From the Office of State Senator Troy Fraser
For Immediate Release
June 13, 2002
Contact: William A. Scott - (512) 463-0124
Fraser Outlines Legislative Action on Homeowners Insurance
AUSTIN -- Troubled by allegations of market manipulation and fraudulent handling of mold-related claims, State Senator Troy Fraser said today he would author legislation next session granting the Texas Department of Insurance needed authority to regulate insurance rates on homeowner policies.
Fraser, chairman of the Senate Committee on Business and Commerce that handles insurance-related issues, said he will invite related testimony before his committee next month.
"Homeowners in Texas are being abused, and in some cases, insurance premiums are increasing as much as 200 percent. That is happening because a handful of companies dominate the Texas market that is essentially free from any kind of oversight," Fraser said. "Texas is headed toward a full-blown insurance crisis, and the Legislature needs to intervene to help restore competition in the marketplace."
"It's not a question of whether the industry needs rate oversight," Fraser said. "It's a question of to what degree we regulate so consumers can get a fair shake. That's not happening now and people are fed up."
Fraser, R-Horseshoe Bay, outlined his plans for legislative action at news conferences today in Temple, Brownwood, Abilene and Stephenville.
Preliminary data gathered during ongoing investigations of insurance market practices by various state and federal agencies indicates some companies may have deliberately delayed their investigations and handling of mold-related claims, or paid out excessive amounts with little or no investigation, Fraser said. The companies then cite the increase in paid claims to justify higher premiums to policyholders. "We've identified some other bad actors in the system, in addition to the insurance companies," Fraser said. "You have public adjusters and mold remediators, both unlicensed and uncertified, who are clearly contributing to the problem when it comes to mold claims.
"To go into the mold remediation business, all you need is a sign on the side of your pickup," he said. "Compounding the problem, you have plaintiffs lawyers throwing gasoline on the fire by conducting "Mold is Gold" seminars around the state, teaching other lawyers how to sue insurance companies.
Fraser is also reviewing allegations that some insurance companies have been potentially deceptive or misleading in their sales, marketing and advertising practices as it relates to recent changes in homeowners insurance coverage and costs.
"The bottom line is that if a sufficient pattern of these types of abuses can be determined, it would be grounds for legal action by the Texas Attorney General under the Deceptive Trade Practices Act as well as the Unfair Competition and Unfair Practices Act."
Fraser said he would also examine an allegation against one company of potentially illegal tying of auto coverage to homeowners' policies, and allegations that some companies instructed independent agents to boycott the selling of competitors' policies when they do not offer a similar policy. Both allegations, he said, raise questions about possible anti-trust violations.
Fraser began reviewing problems in the insurance market soon after assuming the duties of chairman of the Business and Commerce Committee. As part of his information gathering, he met with major stakeholder groups involved in or affected by the problems, including consumer groups, insurance companies, Realtors, bankers and mortgage lenders, mold remediators, and representatives of the state departments of Insurance, Banking and Health.
State Senator Troy Fraser, R-Horseshoe Bay, represents a 21-county district that includes the Highland Lakes region.