Texas Senate committee urges end to insurers using customer inquiries to raise rates
By TERRENCE STUTZ
AUSTIN — Some Texas insurers are penalizing customers who call asking questions about their coverage or potential claims, a Senate committee said Tuesday, urging that the practice be stopped.
The Senate Business and Commerce Committee’s report calls for legislation prohibiting insurers from using customer inquiries to cancel policies or decline to renew them, or to increase premiums for those policyholders.
A survey conducted by the Texas Department of Insurance found that several companies use customer inquiries in ways that can affect rates or determine whether a homeowner policy should be renewed.
The report cites the case of a homeowner who asks an insurance agent about a leaking roof and then does not make repairs before the policy comes up for renewal, resulting in cancellation of the policy. Another example is a homeowner asking about the need for additional coverage after a remodeling project or addition to a house, triggering an automatic premium increase.
“Consumers should feel free to contact their insurance carriers with questions and concerns, while carriers have a responsibility to ensure that rates are not inflated by issues or losses that come to their attention,” the Senate committee said in the report. It did not identify companies that keep track of customer inquiries.
The proposed legislation was applauded by a leading consumer group, Texas Watch, which said homeowners should not be penalized simply for asking their agents legitimate questions about coverage.
The Business and Commerce Committee also called for the return to a standard homeowner policy in Texas so consumers can more easily compare companies when they are shopping for insurance.
Currently, companies offer policies that often differ greatly from those offered by competitors. Texas at one time had a standard homeowner policy — laying out specific coverage — which was the basis for most insurance policies sold in the state.
“Texans pay too much and get too little for their insurance,” said Alex Winslow of Texas Watch. “They are told to shop the market but don’t have the tools necessary to make informed choices.”
Insurance industry representatives were cool to the idea of a standard policy, which companies lobbied to get rid of several years ago. Instead, companies seek to “offer policies they feel can successfully compete with others in the marketplace,” said Mark Hanna of the Insurance Council of Texas.
Follow Terrence Stutz on Twitter at @t_stutz.