AUSTIN – At its meeting tomorrow, the Sunset Advisory Commission should embrace free-market insurance reforms that reduce costs to both consumers and taxpayers.
“Excessive insurance regulations raise costs for insurers and consumers, and drive insurers from the state,” said Foundation policy analyst Drew Thornley. “Stripping the Insurance Code’s conflicting provisions and arbitrary standards will make Texas a more attractive place to do business. More companies will return to the state, and consumers will have more options to find affordable rates.”
The Commission is scheduled to vote tomorrow on staff recommendations regarding the Texas Department of Insurance. The Foundation urges the Commission to endorse:
– A complete transition to a file-and-use regulatory system for homeowners’ insurance rates; – A narrower definition of the types of supplementary information that insurers are required to submit with their rate filings; – A clearer definition of the circumstances under which the state insurance commissioner may place an insurer under prior approval; and – A reform agenda for the Texas Windstorm Insurance Association so that it functions as a true “provider of last resort” rather than a first option for windstorm insurance coverage.
“Consumers and insurers are perfectly capable of negotiating what needs to be covered and how much coverage should cost,” Thornley said. “As we lower regulatory costs for insurers, consumers will reap the competitive benefits of more companies writing insurance in the state, particularly along the coast. The more companies that write insurance in Texas, the more consumers are protected, because consumers have more alternatives to get a better deal on their rates.”
“The Sunset staff report does a very good job of setting out the path to a robust and competitive Texas insurance market,” Thornley concluded. “The Texas Department of Insurance will be more effective if it is re-focused on making sure that insurers have the resources to cover the risks they insure and follow through on what they promise to cover.”
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.
Drew Thornley is a policy analyst at the Texas Public Policy Foundation and the co-author of the recent report, “Consumers, Competition, and Homeowners’ Insurance: A Sunset Report on the Texas Department of Insurance and the Office of Public Insurance Counsel.”
The Sunset Advisory Commission is a legislative advisory committee that reviews the policies and programs of more than 150 government agencies once every 12 years. It will meet at 9 a.m. on Wednesday, September 24 in the Texas Capitol Extension, Room E1.030.
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