Bay Area Houston

We won’t be fooled. Again.

Years ago the Texas Department of Insurance was considering allowing mandatory binding arbitration in home insurance contracts. This was due to a rash of hail damage claims in South Texas. I attended the hearing and watched as the Commissioner was warned about the abuse of arbitration in other contracts like new home construction. Eventually the Commission denied the request but I believe it is coming back.

Consumers should be very concerned about this for a number of reasons. First and foremost the right to a civil trial is protected (or was) by the 7th Amendment of the Constitution.

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

Back in the mid 90’s the homebuilders decided to put mandatory arbitration clauses in their new home contracts. Home buyers were required to sign away their rights to the Constitution. Since the vast majority of home builders required mandatory arbitration there was not much of a choice. When you give up your rights and have a defect in your new home you are required to enter into a private justice system that is mandatory, secret, and final. There are no appeals. There isn’t a jury or a judge. The builders will never say arbitration is faster, cheaper, and just as fair as our time honored justice system because it is simply not true.

Recently State Farm is being sued for denying hail damage across the nation. NPR wrote an excellent article on the situation. I can see this being used as a way for the Texas Legislature to allow insurance companies to put arbitration clauses in home contracts. Just remember, just like new home construction, rates and cost of repairs will not go down. So called “tort reform” have never resulted in lower prices for consumers. It only helps the insurance companies from being held accountable in a public trial.

More on this issue later.

NOTE: I have arranged a meeting with the TDI staff to address the rising cost of insurance in our area. I will update later.

Her Speech
To say the speech by the Texas Insurance Commissioner Cassie Brown’s was disappointing would be a gross understatement.

After telling the business community how wonderful the TDI is protecting the consumer from the rising cost of insurance and explaining why rates are so high, she left the stage, took no questions, and quickly left the building. Many in the crowd were not  happy especially those at my table. 

I was able to speak with her briefly as well as two other attendees. A realtor told her about the impact to realtors in the area and her personal 40% increase, she basically asked her Why? Brown’s response was simply “I just told you why in my speech”. My question to her was about the price gouging by roofers after a hail storm or hurricane. Her response was short “We have no control over that.”. She then ignored my plea for the TDI to at least address the issue.

Reasons for high premiums.
Iv’e heard the same excuses from the insurance industry. Inflation, rise in home values, and “severity and frequency of storms” (climate change). I have said it before. The entire industry, the lobbyists, and many elected officials will NEVER say “Climate change” it is always “severity and frequency of storms”. She used the exact phrase of the industry.

Actions being taken to reduce the risk
She did not address anything the TDI was doing to reduce damage to homes such as better requirements on roofing materials, stopping price gouging, or anything positive.

My opinion
I do not believe the Commissioner is concerned about our situation. She seems to be representing the industry and the industry only. She showed no interest in our situation, no empathy, no concern. She never addressed the extreme rate increase we were experiencing. It was as if she really didn’t care. Disappointing to say the least especially when talking to the business community.

Texas Insurance Commissioner to Address Clear Lake Businesses

The Commissioner of the Texas Department of Insurance, Cassie Brown, will be addressing the business community at a meeting sponsored by the Bay Area Houston Economic Partnership. I will be attending and will report. I am very interested in this meeting and appreciate BAHEP’s effort. Needless to say homeowners are not the only people affected by the rising cost of insurance. Business owners, realtors, home buyers and sellers, and our school districts are all affected. 

I asked her staff if she could squeeze in a visit with people in the community but she is unavailable. I am trying to set up a meeting with her staff in Austin.

As I mentioned a few days ago:

Progressive Insurance sent out a message to home owners and insurance agents in the Bay Area urging them to contact elected officials concerning an insurance bill. Just an FYI: Progressive will NOT write policies in the Bay Area.

The agents have responded. You can read their comments in opposition of the bill here. They pretty much reflect the talking points provided by Progressive. So take a few minutes to write to the Committee in support of this bill. Here are my talking points:

• This bill requires the insurance industry to justify rate increases over 10%. If they can’t justify their increases they should not be able to increase.
• This bill is the least our elected officials can do for those affected by the rising cost of home insurance. Literally.
• This bill will NOT address the problem of our out of control insurance premiums
• Justifying an increase in rates will NOT lower premiums since premiums are calculated based upon the rates and other factors
• Our issue in the Bay Area is the extreme premiums and deductibles.

Your comments would be appreciated 
On Monday 5/19/25  the House Insurance Committee will hear Senate Bill 1643. This bill will require insurance companies to justify to the Texas Department of Insurance any rate increase above 10%. It DOES NOT regulate the rate, it simply requires a justification.

The Industry has sent out emails to their insurance agents to write comments opposing this bill and they have. You can also send in comments. It is easy. The form is online here. Do the following:

• Fill out your personal information
• Select SB 1643 by Schwertner
• Enter your comments including your support for the bill
• Submit your comments

Again thank you for your interest in this issue!

Progressive Insurance sent out a message to home owners and insurance agents in the Bay Area urging them to contact elected officials concerning an insurance bill. Just an FYI: Progressive will NOT write policies in the Bay Area.

Senate Bill 1643 will require an insurance company to justify their rate increases of more than 10% prior to using the new rates. Back in 2003 the Legislature removed the prior approval of rate increases and implemented a “File and Use” system allowing the insurance industry to raise rates, file them with the Texas Department of Insurance (TDI), and immediately use the new rates. The rates could be challenged by TDI but they rarely do.

Needless to say the insurance industry is whining like a two year old, sending out emails to their agents and homeowners doing what they have been doing for the last 20 years, complain about turning into California with rate regulations. If they lived in the Bay Area they would realize that we ARE California! Rates have skyrocketed and deductibles are through the roof. Many companies including Progressive, will NOT write policies in the area. Their great “Free Market” lets them Flee the Market and they have. All the bill requires is justification for raising rates above 10%. If you can’t justify it, you shouldn’t be using it. It’s not regulating squat.

The hearing for the bill was scheduled in the House Insurance Committee has been canceled.