Senator Glenn Hegar Responds to Questionable Lawsuit Filed by State Farm Insurance Company against the Texas Department of Insurance
Chairman of the Sunset Advisory Commission demands that Insurance Companies Disclose Rational for Rate Increases to the Texas Public
Austin, Texas — Today State Senator Glenn Hegar (R, Katy), the Chairman of the Texas Sunset Advisory Commission, responded to a questionable lawsuit filed by State Farm Insurance Company against the Texas Department of Insurance (TDI). State Farm recently filed for a rate increase with TDI on its homeowner insurance policies in Texas and in turn, TDI posted State Farm's rate increase filing on the agency's website. Yesterday, State Farm filed a lawsuit to prevent TDI from posting their rate increase filing on the agency's website by alleging that the information is highly privileged and confidential. TDI, on the other hand, contends that such information is subject to public disclosure and should be made available to Texas consumers.
"I have long supported a company's ability to protect proprietary and confidential information, however the need for confidentiality does not in any way create an automatic trump card that insurance companies can use to deny their customers and other Texans information about the merits of a rate increase whenever they deem it to be convenient," said Senator Hegar.
"Insurance companies are regulated and licensed by the State of Texas and Texans have an absolute right to full transparency and disclosure when an insurance company is attempting to increase rates on its customers. When a company raises rates on its policyholders, those policyholders have the right to know why their rates are increasing," Hegar said. "I am in no way proposing additional regulations, rather I am demanding that consumers be informed when they are being asked to pay more for a product they have previously purchased at a different rate so that they can fully understand the reason for the proposed increase. Armed with that information, a policyholder can choose to keep their policy or shop for a lower rate," Hegar continued.
"As the Chairman of the Sunset Advisory Commission, I fully understand that the highest obligation of any Texas insurance company is to guarantee fiscal soundness and the ability to pay claims quickly when catastrophic events occur or natural disasters strike," said Senator Hegar. "While Texas is a wonderful place to work, live, and raise our families, our state usually leads the nation in weather-related losses and last year, Texans suffered $2.5 billion dollars in insured losses. It is critical that insurers have the financial ability to make good on the claims associated with those losses," Hegar added.
"It is imperative that the victims of catastrophic hurricanes, hailstorms, floods, and tornadoes be paid in a timely fashion and we must demand that insurance companies guarantee they have enough money on hand to pay consumers for the damage that these natural disasters bring. That reality does not, however give insurance companies doing business in Texas an unfettered right to raise rates without explanation to their policyholders. Every insurance company that chooses to do business in our state has an absolute obligation to validate their rate increases to TDI and to Texas consumers, whether they like it or not. I will not allow them to hide behind the curtain of confidentially when their actions impact their rate payers and Texas consumers," Hegar declared.
"Texans deserve a stable and competitive insurance market and insurers who can quickly and fully pay claims to homeowners in the wake of a tragedy. Likewise, Texas consumers deserve straight forward answers about their insurance policies and the costs of those policies and I believe that insurance companies must provide full disclosure to TDI and consumers each and every time they attempt to raise rates on their existing policyholders," Senator Hegar said.
Hegar said that over the past decade, the Legislature and TDI have taken important steps toward increasing consumer choice and education. Nevertheless, he said that in the 21st Century, Texans expect, demand, and deserve the highest level of consumer information readily available at their fingertips. "We must ensure that TDI operates a state-of-the-art and user friendly website to provide Texas consumers with the most up-to-date information about the fiscal strength and viability of insurers and any rate increase requests filed with the department.
"I strongly encourage Texans to visit www.helpinsure.com, which allows insurance consumers to go online and compare insurance prices company-by-company," Hegar said. "Texans can get a variety of individualized quotes for homeowner's insurance and select the lowest rate or the plan that best fits their needs. Thanks to a recently added function, consumers can also search for insurance agents that are available to help them with their purchase," the Senator added.
"I have been, and will continue to be, a strong advocate for empowering Texas consumers," Senator Hegar stated, "Therefore, when insurance companies doing business in our state unnecessarily attempt to keep information away from the public, I must stand in opposition. Texans need access to all of the facts in order to make well-informed decisions about what company they will trust with their hard-earned dollars. They expect it and they deserve it," Hegar concluded.