Senate passes Texas Department of Insurance Sunset Bill
Senator Glenn Hegar says Senate Bill 1007 provides Texas Consumers with Increased Protections from Unscrupulous Insurance Companies
(AUSTIN, TEXAS) — State Senator Glenn Hegar announced today that the Texas Senate has passed Senate Bill 1007 – the Texas Department of Insurance Sunset bill – which provides new consumer safeguards and significantly strengthens the Department of Insurance’s ability to protect Texans from unscrupulous insurance carriers. The bill, which passed by a margin of 18-12, was the result of an almost two year intense review of the state’s Department of Insurance by the Sunset Advisory Commission. The bill also increases protections for Texas homeowners and Texans receiving their health insurance through Preferred Provider Organizations (PPOs). Hegar serves as the Commission's Vice Chairman.
"Senate Bill 1007 is good public policy that protects Texans and demands insurer accountability," Senator Hegar said. "The Texas Senate had no choice but to pass this important bill – not doing so would have been bad for Texas consumers. I am sorry that some of my colleagues were willing to let insurance companies continue doing business as usual for another two years," Hegar added.
Hegar said that the safeguards contained in the bill had been adopted by the members of the Sunset Advisory Commission in October 2008 after a series of public hearings. "The work of the Texas Department of Insurance affects every Texan and Texans demanded that we implement significant reforms that provide greater transparency and consumer protections for Texans. This bill delivers," said Hegar.
Senate Bill 1007 significantly reforms the current law for homeowners' insurance. Most notably, the bill ensures that the Insurance Commissioner has clear authority to punish irresponsible and rogue insurance companies for excessive rates and financial insolvency. Unlike other proposals offered this session, this bill better protects Texas taxpayers by not limiting the Commissioner's authority to act to a particular group of insurers; instead, the bill allows the Commissioner to punish any insurer who breaks the rules and violates the trust of Texas homeowners.
Senator Hegar said that Senate Bill 1007 also improves existing law by streamlining the process for creating and implementing sanctions against insurers. More specifically, the bill adds a new penalty, including a significant interest penalty, for insurance companies that unjustly charge consumers excessive rates.
"Hardworking Texans deserve protection from unscrupulous insurance companies that overcharge homeowners and refuse to issue back to them immediate refunds and discounts," said Senator Hegar. "In addition to these important safeguards, Senate Bill 1007 requires title insurers to prove they are solvent and can meet their obligations to consumers."
"Such consumer protections are more important than ever as consumers face a combined housing and economic crisis," Hegar said. "It is our responsibility to develop a common sense regulatory system that guarantees the market is reliable and that insurance companies fully pay their claims. This is particularly true for insurers who provide homeowners coverage and we crafted our bill with these concerns in mind."
Senate Bill 1007 also prevents Texas from returning to failed public policies, including government-mandated and standardized homeowners’ insurance forms. Just a few years ago, two poorly drafted words in the state mandated forms created years of litigation over the mold crisis that led to sky-rocketing insurance rates for Texas homeowners.
"Texas homeowners have suffered at the hands of a state-mandated form once before – watching helplessly as both their insurance rates and frivolous lawsuits increased dramatically," Senator Hegar said. "I firmly believe that Texans need to know what is covered under their insurance policy, and I stand committed to ensuring that insurance policies are easy to read and understand. Government-mandated forms, however, are not the answer, Hegar added."
Only one other state has a standard, government-mandated form.
In an effort to extend protections to the health insurance arena as well, Senate Bill 1007 requires certain health insurance plans, so-called PPOs, to register with the Texas Department of Insurance. This change to current law helps set the stage for increased oversight, giving the department the ability to identify and monitor health insurers.
"The registration requirement contained in Senate Bill 1007 is an important first step towards improving access to healthcare in Texas," Hegar said. "Although the Sunset recommendations did not address healthcare coverage, I am committed to building upon this reform in coming months to find new ways to assure quality healthcare for Texans."
Senate Bill 1007 also prevents health insurers from shirking their responsibility to consumers by preventing companies from making last minute cancellations and rescissions.
Senator Hegar's bill also includes provisions to increase public representation on the Texas Windstorm Insurance Association (TWIA) board; improve the inspections conducted by the State Fire Marshall's Office; require insurers to report how often and how quickly they pay claims; and to allow consumers to save time and money by accessing online tools to renew their insurance policies.
Hegar said that the bill now goes to the Texas House of Representatives for their consideration.
"I look forward to working with my colleagues in the Texas House to ensure that the consumer protections in Senate Bill 1007 are maintained." Senator Hegar said.
"We are in a difficult time in our nation’s history and Texas consumers face uncertainties in the economy and in the job and housing market. Texans’ fear about their insurance coverage and the stability of insurance carriers are at an all time high as a result," Hegar said. "I believe that Senate Bill 1007 goes a long way in helping to reduce those fears and when passed into law, will help instill a sense of confidence that the Texas Department of Insurance has the tools and resources needed to protect Texas consumers and their families," Senator Hegar concluded.