At first blush, Mr. Mitchell's solution to the homeowners' crisis sounds like an oxymoron free market competition coupled with aggressive oversight. But that is what it's going to take to lower homeowners' rates, prevent abuse and restore competition to the market.
At best, there are only six or seven companies writing new homeowners policies in the state. And no new companies are considering coming into Texas to provide coverage.
So what can be done to help consumers and stop the hemorrhaging by home insurers? Plenty.
First and foremost, we need to address the mold problem. Most homeowners are not interested in buying mold coverage or filing mold claims; hence, consumers should not be forced to pay for coverage they don't want.
Second, consumers should not be punished for claims they never made. Only prior loss history of the applicant, not the previous property owner, should be used for rating purposes.
And, third, we should either disallow rating based on credit scores or put in place a process allowing consumers to contest an incorrect credit report.
Swift, bold action is needed to protect consumers and "open up" the Texas homeowners market immediately.
The outdated benchmark system should be scrapped for a more practical file and use system in which insurance companies can justify their pricing to the insurance commissioner before changing their rates.
Last, all homeowners policies issued in Texas should be controlled and approved by the Texas Department of Insurance. All insurance companies that are licensed to do business in Texas should be authorized to sell homeowners coverage so long as they use forms approved by the Texas Department of Insurance.
Market competition, consumer safeguards and elimination of mold coverage will stabilize rates and reinvigorate the Texas homeowners market.
Norman E. Adams
Citizens Against Lawsuit Abuse