The Watchdog: As Texas’ new insurance commissioner takes office, she must deal with insurance poverty

The following is an open letter from The Watchdog to new Texas Department of Insurance Commissioner Amanda Crawford.

Dear Insurance Commissioner Crawford:

Congratulations on your new job. Hope you've enjoyed your first days at TDI. You are the chief regulator over 3,400 insurance companies and 875,000 agents and adjusters.

Now the hard part begins.

You are stepping into the spotlight as Texans struggle with an insurance crisis. There's a name for it: insurance poverty.

Homeowners all over the country are suffering as they pay higher premiums and deductibles and, in some cases, get less coverage in return. Some are going without coverage because they can't afford it.

Texas culture is tilted in favor of the all-powerful insurance industry, not the consumer. Let's not pretend otherwise.

Some states have strict regulatory insurance departments that must approve rate increases before a company can unleash them onto the public.

Other states have what's called a "file-and-use" setup. Companies file their rates with regulators and immediately change their rates. No approval is necessary.

Guess which one Texas is.

TDI, toughen up

Texas must toughen up its regulatory powers. That's what people need.

The challenge is you're going to have to make that happen through the Texas Legislature. You would have to lead this fight to make your department stronger.

I give your predecessor Cassie Brown credit for educating Texans on consumer issues. TDI, for instance, has amassed a catalog of educational videos on how to shop. (Visit helpinsure.com.)

The news release announcing Brown's departure after four years praised Brown for protecting consumers and maintaining a stable insurance market. She saved consumers, it says, "millions through rate reviews."

Commissioner, think what you could do.

Missing notices

Let me give you a single example of insurance abuse that is easy to prevent.

An East Texas man has sued his insurer, American Economy Insurance Co., for failing to notify its customers over rate increases of 10% or higher.

A provision of the Texas Insurance Code is designed to inform consumers by mail of a large rate increase. Otherwise, a mortgage servicer pays the increase as part of the monthly mortgage escrow bill, which also includes property taxes. The consumer misses information about a large rate increase.

American Economy is a subsidiary of Safeco, which is a subsidiary of Liberty Mutual. Company spokesperson Emma Bannen told The Watchdog, "We do not comment on specific customer claims or matters in litigation."

Commissioner Crawford, TDI should have enforced that provision. Now it's a federal court case.

Because of this lack of transparency, the lawsuit asserts, Texans overpaid. Ben Linyard, who sued, watched as his premiums shot up 40% in two years — without required notice. Same goes for thousands of other company customers, according to the lawsuit.

The notice is supposed to remind customers that they can shop competitively for a better deal.

Not sharing news of the increase was deceptive, and the company should be fined.

Texas has a denied claim problem

What did you think of that report that came out about Texas' insurance claim failures?

The report, from a group called Unlocking America's Future, states that Texas ranks third among states for the highest premiums paid. But here's the shocker: Nearly half of Texas homeowners' claims are rejected.

The report also stated that 10 Texas home insurance companies closed more than half of their claims without fulfilling them.

Imagine that: Insurance companies that don't want to provide insurance coverage.

It's a battle

Commissioner, I realize that bringing this up makes me a target. In a letter to The Dallas Morning News, David Sampson, who heads American Property Casualty Insurance Association, charged that I used "misleading statistics to stir outrage."

He wrote, "Claims are sometimes closed because the amount of damage is below the deductible, or the damage is unrelated to the reported catastrophic event, or because the homeowner chooses not to make repairs."

He called on Texas lawmakers to "pass reasonable legal reforms that will limit jackpot jury awards in lawsuits."

I find that goal chilling.

Hearing from Texans

Another critic, Charles (last name not given), commented on Dallasnews.com that my report on denied claims "misses the basics of economics."

"There is a lot more to this story, it is just not considered here," he continued. "The reader should wonder whether that is because the author did not want to take the time, or did look into it but found it didn't support the story he wanted to present."

I say to Charles and others that I am certainly not an expert on the complexities of the insurance industry. But I am an expert when it comes to learning what Texans think. I've received many complaints in recent years.

The tilt against consumers is getting worse.

Commissioner, you are the defensive wall against insurance abuse, against file and use, against lack of transparency, against abuse of denied claims.

On behalf of Texas consumers, please lead the way.