.
Systems such as the "file and use" system being promoted by insurance industry lobbyists would allow regulators to step in only after unfair rates had been charged to homeowners and drivers.
     Also, all insurance coverage should be regulated.
     In the past 10 years, insurance companies have exploited loopholes that allowed them to move customers from rate-regulated companies to non-rate-regulated companies. As a result, 95 percent of the homeowner's insurance market became unregulated, leaving homeowners subject to unreasonable and unfair rate increases.

     More and more, insurance companies have been using unfair underwriting criteria, such as credit scoring, to deny  issuing coverage or drastically increase the rates of a consumer who is already covered.
     As a result, many Texans with good driving records and no insurance claims are finding their long-time auto insurance company has drastically increased their rates. Many other Texans  who have filed water damage claims on their homes are losing their homeowner's insurance, and they cannot find new coverage or are being forced to pay astronomical rates for new insurance.
     Credit scoring, in which an insurer uses a person's credit record to set that person's insurance rates, should be completely banned by the 2003 Legislature. Insurance companies have never shown proof of a cause-and-effect- relationship between a credit score and an insurance risk.
     These unfair practices tend to discriminate against senior citizens, racial minorities, small business owners,, people with little or no credit, and victims of identity theft.