Working for the people of Texas

New legislation is getting a handle on homeowners insurance.

by John Smithee   I want to congratulate Texas REALTORS®. You are one of the few groups in the state working to pass legislation that’s in the best interests of the public. That’s why I was proud to sponsor SB 14 in the House. The legislation you campaigned so hard for during the 78th Legislature is the first meaningful reform to a homeowners insurance situation that had gotten out of hand.

The purpose of the bill is to ensure that Texans can be confident they are getting a fair shake and paying a fair rate for homeowners insurance. Recently, the Texas Department of Insurance ordered many companies to reduce their homeowners insurance rates. Now, many Texans are wondering when and how these reductions will affect them.

For starters, the TDI ordered most of the top 32 insurance companies writing policies in Texas to reduce their rates as much as 31%. Although these mandated reductions are subject to appeal, many insurers have decided not to appeal the orders.

Premium reductions will vary and are based on actuarial justifications for each insurer. The reductions took effect Sept. 7 and will apply to all new and renewal policies that become effective on or after that date.

Companies that appeal and lose will have to reduce their rates retroactively to Sept. 7. Policyholders with those companies will receive the reduction either through a refund check or as a credit on next year’s renewal.

As always, consumers can shop for homeowners insurance by getting quotes from several agents or companies. When comparing rates, homeowners should ask about the type of policy being offered by the company. Soon, an updated rate guide will be available at www.tdi.state.tx.us. The reason to ask about policy types is that there are a number of different policies being offered. Insurers should have coverage comparisons to assist in understanding the coverage provided. Also, a comparison chart is available online at www.opic.state.tx.us/hoic.php.

Whether shopping around or sticking with a current insurer, consumers can lower their costs even further by asking about available discounts. Homeowners may be eligible for discounts or lower premiums for things like an impact-resistant roof, security system, automatic fire-sprinkler system, multiple policies, a newer home, a good claim history, or by increasing the deductible.

Homeowners whose policies have been cancelled can look online for help in finding new coverage at HelpInsure.com or by calling 866/695-6873. People who are declined coverage by two or more licensed companies currently writing homeowners insurance in Texas may be eligible for coverage provided by the Fair Access to Insurance Requirements (FAIR) Plan, accessible at TexasFAIRPlan.com.

SB 14 now provides limitations and prohibitions regarding the use of credit scoring and requires insurers to file their credit-scoring models and other credit-scoring processes with the TDI. Beginning Jan. 1, an insurer must provide disclosures to consumers, including whether credit information will be obtained and used for insurance scoring.

Finally, a company may not deny, cancel, or fail to renew a policy for personal insurance based solely on credit information without considering any other applicable underwriting factors. There will also be numerous restrictions on unfair use of credit history.

Be sure to tell your clients and customers about these changes. And be proud of your role in helping them come about.

John Smithee is state representative for District 86. He is chairman of the House Insurance Committee.

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