January 26, 2005

Austin American-Statesman

Lapham: Credit scoring isn't fair and doesn't work – so let's ban it

"Regardless of whether credit scoring is proven to predict losses, it should be banned because of what the insurance department's report did find. It determined that insurance credit scoring disproportionately affects minorities and moderate income Texans." Full editorial.

January 4, 2005

Fort Worth Star Telegram

"The study, which looked at the insurance industry's use of personal credit history in rate making, indicates that customers with poor credit are more likely to file claims.

But black, Hispanic, young and low- and moderate-income policyholders tend to have worse credit scores than white, Asian, older and high-income policyholders, according to a department summary of the report." Full article.

Dallas Morning News

A sweeping state study has found that Texans with bad credit histories tend to file more insurance claims. But it also shows that blacks and Hispanics are disproportionately more likely to be hit with higher premiums because of low credit scores. Full article.

TDI

"Preliminary findings indicate a strong relationship between credit scores and claims experience. Poor credit scores are associated with increased claims activity. Furthermore, the study found that Black, Hispanic, young, and low-to-moderate income policyholders tend to have worse credit scores than White, Asian, older, and high income policyholders." Full article.

August 8, 2004

CEJ

Consumer Group Supports Ban on Insurance Credit Scoring at Grand Rapids Public Hearing - CEJ Testifies That Lower Rates, Greater Fairness Will Result. Full report

June 15, 2004

FTC

"Request for public comments: The Commission is seeking public comment to aid staff in preparing a study on the effects of credit scores and credit-based insurance scores on the price and availability of mortgages, auto loans, credit cards, insurance, and other financial products. The Fair and Accurate Credit Transactions Act (FACTA), which was enacted in December 2003, directs the FTC and the Federal Reserve Board, in cooperation with the Office of Fair Housing at the Department of Housing and Urban Development, to conduct the credit score study and also to examine whether the use of any of these tools has discriminatory impacts. The FTC is required to seek public input on the “prescribed methodology and research design” of the study. In a Federal Register notice published today, the FTC lists specific methodological questions to which commentors should respond." Complete information.

May 31, 2004

Dallas Morning News

Leading a charge on credit scoring
State regulators weigh how to restrict insurers' rate-setting method

"Homeowners and drivers – even those with good claims records – are shelling out bigger payments for insurance if they have mediocre or worse credit histories." Full article.

May 7, 2004

Michigan

Detroit News

Insurers endorse bill in Michigan House allowing credit scores in setting rates

"Woodward questioned how insurers could offer discounts to some customers while avoiding increases in base rates for all customers.

“It’s like a retailer who offers a 50 percent discount after doubling the price,” he said." Full article.

April 28, 2004

Detroit News

Credit score ban could cut insurance bills
Granholm: Practice unfairly targets minorities, poor

"But Granholm — echoing consumer advocates across the nation — said credit scores are notoriously inaccurate and discriminatory.

People with no credit history and a spotless driving record would pay a penalty, for instance. She said there’s no rational connection between credit history and insurance risk." Full article.

Governor Granholm's Press Release

March 17, 2004

Dallas Morning News

Insurance companies criticized for lack of rate cuts

"The state's own numbers show almost half of Texas homeowners have received almost no rate relief, and the average premium has dropped just four percent since lawmakers began working on insurance reform a year ago." Full story.

Insurance rates still excessive despite reform bill, groups say
AARP, others seek more regulation; industry says premiums are fair

"Texas homeowners have overpaid as much as $287 million because of excessively high insurance rates since last August, two consumer groups said Tuesday." Full story.

Home insurers' reports show rebound

"Year-end reports from leading Texas insurers showed that the homeowners insurance market rebounded in 2003 as property losses dropped significantly after two straight years of record losses caused by a massive increase in mold and water damage claims.

Released Monday by the Texas Department of Insurance, the reports showed a loss ratio of 58 percent, meaning that 58 percent of premiums collected by insurers last year were used to settle homeowner claims. That figure follows loss ratios of 108.6 percent in 2002 and 118 percent in 2001." Full story.

Homeowners' woes remain
Mold claims down, but many are still waiting for rate relief

"The billions of dollars in mold-damage claims are nearly gone, but Texas' homeowners insurance market is still struggling to pull itself out of a hole that underscored its reputation as the most expensive in the nation." Full story.

March 6, 2004

Dallas Morning News

Homeowners' woes remain
Mold claims down, but many are still waiting for rate relief

"Nine months after state lawmakers passed insurance reforms aimed at reducing rates and making it easier to obtain coverage, many homeowners are still waiting for significant rate relief while others have been forced to buy coverage through a state plan that offers minimal protection."      Full story

Two new websites launched:

www.TexasWatch.org

www.LouisianaWatch.com

January 12, 2004

Texas Department of Insurance

The Texas Department of Insurance has published a list of companies who use credit scoring in Texas. That list may be accessed through the TDI website here.

January 8, 2004

Houston Chronicle

Few like credit scoring proposal for insurance

"Previously, most companies had free reign in using credit scoring. Information submitted by insurance companies to Montemayor last year showed that some Texans have been charged up to 113 percent higher premiums because of credit scoring.". Full article.

January 1, 2004

The Daily News, Galveston

Insurers face new laws today

"From the way they use credit scores to how they decide what homes and automobiles to cover, starting today Texas insurers will have to abide by new laws meant to protect consumers." Full article.

December 22, 2003

Houston Chronicle

Broken promises
So far, homeowner insurance rate reform is a bust

"According to analysis of Texas insurance figures by a consumer watchdog group, homeowners in Harris County are paying 17 percent more for insurance than they were before the start of the Legislature. The survey by Texas Watch found similar hikes in average rates in other metropolitan areas across the state." Full article.

November 11, 2003

Dallas Morning News

Insurance chief sets 'credit scoring' rules

"New rules regulating insurance companies' use of their customers' credit histories were approved Monday by the insurance commissioner. But he stopped short of setting a limit on how much extra those with poor credit can be charged." Full story.

Houston Chronicle

Poor credit can still raise insurance rates -- for now

"Consumers' bad credit histories can still be used against them in the form of significantly higher rates charged by insurance companies under rules adopted Monday by Texas Insurance Commissioner Jose Montemayor." Full story.

October 23, 2003

WFAA.com

Law aims to protect consumers against 'credit scoring'

"Stories like Lapham's are the reason many lawmakers tried to make it illegal for insurance companies to increase rates because of credit histories. That effort failed, but lawmakers passed a compromise that limits the way credit histories can be used." Full story 

Dallas Morning News

Insurance chief urged to limit companies' use of credit scoring

"Although the Texas House initially voted to ban credit scoring by insurers during the legislative session, industry lobbyists managed to get that prohibition pulled out of the insurance reform measure before it was finally passed by the House and Senate." Full story.

San Antonio Express News

Credit scoring bashed, defended

"State Rep. Charlie Geren, R-Fort Worth, said that although he voted against the bill regulating auto and homeowner insurance rates, the proposed rules didn't live up to the intent of the legislation that did pass." Full story.

October 15, 2003

Texas Department of Insurance

TDI Examines Credit Scoring

"AUSTIN - The controversial issue of insurance credit scoring will be under the Texas Department of Insurance microscope as the agency begins a comprehensive review process to determine the accuracy of and need for this pricing practice." Full release.

October 10, 2003

Public Hearing

The Texas Department of Insurance will hold a public hearing on Oct. 22, 2003 to address issues related to homeowners and auto insurance, and the use of credit information in certain personal lines insurance. The hearing begins at 9:30 a.m. More info.

September 23, 2003

Bankrate.com

How credit scores affect insurance rates

"An opposing view comes from Sara Lapham, who heads www.InsuranceScored.com, which claims, "There has really been no independent study of the issue. All the studies and the numbers come from insurers or the vendors of the scores. Its hard to trust them because all of these companies have a vested interest in seeing (insurance scoring) continue." Full article.

Dallas Morning News

State Farm appeals rate cut to district court

"State Farm said it would raise the same objections in state court that it used in its appeal to Mr. Montemayor, contending it cannot afford to lower its rates because of its "precarious" financial situation. The company has cited $1.4 billion in property losses in Texas over the last 2 ½ years, mostly resulting from mold and weather-related damage.

Attorneys for the Texas Department of Insurance have argued that the proposed rate cuts would leave State Farm with enough revenue to pay expenses and still earn a profit." Full story.

September 14, 2003

Dallas Morning News

Steven Wolens: Insurance commissioner threatens lawmakers' meager reforms

"The commissioner recently proposed a rule that effectively repeals an agreement made with Senate Democrats that would have set a cap on the amount that rates could differ due to credit scores. Under the commissioner's proposal, a homeowner who lived next to a fire station but had bad credit could pay higher rates than someone who lived miles away from a fire hydrant but had good credit." Full editorial.

September 13, 2003

Austin American-Statesman

Insurers must cut rates, official says
Insurance commissioner affirms ordered reductions for Farmers, State Farm

"Rejecting arguments the companies made at appeals hearings two weeks ago that the cuts would harm them financially, Montemayor refused to reduce the size of a 17.5 percent cut that the Texas Department of Insurance ordered for Farmers Insurance Group and a 12 percent cut ordered for State Farm Insurance Cos." Full article.

September 10, 2003

Consumer Group Uncovers False Rebate Claims By Insurance Department

"Austin, TX -- The Center for Economic Justice (CEJ) today criticized the Insurance Department for capitulating to insurance companies and cutting the already low rate rollbacks for homeowners in half. "The promised refunds in August 2004 are illusory," said CEJ’s President D.J. Powers. "It is a virtual certainty that consumers will never see the rebates promised by the Department" Full press release.

September 6, 2003

Dallas Morning News

Allstate to cut home rates 10.1% and issue refunds

"The people won't see the full amount of the rate reduction immediately, and the company will get to hang on to that money in the meantime," said Rob Schneider of Consumers Union." Full story.

Austin American-Statesman

Allstate relents, rolls back rates
The state's No. 2 also will send refunds to customers next summer

"For Allstate's 600,000 customers in Texas, average rates will drop about $116 a year, starting with policies that come up for renewal Sunday. That amount includes the 1.5 percent cut the company implemented in July." Full story.

Allstate pares rates 8.7% now, may trim more
Sixth insurer to settle with state

"Robert Black, a spokesman for the Texas Department of Insurance, said Allstate consented to allow the department to review its rates in August 2004 and possibly refund or credit policyholders another 8.75 percent.

Depending on the company's financial condition at that time, further cuts could be ordered, Black said." Full story.

September 4, 2003

Austin American-Statesman

Allstate may settle with state on rates
If 2nd-largest home insurer and regulators can agree to a deal, customers will see lower prices

"Twelve insurers filed appeals of state-ordered rate cuts, but four already have abandoned their fight only two days into a schedule of appeal hearings before Insurance Commissioner José Montemayor. They include Nationwide Lloyds, one of the state's 10 largest insurers." Full story.

Ft. Worth Star-Telegram

4 insurance companies agree to rollbacks

"The four companies are among a dozen that appealed rollbacks ordered last month by the department. In all, companies representing three-fourths of the Texas homeowners' market have appealed rollback orders." Full article.

September 3, 2003

Dallas Morning News

State Farm says it can't afford rate decrease
Insurance chief hears appeal of state order to cut prices by 12%

"Representing the Texas Department of Insurance, Catherine Reyer dismissed the company's objections, saying the proposed rate cuts would leave State Farm with enough revenue to pay expenses and earn a profit." Full story.

Houston Chronicle

Rate cuts defended by Perry
Insurance firms cite revenue needs

"Gov. Rick Perry said Tuesday that he hopes insurance companies fail in their appeal of homeowners premium rate rollbacks ordered by the Texas Department of Insurance." Full story.

Austin American-Statesman 

State Farm first to defend its rates
Company, making case to Insurance Department, cites financial problems

"The Texas Department of Insurance has ordered the rate cuts, exercising its authority under a new state law that is designed to curb the nation's highest home insurance rates." Full story.

August 30, 2003

 NationalUnderwriter.com 

"U.S. Panel Okays Insurance Credit Scoring Study: Language calling for a study of credit-based insurance scoring by the Federal Trade Commission was tacked onto legislation reauthorizing the Fair Credit Reporting Act, which was approved by a Congressional panel". Link.

Houston Chronicle

Rep. Joe Nixon should be tithing

"Nixon and Farmers both say the payment had nothing to do with the fact that Nixon, chairman of the House Civil Practices Committee, was in a position to champion several bills and a constitutional amendment that will make life easier for insurance companies." Full story.

Austin American-Statesman

Insurance commissioner should stand his ground

For the past three years, homeowners' rates have gone up, often by stunning amounts, even for those who had no claims. Policyholders were infuriated, and some of them were legislators who saw their own coverage go up in price or get canceled altogether. Full editorial.

DenverPost.com

Credit report's use rankles many.

His reward: The company jacked up his rates. It had nothing to do with his insurance history but everything to do with his credit score. Full story.

August 19, 2003

Dallas Morning News

Insurers wrangle with state over rate rollbacks
Companies say they can't afford to cut homeowners premiums

"Besides the "big three" (Allstate, State Farm, Farmers) companies, others filing appeals Monday were Columbia, Consolidated, Continental, Kemper, Metropolitan, National, Nationwide and Trinity.

One company that did not appeal – USAA, the fourth largest in the state – said it will reluctantly follow the commissioner's order to trim its rates 7 percent." Full article.

Austin American-Statesman

Top insurers fight cuts in home rates
More than 70 percent of Texas homeowners will have to wait for mandated rollbacks

"We knew that there would be some companies who would be unwilling to make these cuts and provide fair rates for their policyholders without a fight," Black said. "We stand by these numbers and will wait for the hearings process to run its course." Full article.

Fort Worth Star Telegram

Home insurers appeal rollbacks

""These are more delays and games being played by the greedy insurance industry -- and the more these insurance companies stall, the longer Texas homeowners are going to have to wait before they see any reductions in their insurance premiums," said Lambe, of Texas Watch." Full article.

Houston Chronicle

Insurance against election-year outrage

"The company's continuing political success in Texas is not by accident. While public officials were rolling their eyes and pretending to distance themselves from Farmers' bad publicity last fall, they also were quietly accepting generous doses of money from the insurer." Full editorial.

August 14, 2003

Houston Chronicle

Why didn't Perry call special session on insurance?

"Texas homeowners should be leery of recent proclamations by the governor and statewide leaders that real relief from skyrocketing homeowners insurance rates is on the way." Full editorial.

August 13, 2003

Dallas Morning News

Rate Rollback: Insurers must justify their figures - or else

"State Insurance Commissioner Jose Montemayor recently ordered many insurers to roll back their premiums, and, predictably, the insurance industry has responded with tiresome warnings of dire consequences.

Indeed, few can spin a gloom-and-doom tale as creatively as a homeowners insurance company whose rates are questioned." Full editorial.

Houston Chronicle

Closed doors shroud Farmers victory
Conferees got PAC funds after last-minute change

"Fingerprints are hard to find, since the ultimate decision to side with Farmers was made behind closed doors. But several members of a House-Senate conference committee that stripped a key provision from an insurance regulatory bill -- over the objections of the bill's sponsor -- soon collected at least $10,000 from Farmers' political action committee." Full article.

August 10, 2003

Austin American-Statesman

Mold hypocrisy leaves many homeowners smoldering

"In 2001, while hearings were under way and legislation was being crafted to address mold claims, Nixon received more than $300,000 for his mold claim. Like many mold victims, his life was disrupted while his family spent a year in a crowded apartment during his mold remediation. But unlike many victims, he kept silent about the dangers of toxic mold, the cost of remediation, the stress upon his family and the urgent need to address mold contamination." Full editorial.

August 10, 2003

Houston Chronicle

Just a friendly little Texas mold claim?

"Warming up for his new leadership role in the tort war last February, Nixon offered his opinion of how the homeowners' insurance crisis had been "primarily driven by a barrage of increasingly expensive mold claims."... "Between the mid-'90s and 2001 the average mold claim cost increased from $4,000 to $22,000; and by 2001, 70 percent of all mold claims filed nationally were filed in Texas," complained the $300,000 claimant." Full article.

August 9, 2003

Houston Chronicle

Texas tells insurers to shave rates
Appeal by industry may stall homeowner savings

"But don't count on the rollbacks coming any time soon. The insurance industry already is balking and appeals could take some time." Full story.

Austin American-Statesman

Insurers ordered to slash rates

"Consumer advocate D.J. Powers said the cuts are "woefully inadequate," considering that homeowners' insurers have raised rates by $1.9 billion during the past two years even as they curtailed coverage. Powers said Texans should be getting an average decrease of 35 percent." Full story.

Putting the 'e' in e-mail

"Noting the e-mails were strong enough to warrant a good look by prosecutors, Travis County District Attorney Ronnie Earle commented: "You know what the 'e' in e-mail stands for, don't you? Evidence." Full article.

Dallas Morning News

Rollbacks ordered in homeowners' insurance
Cuts would be up to 31%; companies can appeal Texas mandate

"Representatives of consumer groups said any reduction is welcome in Texas, which has the highest insurance rates in the country, but questioned how much relief policyholders actually will see." Full story.

San Antonio Express-News

Insurance cuts are coming home

"And Texas Watch Executive Director Dan Lambe said consumers need to ensure that the cuts reflect the loss of coverage that went along with the rate increases of the past two years." Full story.

August 8, 2003

News Release - For Immediate Release Friday, August 8, 2003

For More Information Contact: 
D.J. Powers, 444-1641, cell 659-5237
Dan Lambe, 381-1111
George Kelemen, 480-2427

Consumer Advocates Respond to Department of Insurance Rate Recommendations

"Over the past two years, Texans have seen deep cuts in their homeowner's insurance coverage.  Homeowners should see deep reductions in their premiums to reflect that loss in coverage and these rate reductions do not measure up," said Dan Lambe, Executive Director of Texas Watch.  "If Texans do not see their premiums drop considerably they should be asking why.  They should be asking their legislators, the Governor and the Department of Insurance why greedy insurance companies are being allowed to keep their money." Full press release.

Texas Department of Insurance

TDI orders Texas insurers to lower rates. More.

Dallas Morning News

Editorial: Moldy Decision: Insurance payment to legislator is smelly

"And if the claim should have been paid in the normal course of business, why would three high-ranking company executives ask that it be paid and want Mr. Nixon to "be a friend of Farmers in the Legislative session"? Was it because Mr. Nixon served on a conference committee that hammered out homeowners insurance reform?" Full editorial.

Farmers officers testify about legislator's claim
2 had questioned payout; firm denies preferential treatment

"In a June 4 response to Ms. Arnold's e-mail, Jim Daues, vice president for property claims, said Mr. Hageman, lobbyist Mark Toohey and Farmers division manager Kevin Kelso "all called me about this claim and wanted Mr. Nixon to be a friend of Farmers in the legislative session." Full story.

Austin American-Statesman

Insurers testify on mold checks to Rep. Nixon

"In a February question-and-answer interview on his law firm's Web site, Nixon addressed the homeowners insurance crisis, saying it has been "primarily driven by a barrage of increasingly expensive mold claims.

"Between the mid-90s and 2001, the average mold claim cost increased from $4,000 to $22,000," Nixon said. "While some claims are legitimate, a cottage industry of mold remediators and `experts' has arisen who are unregulated and unlicensed." Full story.

August 7, 2003

Houston Chronicle

Ex-official: Favoritism at Farmers
Fired mold manager alleges secret meetings

"Farmers Insurance Group executives often gave preferential treatment to mold claims filed in Texas by friends and influential people during the homeowners insurance crisis of 2002, a former manager of the company said Wednesday." Full story.

August 6, 2003

Houston Chronicle

Consumer groups seek strict guidelines for credit scoring

"A coalition of consumer groups filed a petition Tuesday with the Texas Department of Insurance asking that strong rules be adopted to restrict the use of credit scoring in the sale of auto and homeowners insurance." Full story.

Austin American-Statesman

Mold checks to lawmaker scrutinized
Prosecutors investigate whether insurance execs approved extra payment

"Travis County District Attorney Ronnie Earle confirmed Tuesday that his office is investigating the circumstances behind insurance company e-mails about Rep. Joe Nixon's $300,000-plus claim for mold damage. The e-mails are an exchange between the national mold manager for Farmers Insurance and a company vice president for claims. One e-mail questions why Nixon, R-Houston, is to be paid an additional payment for a mold claim that the e-mail said is not covered by insurance and had been denied at lower levels of the insurance company." Full story.

Houston Chronicle

Of mold, e-mails and political hay

"Travis County District Attorney Ronnie Earle said his office is investigating Farmers' mold-related damage payments to state Rep. Joe Nixon, who earlier this year helped pass homeowners insurance regulations and major changes in civil justice law important to insurance companies." Full story.

July 26, 2003

California

"Credit scoring, Garamendi said, is a very powerful, insidious, and wrong tool to be using. "For those companies who want to use it, you will have a long fight ahead of you," he said. "I will do everything I can to prevent discrimination."" Full article.

SFGate- San Francisco Chronicle

EDITORIAL: LOST LEGISLATORS

Beyond the budget, they're AWOL on many major issues

"Do you think it's fair for an insurance company to refuse to renew your homeowners policy without cause, or to jack up your premiums on the basis of your credit score? Legislation attempting to deal with each of those issues also sank from Assembly nonvoting." Full editorial.

National

"Reauthorization of the Fair Credit Reporting Act advanced in a U.S. House subcommittee, but it picked up an amendment that calls for a study of insurers' use of credit information...

It also contains an amendment offered by Rep. Luis Gutierrez, D-Ill., that would commission a study by the Federal Trade Commission, in consultation with the Department of Housing and Urban Development, on the effects of credit scores and insurance scoring on the availability of consumer credit." Full article.

July 22, 2003

Massachusetts

The Boston Globe

Insurance chief pulls credit-scoring plan
Withdraws proposal on setting of rates

"The state insurance commissioner abruptly withdrew controversial regulations yesterday that would have allowed insurers to use customer credit scores in setting homeowner's and renter's insurance rates.

Commissioner Julianne M. Bowler also changed her position on whether current law allows insurers to charge customers with poor credit more and those with good credit less." Full article.

July 15, 2003

California

North County Times

Insurers need lesson in ethics

"In a wrongheaded move, the California Chamber of Commerce paid for a "study" to defend the insurers. The chamber paid the Berkeley-based Rosen Consulting Group to produce a July 8 report, "Potential Impact on California of a Contraction of the Residential Insurance Market." The chamber asked its consultants to presume a 10 percent contraction in the California insurance market, then used to report to lobby against the reform bills ---- though it never even tried to show that the bills actually would reduce the insurance market by 10 percent.

In other words, the chamber asked its consultants to assume what it wanted to prove, then claimed it had proved it." Full editorial.

Insurers push use of credit scoring

"Well, that data is not so hard to come by. And it does not show that disallowing an insurer to consider an applicant's credit rating will result in a decline in insurance binders being written. What it shows is that, in Maryland at least, the rates paid by insured homeowners become more uniform. They are leveled out" Full story

Garamendi acts in credit-score use

"We were very disappointed the bills were not passed," Garamendi's office said. "These were important protections for consumers. We have had a 71 percent increase in complaints by homeowners regarding insurance over the past year. There's a growing problem in the industry that needs to be addressed immediately." Full story.

July 10, 2003

California

LA Times

"A bill that would outlaw the use of consumer credit scores in deciding a customer's suitability for homeowner coverage was defeated Wednesday in the Assembly Insurance Committee at the urging of the insurance industry....several committee members disappeared before the votes, refused to vote when the roll was called or never showed up for the hearing" Full story.

July 7, 2003

Dallas Morning News

Where's the reform?
State must keep promise of lower insurance

Homeowners should be hopping mad. Just a few weeks ago, homeowners were promised that they would soon see savings of between 12 percent and 18 percent in annual homeowners insurance premiums, courtesy of the Legislature's insurance reform efforts. Insurers apparently didn't get the memo. In recent filings, many held the line on current rates, and some warned of pending rate hikes. Full story.

July 2, 2003

Dallas Morning News

Insurers say no to rate cuts

"Nine of the 10 largest homeowners insurance companies are standing pat on their current rates even though state leaders and Texas' insurance chief say that premiums of most companies are excessive and should come down." Full story.

Houston Chronicle

Farmers eases off new-policy ban
Insurer to add pool of homeowners

"This is the same strategy that Farmers used in litigation," said Rob Schneider, an Austin-based attorney for Consumers Union. "This is an implicit threat that if the department does something they don't like, Farmers will continue to make insurance availability a problem in Texas." Full article.

July 1, 2003

Dallas Morning News

Let the sun shine!

Re: "Let the Sun Shine – Stealth votes make for sneaky laws," Sunday Editorials.

The industry-backed "technical corrections" to the insurance credit-scoring regulations in Senate Bill 14 are just the latest disturbing event producing credit-scoring restrictions so riddled with loopholes they are meaningless.

Our lawmakers supported severe insurance credit-scoring restrictions in most public forums but it is what happened behind closed doors that led to restrictions that lack even the most basic of consumer protections.

Texans must have the tools necessary to confirm their interests are being served and voter review is the most basic of these, we must let the sun shine.

Sara C. Lapham, Garland

Insurers want same home rates
Largest 3 companies in Texas say premiums are justified

"Texas' three largest property insurance companies have filed proposed homeowners rates with state regulators that are identical or slightly less than the premiums they have been charging for several months." Full article.

Austin American-Statesman

"Based on preliminary information we obtained a few months ago and declining loss trends, a majority of Texas consumers will see rate decreases of between zero and 25 percent, regardless of what the insurance companies say today."

Black declined to elaborate: "I'm not gong to comment on their data or their spin at this time. I don't want to speculate until our analysis is complete." Full story.

Houston Chronicle

Insurers push limit on filings

"Allstate volunteered to adopt lower rates on all its homeowner policies by 1.5 percent, while Farmers Insurance took the same stance that State Farm did last week and said its rates should stay the same." Full article.

PERRY'S PROMISE
Up to a few state actuaries to lower homeowner rates

"Since state officials cannot lower a company's rates unless they mathematically prove the rates to be unreasonably high, Texans should not get their hopes up. Following a season in which rates doubled or tripled for many homeowners, however, if generous relief isn't forthcoming or Perry's promise will go unkept." Full editorial.

June 12, 2003

Austin American-Statesman

When it comes to insurance, Texas homeowners got taken

"With the passage of Senate Bill 14, the high -paid insurance lobbyists, lawyers and public relations firms have successfully turned a consumer crisis into an insurance welfare package." Full editorial.

June 10, 2003

Austin American-Statesman

Insurers face new scrutiny under law
Perry signs bills that target high rates, regulate mold cleanup

"In the eyes of several consumer groups, Senate Bill 14 falls short. They had pushed lawmakers to roll back rates to January 2001 levels, ban insurers from using people's credit history to help determine their insurance rates and make the insurance commissioner's rate-setting power permanent." Full story.

June 5, 2002

Texas

SB14 has been approved by both the House and Senate. The bill now goes to the Governor.

Many consumers have asked how the lawmakers managed to go from a complete ban to simply restricting the practice of insurance credit scoring. The "Story Not Told" will be available soon on the In Texas page.

A complete analysis of the credit scoring restrictions in the bill will be also available soon on the In Texas page.

**NEW!**To be notified when this site is updated, please email here. 

June 1, 2003

Austin American-Statesman

Deal would let insurers tap credit reports
Data could be used, although not solely, in setting homeowners rates

"The most controversial portion of the bill was a proposed ban on the use of credit data. House members said there was no connection between consumers' credit reports and their likelihood of filing claims.

But the Senate prevailed, allowing the use of credit information by insurers as long as it is not the only data used to set rates and it is not used to discriminate against any group." Full story.

May 30, 2003

US House of Representatives

H.R.1473 : To amend the Fair Credit Reporting Act to provide disclosures of credit-based insurance scoring information by insurers and credit reporting agencies, and for other purposes.
Sponsor: Rep Gutierrez, Luis V. [IL-4]
Committees: House Financial Services
Latest Major Action: 4/10/2003 Referred to House subcommittee. 

SEC. 2. FINDINGS AND PURPOSES.

     (a) FINDINGS- The Congress finds as follows:

(1) According to the Insurance Information Institute, 90 percent of property   insurers now use insurance credit scoring in some way in their underwriting decisions.

(2) According to Consumer Reports, 70 percent of consumer reports have some kind of error and 29 percent have at least 1 major error.

(3) Since insurance credit scores are based on credit bureau data, the accuracy of the data is essential to achieving accurate scores.

(4) No insurance credit scoring modeling company has been able to identify the exact relationship between credit characteristics and loss ratios.

(5) In January 2002, the Florida Task Force on the Use of Credit Reports in Underwriting Automobile and Homeowners Insurance concluded that the use of consumer reports has a negative impact on young people, minorities and people with low incomes.

(6) The Fair Credit Reporting Act requires that insurers disclose the specific credit criteria used to raise rates or to render a consumer ineligible for a discounted premium.

(7) Corporate research conducted by Fair, Isaac & Company found that residents of ZIP codes with high minority populations scored substantially lower than residents than residents of other ZIP codes.

May 29, 2003

Houston Chronicle

KEEPING SCORE
Stand firm on ban on credit scoring in insurance reform

"Fairness to insurance customers dictates that conferees hold fast on the credit scoring ban." Full editorial.

Austin American-Statesman

Much work still needed to fix home insurance rates

"On one point, the House bill stands out as pro-consumer: It would bar insurers from using a person's credit history in determining what premium to charge. Insurers have adopted "credit scoring" in setting individual premiums over the past decade or so and say that it leads to lower rates for many customers, not just higher rates for some." Full editorial.

May 28, 2003

Waco Tribune-Herald

"Now reforms to rein in the insurance industry are close to completion, for what they're worth. They will be worth much less if the industry manages to convince House-Senate conferees to allow insurers to continue to use credit scoring to set rates." Full editorial.

May 27, 2003

Austin

SB14 goes to Conference Committee

Alaska

Sent to Governor

SB 13, authored by Senator Kim Elton, bans the use of insurance scores for the renewal of existing policies unless the consumer grants a waiver and also requires insurers to submit their models to the Department of Insurance. SB 13 also restricts the inclusion of specific factors in a scoring model.

May 26, 2003

Austin-American Statesman

"House lawmakers last week voted to ban the use of credit information in deciding whether to cover prospective customers and how much to charge. On Saturday, they moved the ban to Feb. 1, 2004, to allow insurers time to adjust." Full article.

California

Calif. Senate Passes Ban on Use of Credit History by Insurers

"The legislation, which now moves to the Assembly would ensure that California provides the nation's strongest insurance consumer protections against the unfair practice of credit scoring insurance policyholders." Full story.

Allstate to End Use of Consumer Credit Scores in Homeowners' Insurance
Consumer Group Calls on Lawmakers to Ban Practice Throughout Insurance Industry

"Allstate Insurance Company will scrap its use of consumer credit scores in homeowners' insurance underwriting, according to an announcement by Insurance Commissioner Garamendi today." Full story.

Insurance rollback rejected by House
Another vote would ban credit history in selling policies, setting rates

"But in a surprise move, House members went against the wishes of the insurance industry by voting to ban the use of credit history in selling policies and setting premiums. Insurers have vigorously defended the practice of "credit scoring" in their business." Full story.

Austin American-Statesman

House bans using credit reports to set rates

"The Texas House on Thursday voted unanimously to ban use of credit data by insurance companies in setting rates for auto or homeowners policies.

If the ban survives negotiations with the Senate, Texas would be one of three states that outlaw the practice." Full story.

Houston Chronicle

House votes to stop use of credit histories

"Representatives cheered as they voted Thursday to ban insurance companies from using a person's credit history to make coverage decisions or set premiums." Full story.

San Antonio Express-News

Insurance credit scores targeted

"A ban on the practice of using Texans' credit records to determine their insurance rates was added Thursday to an insurance bill making its way through the Texas House." Full story.

Abilene Reporter-News

House votes to ban insurers from using credit scoring

"The Texas House, debating a bill that would overhaul how the state regulates homeowners and auto insurance rates, approved an amendment that would ban insurers from using credit history as a factor in setting insurance rates." Full story.

May 22, 2003

ANNOUNCEMENT

The Texas House of Representatives passed by unanimous vote an amendment to ban the practice of insurance credit scoring in the state of Texas for both homeowner and auto insurance

BRAVO Texas House of Representatives!!

May 22, 2003

A new home! www.InsuranceScored.com. Please update your bookmarks.

May 18, 2003

Not just credit anymore.....

"LIFT® data combines information from TeleCheck®, the world's leading check verification and guarantee company, and Teletrack®, the nation's only subprime consumer credit database. These data sources contain only information on consumer financial behavior similar to that of credit reporting companies and LIFT® data is compliant with the Fair Credit Reporting Act (FCRA). LIFT® can help protect insurers from obvious adverse risks and reduce losses through further segmentation and refinement of credit-based insurance score ranges. Convergence Data is the sole representative of this data to the insurance industry." Full press release.

"The greatest benefit of LIFT is providing additional underwriting information that is missing from the credit reporting agencies in the insurance scoring process. This is true not only when there is not enough information about an applicant to create an insurance score (no-hits and no-score thin files), but also when an individual is assigned a score and more information would change the insurance offer. In the latter instance, LIFT can provide additional information that can lead to underwriting action that will make a solid difference in how the book performs."

May 16, 2003

Abilene Reporter-News

Poll: Texans want insurance reform

"Sixty-eight percent of poll respondents want banned the practice of using a consumer’s credit history to set insurance rates. The bill lawmakers are considering only limits the use of credit scoring in setting rates." Full story.

May 1, 2003

**Updated: The Studies - University of Texas credit scoring study.

The University of Texas study that insurers say validates the use of insurance credit scoring:

The only problem with this is that the data in the study supports the argument that insurance credit scoring is redundant and unnecessary. This note:

"The insurers comprising the top 70 percent of the market (in descending order, starting with the largest companies) were then asked to provide a random sample of new or renewing automobile policies from the first quarter of 1998 (January 1, 1998 through March 31, 1998). This examination period was chosen chiefly for two reasons. First, most of the insurers from whom data were requested were not using credit scoring at that time in rate-making or underwriting decisions, which meant that premium data collected were not affected by credit history",

and these results:

"Chart 3 shows the distribution of scores for policies from the standard market insurers participating in the study. Credit scores for the standard market (mean=733.0) are significantly higher than the credit scores for the non-standard market (mean=657.7)."

Clearly demonstrate that prior to insurance credit scoring, traditional underwriting and rating factors achieved the desired results!

April 26, 2003

Louisiana

"By a vote of 27-7, the Senate passed a bill Wednesday that would outlaw the use of a person's credit history in determining a customer's auto or homeowner's insurance premiums." Full article.

April 10, 2003

Dallas Morning News

Broken Promise: Senate's insurance 'reform' a disappointment

"The first problem with the bill is that it doesn't ban credit scoring. Although the legislation does set some borders around the use of credit histories in determining premiums, those borders still are pretty porous and give insurers too much latitude." Full article.

April 4, 2003

Dallas Morning News

State Farm to stop covering current customers who move

"The decision comes as lawmakers are contemplating changes to how the state regulates homeowners insurance. The Senate approved a bill this week that would bring most homeowners and auto insurance companies under rate regulation, forcing them to seek permission from the state when they want to raise rates." Full story.

Alaska

Senator John Cowdery needs you, Alaska!

 SB 13, "An Act prohibiting discrimination in insurance rates based on credit rating or credit scoring."  The bill has been scheduled for its first hearing in the Senate.  That hearing is scheduled for:

Senate Labor & Commerce Committee, Chair Bunde
Tuesday, April 8th, 2003
1:30 PM

You may participate by going to your local Legislative Information Office, on April 8.

Anchorage - 716 West 4th Avenue
Mat-Su - 600 E Railroad Avenue
Fairbanks - 119 N. Cushman
Kenai - 145 Main Street

If you do intend to testify, and would like to contact Senator Cowdery's office beforehand, his toll free number is 1-888-269-3879.

April 3, 2003

Austin American-Statesman

Insurance bill heads to House
Senate supporters say bill, despite absence of rate rollback, will save homeowners money

"Two contentious issues emerged. The first was the absence of specific requirements in the legislation that insurers roll back rates. The second was restrictions, rather than an outright ban, on the use of credit data to set rates." Full story.

Dallas Morning News

Senate approves insurance bill
Lower costs sought; critics deride 'missed opportunity'

"Leading consumer groups ripped into the legislation as a "missed opportunity" to truly reform the market, while the insurance industry argued the new regulations will make it hard to do business in Texas." Full story.

Houston Chronicle

Senate OKs insurance reform
Bill would give state control of coverage for homeowners

"But the legislation made consumer groups unhappy because it did not roll homeowner insurance rates back to 2001 levels, and it also does not completely ban the controversial practice of credit scoring." Full story.

San Antonio Express-News

Texas Senate passes insurance reform legislation

"Shapleigh, Gallegos and Sen. Gonzalo Barrientos, D-Austin, voted against the bill. Barrientos said he was not happy that the amendments to ban credit scoring and require a rate rollback failed." Full story.

April 2, 2003

Insurance Regulation Legislation Passed by Senate

"One of the main topics of debate was the use of credit scoring. While the bill does not ban the practice outright, it does prohibit the unfair and discriminatory use of credit scoring. San Antonio Senator Leticia Van de Putte said that by mandating insurers to make their credit scoring criteria data public, it will add more sunshine on the practice." Full article.

March 31, 2003

Houston Chronicle

Betrayal
Senate should rewrite sham insurance reform bill

"The weak bill would allow unscrupulous insurers to use credit scoring to insure whom they wanted, when they wanted, at the price they wanted. Unless banned, credit scoring could result in practices little different from the outlawed red-lining based on race, income or neighborhood." Full story.

Austin American-Statesman

Debate could get heated on Senate insurance bill

"They include allowing the use of credit data to set rates as long as the information is available to consumers. Regulators would be required to decide on the maximum impact the data would have on rates. And it would be illegal for premiums to be set according to the consumer's ZIP code." Full story.

Dallas Morning News

Homeowner rates rise over new estimate

"The report from the Texas Department of Insurance indicated that premiums have jumped an average of 45 percent since 2000 – with at least some of those increases larger than necessary to offset insurance company losses and expenses" Full story.

March 26, 2003

Austin American-Statesman

11 threaten to block insurance bill
Senate Democrats say debate won't happen till issues are resolved

"The Democrats have complained about several issues, including the absence of a guarantee that rates will be rolled back. They also have pushed for limits to the use of credit data in setting insurance rates." Full story.

March 22, 2003

Dallas Morning News

Panel approves insurer changes
Bill would restore state regulation of homeowners rates

"The bill also would put restrictions on credit scoring – the practice by many companies of using a customer's credit history when selling a policy and setting rates. When weighing different factors such as a driver's history or age, the credit scoring could count no more than 50 percent in calculation of a premium." Full story.

Austin American-Statesman

Panel OKs bill to treat auto, homeowners insurers alike

"The debate over the use of credit data to set rates also was heated. Sen. Mike Jackson, R-La Porte, said that if the practice was banned, insurance companies would find some other way of using the data. The committee voted to restrict rather than ban its use." Full story.

March 14, 2003

Dallas Morning News

Homeowners rates up 38% since 2000
Some charges excessive, official says; insurers see numbers stabilizing

"The report, however, said the variations in rates can be massive because of the discounts. Just two of those discounts – credit scoring and the age of the home – produce premium differences within the same company that range from 70 percent below the base rate – for new homes and those with good credit – to 190 percent above that rate – for older homes and those with poor credit." Full story.

Austin American-Statesman

Insurers' data reveal gap in home rates
Average homeowner paid 38% more for 22% less coverage since 2000, Montemayor says.

"Likewise, while regulated companies cannot discount the premiums of homeowners with good credit, unregulated companies gave breaks of up to 40 percent to their better customers while charging those with credit problems up to 150 percent more.

"Within a single company, insureds with bad credit can pay up to nearly three times as much as an insured in the same company with excellent credit," the report states." Full story.

Houston Chronicle

Some save, others feel pinch
Insurance discounts force rate hikes on many homeowners

"AUSTIN -- Some homeowners have been slapped with insurance rate increases of up to 200 percent in recent years to make up for deep discounts given to owners of new homes and those with good credit." Full story.

San Antonio Express-News

Home policy rates up 38%

"The commissioner also told the Senate Business and Commerce Committee, which is considering bills to regulate the insurance industry, that some policyholders were handed 200 percent increases to make up for discounts given to other homeowners.

He said the age of the houses and the controversial practice of using credit scores were used to create what he called "the off-balance effect"." Full story.

Forth Worth Star-Telegram

Insurance customers pay more but get less

"The average rate increases for individual companies ranged from 22 percent to 67 percent, according to the report. But individuals may see changes of up to 200 percent because of credit scoring or other factors, the report said."

The Preliminary Report of SB 310, click here.

March 13, 2003

Kansas

Insurance Commissioner Praeger wants to hear from you. Take the insurance credit scoring poll.

March 12, 2003

San Antonio Express-News

Credit tie to insurance pondered

"But Birny Birnbaum, an economist with the Center for Economic Justice, told the committee that even if there is a correlation of credit scores to possible losses, it doesn't justify the practice.

"In aggregate, credit scoring raises premiums. So the idea that consumers benefit is just wrong," Birnbaum said. "And even if it were right, that is about the most un-American idea I've ever heard."" Full story.

Nevada

Las Vegas Sun

Vote to be called on credit reports bill

"Assembly Democrats said public outrage compelled them to suddenly pass a bill out of committee Monday that would prohibit auto insurers from using credit reports to determine insurance rates." Full story.

Use of credit reports in setting car insurance rates under scrutiny

And insurance lobbyists begrudgingly admitted Wednesday that the erroneous information on the Commerce and Labor Committee chairman's reports could make Goldwater, D-Las Vegas, pay more for car insurance. Full story.

March 10, 2003

Dallas Morning News

Poll: Texans oppose 'credit scoring'
67% want Legislature to prohibit practice by insurers, survey finds

"In the Texas Poll, released as lawmakers consider proposed restrictions on the use of credit history by insurers, about two-thirds of those surveyed – 67 percent – say they want the practice banned." Full article.

Houston Chronicle

Texans eye insurance regulation
Poll: Homeowners seeking `real reform'

"According to the poll, 67 percent of Texans also believe the state should ban insurance companies from using a homeowner's credit history to decide whether to insure that individual or adjust a premium." Full article.

March 6, 2003

Austin American-Statesman

Limits sought on auto insurers
But lawmakers don't need to fix what isn't broken, critics say

"In addition, because auto coverage is often paid by monthly installment, while homeowners pay their premiums in advance, auto insurers may also get more latitude in the use of credit data to set rates." Full story.

March 5, 2003

Dallas Morning News

Insurance deal would cut rates
Senate leaders agree on bill for 12-15% drop in home premiums

"Homeowners would see their insurance premiums drop an average of 12 to 15 percent and insurers would face new state regulation of their rates – now the highest in the nation – under a compromise proposed Tuesday by Senate leaders." Full story.

March 5, 2003

Dallas Morning News

Mold losses drop! Duh

Re: "Claims for mold tapering – Insurance officials, regulators cautiously signal easing of crisis," by Anuradha Raghunathan, Thursday Business.

Duh! I am stunned that officials with both the Texas Department of Insurance and the insurance industry make news of the fact that losses resulting from mold have subsided. Once this became an issue in 2001, insurers immediately began renewing all my customers' policies with exclusions that preclude any coverage for mold. By now, none of us have any coverage for mold and therefore there will no longer be any claims filed against them for mold. If they are filed, they are quickly denied. Problem solved.

Now I am going to hold my breath waiting for all the insurance companies I represent to announce a rate rollback, open up their companies to actually write a new policy once in a while (if clients can actually pass the credit score test) and competition (ha!) returns to the market place.

Peter S. Batjer, San Angelo

February 18, 2003

Austin American-Statesman

Senate panel scolds insurers
Lawmakers say reform bills will pass with or without cooperation from companies

"Fraser warned insurance representatives who packed the committee room that it was in their best interest to cooperate with lawmakers." Full story.

Dallas Morning News

Senators lash out at insurer
Panel tells State Farm to cooperate or face new regulations

"Key senators warned the state's largest insurer Tuesday that it better start giving truthful answers about its business practices or it will wind up with new regulations it may not like." Full story.

February 18, 2003

Dallas Morning News

House gives OK to insurance measure
Companies would have to detail, explain rates for homeowners policies

"Besides requesting current rates and projected rates for the next six months, the legislation would authorize the commissioner of insurance to obtain information from companies about use of credit in setting premiums – credit scoring – and all supporting data used by insurers to set their rates." Full story.

Austin American-Statesman

Insurance bill heads to Perry
Governor likely to sign measure on reporting homeowners' rate data

"The House gave a unanimous nod Monday to a bill that requires homeowners insurance companies to turn over massive amounts of data about their rates and rate-setting policies to state regulators." Full story.

February 13, 2003

Austin American-Statesman

Senate Democrats want rollback

"Eleven of the 12 Democrats in the state Senate are sponsoring a bill that would force homeowners insurers to roll their rates back to their Jan. 1, 2001, levels, to stop using credit information to set rates and to obtain prior approval of state regulators before setting rates.

"We're the Darth Vader of the insurance industry," said Leticia Van de Putte, D-San Antonio."  Full story.

Dallas Morning News

Residents lobby on insurance
Homeowners walk Capitol halls in support of tough regulation bills

"Consumers Union, Texas Watch and other groups touted companion bills filed in the House and Senate that would toughen state regulation of insurers, including a requirement that all rate increases be approved by the state before they can take effect." Full story.

February 12, 2003

Dallas Morning News

Insurance plan gains strength
Senate OKs measure giving an insider's look at rates on homes

"Besides requesting current rates and projected rates over the next six months, the legislation would authorize the commissioner of insurance to obtain information from companies about the use of credit in setting premiums – credit scoring – and all supporting data insurers use to set rates." Full story.

February 8, 2003

New page added: Consumer Feedback. Consumer's reactions and stories.

February 7, 2003

Dallas Morning News

Use of credit scores fraught with peril

"The industry that brought us skyrocketing insurance rates has another trick up its sleeve.

 

Insurers now claim that their using our credit histories to decide if we can get insurance is good for us.

 

Thankfully, state Rep. Steve Wolens, D-Dallas, has filed an insurance reform bill that, among other things, would ban the use of credit scoring. But the insurance industry lobby will fight it tooth and nail." Full article.

January 30, 2003

Austin American-Statesman

Two bills take aim at home insurers
Lawmakers say measures could cut home insurance costs

"Under Wolens' bill, all companies that insure autos and homes would have to get the prior approval of state regulators before raising or lowering rates. Credit data could not be used to set rates or write policies." Full article.

Houston Chronicle

Bill would lower insurance rates
Consumer groups back measure to help homeowners

"Wolens' proposal, House Bill 600, would require companies to roll their rates back to levels of Jan. 1, 2001. He said that would reduce rates by $1.9 billion, giving homeowners an average annual savings of $436." Full article.

Dallas Morning News

Lawmakers want insurance data
Bill would force companies to open their books on rates

"The measure was filed Wednesday after some companies refused to voluntarily furnish the information as the Legislature gets ready to tackle the state's long-running crisis in homeowners insurance.

"We want the insurance companies to open their books and verify that consumers are being treated fairly," said Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate Business and Commerce Committee. "We need to know that the rates being charged for homeowners insurance are just, reasonable, adequate, not excessive and not unfairly discriminatory." Full article.

Forth Worth Star-Telegram

Bills aim to leash unruly insurance rates

"An Austin consumer group official said Wolens' proposal was the most aggressive of the various insurance overhaul proposals under consideration by lawmakers.

"This is going to put money back in consumers' pockets," said Rob Schneider, who works on insurance and financial services issues for Consumers Union." Full article.

January 27, 2003

First Credit Scoring Study Delivered to Legislature

OLYMPIA, Wash. — The Office of the Insurance Commissioner delivered a report on the impact of credit scoring on consumers to the Legislature this morning. While the results are too varied across different insurers’ situations for a clear pattern to emerge, the study found unequal effects were too common to be random events. Web Page: www.insurance.wa.gov

Study: Race, Age Have Credit Score Impact

"Insurers use of credit scores to evaluate auto insurance risks can have an unequal impact on persons who are younger, poorer and members of a racial minority group, a limited study by the Washington State Insurance Commissioner's Office has found." Full article.

January 26, 2003

Dallas Morning News

Promises to Keep
Legislators campaigned on insurance reform

"Lawmakers also must end or at least sharply restrict the use of credit scoring, an underwriting method that unfairly links insurance rates to a person's creditworthiness." Full editorial.

Forth Worth Star-Telegram

Insurance rates tough to budge

"I think most of the consumer groups ... will want to go a step farther than where we'll end up, with what I've envisioned," he said. "But what is the biggest obstacle is trying to get past the huge [insurance industry] lobby. The pitfall is that the insurance industry has never been defeated on an issue." Full article.

January 25, 2003

What insurance reform?

I, too, just received my homeowners insurance. You guessed it, another increase of $221. But now they will not renew the HO-B form (unspecified perils) but, will renew only as an HO-A (specified perils) form. In other words, less coverage for more money! What is wrong with this picture? Does this benefit the consumer? I think not! When is this going to end?

Our homeowners premiums have increased 58 percent since 2000. We were paying $1,377, and now it is $2,178 year. We built our home in 1998 and have never had a claim. Our policy increased $425 last year and now another $221 with a form that provides less coverage. Where is that insurance reform that Gov. Rick Perry and Insurance Commissioner Jose Montemayor are talking about? I have been giving Mr. Perry the benefit of the doubt because he inherited his staff from George W. Bush. You know that our insurance commissioner is appointed by the governor? So, I was hoping to see some changes in our insurance regulations, but I just read a few days ago Gov. Perry re-appointed Mr. Montemayor for his third two-year term. He's already had four years to correct these problems. How much longer does he need?

So, where and when is this insurance reform going to take place? Not only are the premiums sky high, but now the insurance companies are limiting coverage by replacing the form with an HO-A. All of this is approved by the insurance commissioner. I am sure the majority of the consumers do not understand the differences between an HO-B and an HO-A form! I have not had any notification from my insurance agent, and my insurance company tells me via a letter with my new HO-A renewal policy. I am a retired licensed insurance agent, and I barely understand this! Who is protecting and educating the average consumer? How are they supposed to make informed decisions regarding their insurance?

Kara R. Stevens, Plano, Texas

January 21, 2003

Dallas Morning News

Tracking legislative action on insurance
Reform Web site unveiled

"The consumer group Texas Watch on Monday announced a new Web site that it says will make participating in the legislative debate on insurance reform easier for consumers." Full article.

www.FixTexasInsurance.com

January 20, 2003

Dallas Morning News

Insurance proposals get mixed reviews
Consumers groups question whether efforts will help homeowners

"I think there's a real question about whether we're going to see real reform that's in the interest of consumers this session," said Rob Schneider, staff attorney for Consumers Union. "Will insurance reform benefit consumers, or will it benefit insurance companies?" he said. Full article.

January 19, 2003

Dallas Morning News

Luke Metzger: We are paying for stock gamble by insurers
"During the last few years, insurance companies have been drastically increasing rates on homeowners, canceling policies, reducing coverage and prying into private credit records to keep coverage from many Texans." Full article.

January 9, 2003

Austin American-Statesman

"Joe Longley and Phil Maxwell, two veteran Austin trial lawyers representing some of those policyholders, have criticized the settlement -- it "stinks," Maxwell said -- and went to court to require Texas Insurance Commissioner José Montemayor, other state insurance officials and Farmers negotiators to sit down and answer pointed questions about how they reached a settlement that got Farmers off a penalty hook without acknowledging any wrongdoing." Full story.

January 9, 2003

Houston Chronicle

Insurance reforms top legislative goals

"The major insurance company she had been with for years blamed the huge increase on her less-than-perfect credit rating. She ended up switching to a lesser-known company and paid $1,480 for reduced coverage.

Pruitt said she will be watching to see if Perry keeps his campaign promises to fix the homeowners insurance problem." Full story.

KERA 13

Recently on ON THE RECORD

For a schedule of show dates click here.

Topic
Insurance in the state of Texas

Guests
Lon Burnam is a Democratic Representative from Fort Worth . He sits on the insurance committee.

Beaman Floyd is a Lobbyist. He represents All State, State Farm, Nationwide and USAA.

Sara Lapham is a Consumer Advocate. She started www.InsuranceCreditScoring.com.

Joe Driver is a Republican Representative from Garland . He's also a State Farm agent.

 December 30, 2002

Insurance battle almost on in Austin
Lawmakers, consumer groups, lobbyists set for insurance fight

"Thousands of new-home buyers have had to search high and low for insurance in the tight market, while thousands of other homeowners have been angered by the growing practice of many insurers to use a consumer's credit history when setting rates." Full story.

 December 19, 2002

Dallas Morning News

New insurance rule addresses water claims

"AUSTIN - Insurance companies are prohibited from denying coverage to homeowners who have filed a water damage claim in the past under a rule adopted this month by Insurance Commissioner Jose Montemayor.

Insurers can no longer refuse to sell or renew a policy based on a single water-related claim as long as the damage was properly repaired. The rule does not affect premiums.

The changes comes as an increasing number of homeowners have complained that they are unable to find insurance because of a previous water damage claim. Some insurers have restricted sales of new policies in the wake of massive mold and water related losses.

The insurance industry opposed the rule, which was endorsed by leading consumer groups, the Texas Association of Realtors and the state Office of Public Insurance Counsel"

December 17, 2002

"Washington, D.C. - Millions of Americans could pay more for - or be denied - credit, insurance, or utilities because of inaccurate credit scores, according to a new study, Credit Score Accuracy and Implications for Consumers, released this morning by the Consumer Federation of America (CFA) and the National Credit Reporting Association (NCRA)." Full article.

December 16, 2002

Michigan

Commissioner Fitzgerald released his report on The Use of Insurance Credit Scoring in Automobile and Homeowners Insurance. 

"In response to the report, OFIS will begin to implement several administrative recommendations over the next several weeks. Those include:

• Requiring all Michigan insurance companies to inform policyholders of insurance credit scores and levels of discount annually. In addition, the companies will have to file with OFIS the insurance credit scoring formula used to apply a discount and the specific factors used to calculate the credit score. The formulas and factors will be available for public inspection pursuant to the Michigan Freedom of Information Act.
• Requiring companies using an insurance credit scoring discount to recalculate and then apply a policyholder’s insurance credit score at least once annually and at any time a consumer has successfully disputed his or her credit history information.
• Requiring companies using an insurance credit score discount to file with OFIS an actuarial certification justifying discount levels and tiers annually, including those discounts granted to policyholders with no credit history (“no hits”) or whose credit histories do not reveal all the credit factors used by the company’s formula (“thin files”) to determine the insurance credit score." Full article.

December 12, 2002

December 11, 2002

Dallas Morning News

Perry's top goal: insurance

"Mr. Perry wants a bill that:

• Restricts credit scoring of insurance applications.
• Eliminates loopholes that allow major insurers to escape regulation.
• Gives state regulators power to freeze rates while the agency reviews them.

Texas Watch wants more, Mr. Lambe said, including an outright ban on credit scoring and the power for regulators to review rates before they're imposed." Full story.

December 8, 2002

Houston Chronicle

"If you call an agent to find out what your auto deductible is because you had a minor fender bender or you check to see if your home policy covers water leaks because a frozen pipe burst, that can become a mark on your record.

Even if you decide to pay out-of-pocket to repair the damage, the insurance company can still call that an open claim with no payment and add that to your claims history." Full story.

December 8, 2002

Austin American-Statesman

". . . (On credit scoring), I think . . . (you'll see) one of two things: either one, ban it all together, and two, you're going to see some pretty severe restrictions as to what has to be disclosed and how they have to go about it." Full story.

December 7, 2002

Dallas Morning News

Ban credit scoring

I was quite disturbed on Wednesday to read Deputy Commissioner of Insurance Karina Casari's reaction to insurance credit scoring ("State studying State Farm, Allstate insurers"). Any use of insurance credit scoring is unfair and discriminatory. Increasingly, consumers who would otherwise be considered acceptable risks, including those who pay their insurance bills on time and have no loss experience, are subject to nonrenewal and dramatically higher rates based solely on their credit history. Extraordinary medical bills, family emergencies and loss of employment are not considered nor are the credit habits of the elderly and immigrants.

The Texas Department of Insurance needs to examine insurance credit scoring closely, as does the Legislature in the upcoming session. Insurance credit scoring is unfair, discriminatory and must be banned.

Sara C. Lapham, Garland

Dallas Morning News

Craddick taps 3 top aides
Set to become speaker, he disbands criticized transition team

"He also announced that he is dissolving his three-member transition team, whose appointments were a sore point with consumer and citizen watchdog groups because two of the members are registered lobbyists with insurance ties." Full story.

 

 December 4, 2002

Dallas Morning News

State studying State Farm, Allstate insurers

"We're not saying they can't use credit scoring, just that if they do, it cannot be unfair or discriminatory," she said." Full story.

Dewhurst, Craddick welcome lobbyists, checkbooks to parties

"Lt. Gov.-elect David Dewhurst and presumptive House Speaker Tom Craddick welcomed lobbyists and their checkbooks to lavish crosstown fund-raisers Tuesday night, six weeks before the start of the legislative session." Full story.

Craddick to close bill analysis office

"The speaker-apparent of the Texas House plans to eliminate the independent office that analyzes bills, a move that consumer advocates warned could amplify lobbyists' influence over law-making." Full story.

Austin American-Statesman

State defends its settlement with Farmers

"Some consumer groups and legislators are questioning why the state waived potentially millions of dollars in fines and allowed Farmers to pay only two-thirds of what it had sought in restitution. The state originally demanded $150 million in restitution and up to $25,000 per overcharged policyholder.

"I'm still trying to see the good in it," said Dan Lambe, executive director of the consumer group Texas Watch.

Lambe and others say the case highlights the need for legislation that would require insurers to have any rate increases approved by regulators before the increase could take effect. Currently, the rates of 95 percent of the companies that write homeowners insurance are unregulated.

"It's a classic example of how long it takes to challenge an insurance company that's not afraid to spend millions of dollars on attorney's fees," Lambe said. "If ever there was an example of why we need to be ahead of the curve instead of behind when it comes to rate-setting regulation, this latest settlement with Farmers is a perfect example." Full story.

December 3, 2002

Austin American-Statesman

Farmers deal draws critics, scrutiny
Legislators say agreement on rates underscores need for tougher regulation

"Under the deal reached Saturday, the state waived potentially millions of dollars in fines. Farmers will have to pay two-thirds of what the state had sought in credits and rebates to customers. The company also admitted no wrongdoing." Full story.

December 2, 2002

Las Vegas Review-Journal

INSURANCE INDUSTRY: Method to set rates debated

"WASHINGTON -- Sara Lapham knew there had to be a mistake when her homeowners insurance premiums jumped 78 percent earlier this year without her ever having filed a claim.

Confused, Lapham started inquiring about the rate hike.

"Nobody could point me in the right direction, so I did the research myself," said Lapham, 35, a self-employed Web page designer from Garland, Texas. "When I found (the reasons), I was quite appalled." Full story.

Texas Department of Insurance

"AUSTIN - Today the Texas Department of Insurance (TDI) and the Office of Attorney General (OAG) reached an agreement with Farmers Insurance Group that that will effectively end the lawsuit and administrative enforcement actions that were initiated against the company in August." Full article.

Dallas Morning News

"There were no fines or penalties in the settlement – reached after weeks of negotiations – even though state regulators had accused Farmers of illegal pricing practices and other violations of state law.

Farmers executives praised the agreement at a news conference Saturday, insisting that their No. 1 goal had been to remain in Texas, one of their largest markets.

They also refused to concede that the company had done anything improper or illegal, even though the company will pay refunds of about $65 million for allegedly overcharging customers." Full story.

Dallas Morning News

Pay to play in Austin

Not being a professional lobbyist but simply a private citizen it was with great interest I read of Texas' new speaker of the House's invitation only "donations are encouraged" party held recently in Austin. The question immediately came to mind, how do I, your average nonlobbyist citizen, get to "have any influence with Speaker Tom Craddick's office"?

The answer is crystal clear. Send money.

Next question, how much money do I send? Now that's a little tougher. Does Speaker Craddick have a price list? Something that tells how much influence I can purchase for a certain amount of money sent? Surely there's a standard for influence peddling. Any help from the speaker's office would be greatly appreciated.

Do the words $leazy, $leazy, $leazy come to mind?

Robert Brandes, Fredericksburg

Austin American-Statesman

"However, Powers, president of the Center for Economic Justice — a consumer watchdog group — said the deal also sets a dangerous precedent.

"The message the state is sending the insurance industry is that it's profitable to overcharge the Texas consumer," Powers said. "This is going to empower insurers to be very active in overcharging consumers because they know that the state will ultimately back down."

Powers said the restitution is less than half of the $150 million the state had sought, and lets Farmers keep millions that the state claimed rightfully belonged to consumers.

"They are getting to keep $85 million in overcharges," he said. Farmers now can say, "we get to keep half the money we overcharged, escape with no penalties and earn interest on the money we took from consumers." Full story.

Austin American-Statesman

Campaign promise

I am holding Gov. Rick Perry and Lt. Gov.-elect David Dewhurst to their campaign promise to solve the current insurance crisis.

I live in a townhouse. Our homeowners insurance premiums have increased 390 percent with no mold coverage. We are covered by a "Lloyds" insurer.

I am asking that all insurers be licensed by the state. Please close the loopholes that allow the insurers to move the coverage to an unregulated company.

MARILYN K. LAY

November 26, 2002

Dallas Morning News

"Insurance regulators must have the authority and resources to better monitor market conditions, challenge credit scoring and other questionable underwriting standards, and quickly reprove insurers who abuse the system." Full article.

November 24, 2002

Dallas Morning News

"And now, for the first time, well-placed lobbyists for business and corporate interests have a foot in all three top offices." Full article.

Dallas Morning News

"Thank you so much for the stories detailing the capture of Gov. Rick Perry's and speaker-to-be Tom Craddick's offices by insurance lobbyists. Now if you will just try and give us the number of retainers that the lawyer/legislators of the Texas House and Senate have, we can better establish the odds of any bills for the people being passed.

Right now, I have it about the same as the odds as my winning the lotto, approximately 25 million to 1."

James S. Reed, Dallas

November 23, 2002

Austin American-Statesman

"Representatives from both sides met for several hours, but no deal was announced to settle a bitter dispute over the legality of Farmers' pricing practices. Negotiations are expected to continue until an agreement is reached that would keep the state's second-largest insurer from leaving the Texas homeowners market, forcing 700,000 customers to scramble for coverage during the next year." Full story.

Dallas Morning News

"Two members of Tom Craddick's transition team who also represent the state's two largest insurance companies on Friday sent invitations to hundreds of fellow lobbyists soliciting money for the House speaker-to-be." Full story.

November 22, 2002

Austin American-Statesman

"Insurance talks reach critical stage: Officials of Texas and Farmers Insurance Group will meet today as deadline approaches to reach pricing agreement." Full story.

Dallas Morning News

"At the same time, he (Craddick) defended his selection of two prominent lobbyists to serve on his three-member team to help the transition of power in January – a point of concern for consumer and public watchdog groups." Full story.

National Conference of Insurance Legislators

Model Act Regarding Use of Credit Information in Personal Insurance

November 21, 2002

Dallas Morning News

Insurance lobbyists win

We are in the midst of an insurance crisis here in Texas. So what does prospective Texas House Speaker Tom Craddick do? He selects two lobbyists from the insurance industry for his staff, making clear whose interests Mr. Craddick seeks to protect. Those who voted for Mr. Craddick are apparently going to get the government they deserve; the rest of us will just get the business.

John Elmore, Dallas

Dallas Morning News

"An insurance reform package that would restore state regulation of homeowners insurance rates and sharply restrict the ability of companies to use the credit history of their customers was unveiled Wednesday by key members of the Senate." Full story.

November 19, 2002

Dallas Morning News

"Unfortunately, Rep. Craddick already has named two lobbyists with connections to the insurance industry to serve on his transition team. While starting a new speakership is not easy, Rep. Craddick nonetheless should not rely upon lobbyists to guide him." Full editorial.

November 16, 2002

Dallas Morning News

"The election last week brought a big victory for Texas Republicans, and it continues to pay dividends for top state business lobbyists, too." Full story.

November 14, 2002

Austin American-Statesman

"Two of the three members of the next Texas House speaker's transition team have ties to the insurance industry, raising concerns among consumer advocates because insurance reform will be a top issue in the legislative session." Full story.

November 13, 2002

Dallas Morning News

"AUSTIN – Republican state Rep. Tom Craddick chose two prominent Austin lobbyists on Tuesday as part of a three-member transition team to assist in the transfer of power before his presumed election as House speaker." Full story.

November 12, 2002

Dallas Morning News

Farmers, state agree on 30-day extension

"The biggest sticking point, according to representatives for both sides, is the demand by the Texas Department of Insurance that Farmers admit it used illegal pricing practices and refund an estimated $150 million in alleged overcharges. The state agency and attorney general's office also sought massive fines in a lawsuit filed against the company." Full story.

Homeowners are victims in standoff

"Texas' homeowners insurance woes are the result of a complex set of circumstances that have been approaching slow boil for a long time. The problem might have been eased sooner with careful study, negotiation and finesse, but grandstanding and politics made it worse." Full story.

Austin American-Statesman

Insurer, state buy time for a final deal

"Even if a permanent resolution is found, consumer advocates said the company's threat to stop selling homeowners policies in Texas has given the industry another tactic to thwart insurance reform efforts in the Legislature. At least seven legislators plan to introduce bills addressing the insurance crisis." Full story.

November 11, 2002

Austin American-Statesman

Farmers agrees to tentative deal

"Among the issues still on the table Sunday was whether Farmers would have to change its discount or credit-scoring practices for policies it sells during the interim period." Full story.

November 10, 2002

Austin American-Statesman

Legislators gear up for insurance crisis
GOP-controlled Legislature will get reform bills from both sides of aisle, but what will result?

"I recall all of the candidates being in favor of insurance reform, so I'd be surprised if they changed their tune now," said Rob Schneider, senior staff attorney for Consumers Union's Southwest regional office. "It's a real issue, not a made-up campaign issue." Full story.

November 9, 2002

Dallas Morning News

State releases Farmers documents

"In the documents, the department said the company violated the insurance code by "using credit scoring to discriminate against individuals of the same determined class and of essentially the same risk by assigning them the different premiums and/or rates."

Further, the state engaged in deceptive trade practices because "Farmers gives its 'best' customers discounts that accurately reflect the indicated risk but does not give customers with worse credit scores the discounts that are actuarially justified by Farmers own data," the Department of Insurance said." Full story.

Austin American-Statesman

"Farmers withheld discounts, state says
Insurer disputes figures, continues talks to keep operating in Texas.

In the top four categories, customers with the best credit got discounts of 47 percent, less than one point below the guidelines. But people in the second-lowest tier got only a 4 percent discount, although Farmers guidelines said they should have received 19.8 percent. Like other insurers, Farmers won't reveal how it determines credit scores." Full story.

San Antonio Express-News

"State, Farmers resume talks

Farmers faces a lawsuit by the attorney general's office, which had accused the company of overcharging customers and of deceptive trade practices. The company denies wrongdoing." Full story.

October 11, 2002

A perfect quote received from an angry insurance consumer in Florida:

"I don't HAVE to HAVE CREDIT, it's a luxury, I HAVE to HAVE insurance by law."

October 10, 2002

Dallas Morning News

"There's one individual in this race for governor who is profiting because of insurance, and that's you," Mr. Perry said, looking at Mr. Sanchez across the stage. "There's only one individual in this race for governor who has an insurance agency that is selling unregulated policies using credit scoring to run those rates up – and that is Mr. Sanchez." Full story.

October 8, 2002

Dallas Morning News

"The group released a report that showed campaign contributions from the insurance industry to legislative candidates are on pace to increase by 25 percent from the 2000 election cycle.

From June 2001 to June 2002, the industry gave $300,628, the group said. Based on the industry's pattern of giving from the 2000 election, that figure is expected to grow to about $677,000 through the election, Campaigns for People said.

That money came from homeowners insurance companies' political action committees, lawyers and lobbyists, the group said." Full story.

September 27, 2002

Farmers clients to hunt new coverage:
Worried holders of Farmers home policies consider alternatives

"The bottom line is that people are going to have to dig deeper, search further and make more calls than ever before to get homeowners insurance," said Dan Lambe at Texas Watch, a consumer support group. "They have to look under every rock." Full article.

September 26, 2002

Dallas Morning News

Farmers to halt home insurance:
Company cites losses as it cuts off coverage for 700,000 Texans; Perry, Sanchez sound off

"Consumers have been getting ripped off by this company, and I am not going to put up with it," Mr. Perry said while standing before reporters in front of the Governor's Mansion.

"I don't want Texans doing business with a company that is involved in unethical and inappropriate activities while running up their rates." Full article.

Austin American-Statesman

Farmers leaving home market:
Company says it was losing too much money insuring 700,000 Texans

"State officials say that Farmers has overcharged its Texas customers by as much as 50 percent, raised their premiums to cover losses in other states, set "excessive profit targets" for its Texas policies and used insupportable factors to assess future claims." Full article.

San Antonio Express-News

Farmers to abandon Texas

"Farmers' stunning announcement comes two days after the Texas Department of Insurance offered to settle two of three actions it took against the company. The department is accusing Farmers of unfair and illegal practices. Farmers has denied those allegations." Full article.

Ft. Worth Star-Telegram

Farmers cutting off coverage

"It comes on the heels of enforcement action by the Texas Department of Insurance, which on Aug. 13 accused Farmers of deceptive and discriminatory trade practices and ordered it to freeze rates. The agency also said it will seek what might be billions of dollars in penalties against the company." Full article.

September 25, 2002

Texas Consumer Organizations Criticize Farmer’s Insurance Decision: Action Underscores Need for Real Reform

“Farmers Insurance has taken billions of dollars in Texas consumers insurance premiums over the years. They’re with us in the good times, but abandon Texans when the going gets tough,” said Rob Schneider, Senior Staff Attorney for Consumers Union. “Their decision to pull out of the homeowners market as Texas is facing a real insurance crisis is irresponsible and short-sighted. Farmer’s decision demonstrates the urgency for real insurance reform in Texas.”  Full article.

Dallas Morning News

"Farmers Insurance Co., the state's second largest homeowner insurer is leaving Texas homeowners' market and will stop renewing policies in November, a spokesman said Wednesday.

The decision will affect about 700,000 customers, the company said." Full article.

September 24, 2002

Dallas Morning News

Insurance frustrations mount

"On another hot insurance topic – use of credit history to determine a customer's rates – Mr. Sanchez has proposed a flat ban on the practice by Texas insurers.

Mr. Perry favors prohibiting use of credit history, except when there is a direct correlation between customers' credit history and their insurance risk. He also wants companies to disclose their "credit scoring" systems to customers." Full article.

Nation's highest rates are trying the patience of many Texans

"Texans pay the nation's highest rates. Ninety-five percent of Texas policies are written by unregulated companies. In the last year, premiums have soared – in some cases more than doubled – with insurers blaming unprecedented billion-dollar-plus losses from mold and water damage." Full article.

State offers to settle suit with Farmers

"The Texas Department of Insurance proposal addresses the unfair and illegal practices committed by Farmers while giving Farmers a fair opportunity to work through this problem. Our goal is to have Farmers stay in the market and be in compliance with the law." Full article.

September 20, 2002

CBS Evening News

Credit Rating Drives Car Insurance Costs

"It's called credit scoring, and the worse you score, the more you'll pay for insurance -- even if you've never had an accident or suffered a loss to your home." Full story.

September 19, 2002

Houston Chronicle

Many cite insurance as big issue

Of the 1,000 adult Texans contacted by the Scripps Howard Texas Poll,........

Three-fourths of those polled said insurance companies should not be allowed to use a homeowner's credit history as a factor in issuing coverage. Critics say this discriminates against low-income people who may be good risks.

That compares to 15 percent in favor of credit scoring, which the insurance industry said provides good indication of how many claims a person is likely to make.

September 18, 2002

TDI Launches www.helpinsure.com

AUSTIN - The Texas Department of Insurance today announced a new program designed to help consumers find homeowners insurance. The program includes a web site, www.helpinsure.com and a toll free telephone number, 1-866-695-6873.

September 15, 2002

Dallas Morning News

"Mr. Watson has proposed convening a task force, made up of state officials, industry experts and consumer groups, to monitor insurance companies' practices. The approach, dubbed Insurance Watch, would bring all stakeholders to the table and would identify damaging trends, he said.

"Most of what Insurance Watch is intended to do is to prevent problems before they reach a crisis situation," he said.

His plan, which Mr. Watson said could be implemented at no cost, also calls for a ban on insurance companies' practice of using consumers' credit ratings to determine eligibility for coverage. Mr. Watson said he would lobby legislators to raise the standard that insurance companies must meet to justify rate increases. He also wants the state to regulate Lloyds companies, which now sell most policies in the state but whose rates are not regulated." Full article.

September 9, 2002

September 5, 2002

Corpus Christi Caller-Times

"Once Chapa, a corrections officer, got his credit score in order, he was re-accepted into Farmers' regulated car insurance company - for two weeks. His policy was canceled because his housemate, who drove his car, didn't have a good credit history." Full article.

September 1, 2002

Austin American-Statesman

"The Legislature also needs to put clamps on the use of credit scores. For example, it should be acceptable to give customers with a strong credit score a discount on their premium if an insurer wishes. But it is not acceptable to penalize a customer with a higher premium solely on the basis of his or her credit score." Full article.

August 27, 2002

Dallas Morning News

"During a legislative hearing, leading consumers' organizations ripped into the use of so-called credit scoring by insurance companies, calling it "inherently unfair" and a new way for the industry to discriminate against low-income and minority residents." Full article.

Austin American-Statesman

"Credit scoring is one of the hot issues in the state's bubbling insurance crisis. Lawmakers, regulators and consumer groups say they're skeptical about the practice, contending that there's scant evidence that credit scores accurately predict whether someone is a high or low insurance risk." Full article.

San Antonio Express-News

"Credit scoring, a calculation used by some insurers to gauge applicants' financial histories, has emerged as one aspect of the insurance debate expected to play out during the legislative session." Full article.

 Ft. Worth Star-Telegram

"A consumer's actions that generate credit inquiries - such as renting a car - can potentially drive up his or her homeowners and automobile insurance premiums, according to testimony Monday on the controversial use of "credit scoring" by the insurance industry." Full article.

Associated Press story

"An independent study on the use of credit scoring by insurers would help determine how credit history correlates with losses, Insurance Commissioner Jose Montemayor said Monday.

"We really should get an independent look at it by someone who doesn't have a dog in the hunt," Montemayor told the state House Committee on Insurance." Full article.

August 26, 2002

Dallas Morning News

"Moreover, underwriting guidelines vary from company to company, and sometimes include controversial yardsticks such as a consumer's credit rating to help set premiums. Although insurers argue that there is a correlation between a person's credit rating and insurance risk, regulators in Texas and in other parts of the country aren't so sure. Several states are considering a ban on the practice, and at least one state, Maryland, has banned insurers from using credit scores to determine homeowners' rates." Full article.

San Antonio Express-News

"Insurance providers' use of credit histories to gauge whether customers are good risks also has consumers — and now politicians — calling for reform." Full article.

August 13, 2002

**TDI Issues Emergency Cease and Desist Order to Freeze Farmers Insurance Rates**

**House Of Representatives - Notice of Public Hearing**

The Texas House of Representative Committee on Insurance has been asked to study insurance credit scoring over the next few months.  Specifically they are looking at insurance industry guidelines about using information found in your credit history to raise rates and cancel policies and the Texas state laws that apply to that practice. 

The Committee will be holding its first hearing on credit scoring at 1:30pm on Monday, August 26, 2002 at the Capitol in Austin, and public input is welcome.  This is a great opportunity to let our elected officials know exactly what the insurance industry is up to and how it is affecting Texas families.  This is your first chance to share your personal story about credit scoring with the people who can do something to stop it.  If you can’t make it to this hearing, don’t worry -- there will be more opportunities in the future. 

Texas Watch will be organizing consumers who want to speak out against credit scoring at this hearing.  We will meet in advance at our office (around 12:45) which is just a few blocks from the Capitol and then all go over to the hearing together.  At the Texas Watch office, we will go over what to expect at the hearing, help people with their testimony and answer any questions.  The hearing will likely take a few hours.  You can leave after you give your testimony, but you should be prepared to stay until 4pm or so.  Testimony should be kept to 5 minutes.  I will be more than happy to help anyone prepare their testimony in advance. 

If you are interested in speaking at this hearing or you have questions about it please call or email Stacey Pogue (stacey@texaswatch.org or 1-888-738-4226 toll-free). 

August 7, 2002

House Of Representatives
Notice of Public Hearing

COMMITTEE: Insurance
TIME & DATE: 1:30PM, Monday, August 26, 2002
PLACE: E2.026
CHAIR: Rep. John T. Smithee

Charge #5: Review state laws, rules of the Texas Department of Insurance, and industry underwriting guidelines to determine why drivers are classified in ways (for example, "high risk") that cause policy cancellations, non-renewals, or increased premiums. Specifically include the importance of credit histories and prior cancellations in the review.

August 6, 2002

Dallas Morning News: Farmers Insurance sued by state

"Farmers has used credit history as a significant factor in setting premiums without disclosing the adverse impact of the practice to customers. The attorney general called the use of "credit scoring" illegal discrimination." Full article.

Austin American-Statesman: Farmers is sued on home policies

"The suit says Farmers' use of secret credit scores in setting premiums for homeowners is illegal discrimination because Farmers' system charges people with the same risk different premiums." Full article.

August 5, 2002

ATTORNEY GENERAL JOHN CORNYN ANNOUNCES LAWSUIT AGAINST
MAJOR INSURANCE COMPANIES

"Cornyn files suit against insurer: Action could lead to refunds for homeowners; Farmers calls allegations 'without merit'"

"The lawsuit alleges that Farmers has charged Texas policyholders for natural disasters occurring in other states, has used a secret credit history rating system to set premiums without alerting consumers and has made all Texas policyholders pay for water damages that belong to a select group of homeowners." Full article

July 22, 2002

A progressive idea on credit scoring
Editorial Board-AUSTIN AMERICAN-STATESMAN
Monday, July 22, 2002

Calls to regulate insurers' use of credit scoring are coming from an unlikely source: a large auto insurance company.

Progressive Insurance Company's William Graves, speaking to a packed house of insurance officials in Austin last week, challenged his competitors to endorse regulations to restrict the use of credit scoring and to require disclosure of some information.

It is a bold but welcome move. Other insurers should follow Progressive's lead to clear up problems -- before the Legislature does it for them.

Quietly, the big insurers -- Allstate, Farmers, State Farm and Progressive -- are using credit scoring in underwriting decisions that determine rates and whether a person should be sold a new policy or renewed for an existing one.

It is unfortunate that Gov. Rick Perry and lawmakers have allowed that to occur without setting guidelines, as other states have done. With no regulations, each insurer is free to set up its own system of credit scoring. In the absence of any guidelines, insurers have kept secret much of the criteria used to develop credit scores, so the public has had little to go on in evaluating its validity.

Credit scores are based on consumer credit histories compiled by consulting companies, such as Fair, Isaac & Co., which develop scoring models. Companies have zealously guarded those models to protect trade secrets. The models determine credit scores, which drive rates for auto or homeowners policies.

Insurers and advocates cite numerous internal studies that they say confirm the link between credit-based insurance scores and the risk of loss. Basically, the lower the credit score, the more likely a person is to file a claim; the higher the credit score, the less likely a person is to file a claim.

Last week, Progressive did much to raise the veil on credit scoring, even publicly disclosing its model to competitors. Graves pointed out that if consumers know what information negatively affects their credit, consumers can improve their credit and lower their insurance rates.

That is the kind of openness and responsible behavior that is needed if Texas is going to permit credit scoring. It hardly seems fair to deny policyholders access to the information and circumstances that drive their rates.

Other insurers would be wise to follow Progressive's move. Already, lawmakers are lining up to file bills to restrict or ban credit scoring. They will get an earful from upset consumers whose premiums have doubled or tripled because of credit scoring.

When the Legislature meets next year, it should review claims of the insurance industry regarding the validity of credit scoring and it should set guidelines to prevent companies from abusing the practice. Insurers will have to convince legislators that credit scoring doesn't discriminate against the elderly, poor, immigrants or others who tend to use cash more than credit.

Another question that insurers should answer is why credit history and risk of loss are related. Insurance Commissioner José Montemayor said it best: "We're such a large weather state where losses are so tied to weather that I have a difficult time understanding that a hail cloud can tell which house is the one with the lousy credit."

Recommendations

Regulations Progressive Insurance County Mutual of Texas President William Graves recommended be passed by the Legislature:

* Prohibit insurers from canceling, rejecting or renewing policies based solely on a person's credit score.

* Eliminate consideration of disputed credit information. Require rerunning credit if information is incorrect.

* Require companies to file credit scoring models and rules with the Texas Department of Insurance.

* Require disclosure to consumers that credit information will be obtained and that insurers provide reasons for adverse affects.

July 21, 2002

'This is insane'
Homeowners with past water damage scrambling for insurance.
By Shonda Novak
AMERICAN-STATESMAN STAFF

Sunday, July 21, 2002

T amira and Robert Garcia moved into a house in South Austin two weeks ago. Their previous insurance company wouldn't write a policy because the $147,600 house had aluminum wiring and didn't meet new electrical standards.

The Garcias finally found a policy through Farmers Insurance Group and closed on the sale. But last week, Farmers notified the Garcias that they are being dropped Aug. 14. The reason: They had filed a water damage claim in November at their former town house. Farmers refunded them the $702 balance on the premium.

State regulators allow insurance companies to reject a new customer within 90 days of writing a policy if the company discovers a past claim. But the Garcias say they fixed the leak themselves and never submitted a bill to the insurance company.

Despite calls to "a bunch of other companies," the Garcias still have no insurance.

"All these agents are telling me: If it was any other year, this would all be fine," Tamira Garcia says.

But this is an extraordinary year for homeowners insurance in Texas. Insurers say their losses are mounting from expensive mold and water-damage claims. Two of the biggest companies have stopped writing new policies. Nearly all insurers are dramatically raising prices for homeowners policies.

Allstate no longer writes new policies for individuals or on homes with water claims over the past three years. And last week, Farmers said it would stop writing new policies for houses that had a water or mold claim during the past three years. Farmers also said it wouldn't cover homes older than 30 years unless the plumbing had been renovated.

After an outcry from consumers over Farmers' restrictions, Texas Insurance Commissioner Jose Montemayor requested underwriting guidelines from Farmers and Allstate. He said the restrictions "aggravate an already serious availability and affordability problem with homeowners in Texas."

Late Friday, Farmers modified its position. The company said it never intended to drop all coverage for homes with water claims or older plumbing systems. Instead, the company said, it meant only to drop coverage for water damage for those types of properties.

Farmers' internal memo, however, did not spell that out; it clearly said that properties in those categories will be "ineligible for coverage."

Last week, a new and even more damaging facet of the insurance crisis emerged: reports that prospective home-buyers are having tremendous difficulty obtaining insurance for houses with a previous water claim.

"You can't close a loan without homeowners insurance," said Harry Dinham, legislative coordinator for the Texas Association of Mortgage Brokers. "It's causing considerable problems within the industry from that standpoint. Insurance used to be the last of your problems."

Added Earl Lovell, a real estate agent with RE/MAX in Pflugerville: "Now, when I talk to customers, I always ask, do you have any water claims? Any mold claims? I think it's going to make buyers and sellers and agents very aware."

Sales in limbo

Awareness may be increasing, but not regulatory action. Insurance companies write about 95 percent of their homeowners policies through subsidiaries that are exempt from rate regulation by the state.

As more home sales are delayed, however, consumer outcry is likely to grow, and with it the pressure for action by state lawmakers when the Legislature convenes in January.

Real estate broker Carol Dochen said she has a buyer for a $545,000 house in Austin's Northwest Hills, but she says the sale is in limbo because the house had a water damage claim in 1998.

"My buyer was told by his insurance company that they wouldn't insure it," said Dochen, president of Carol Dochen Realtors. She said she and the buyer are "jumping through all kinds of hoops" to find coverage. The buyer's present insurer finally has agreed to an inspection to determine whether the house is eligible for coverage.

Dochen said another company would talk to the buyer only if he agreed to have them also insure his car, at a higher price than his current premium. Even then, he was told the company would need up to two weeks to investigate whether it would insure the house.

"This is insane," Dochen said.

Dochen also is concerned about Farmers' new rules.

An area Dochen specializes in is Central Austin, where many older houses have the kinds of plumbing that fall under Farmers' new restrictions. The cost of replacing older plumbing can range from about $2,000 for an average-size house on a pier-and-beam foundation to $30,000 for a house on a cement slab.

"I read that and I thought: My business is going to be dead," she said. "If all the insurance companies in the state of Texas followed the guidelines set by Farmers, it would shut down sales in Central Austin."

One-third of the houses in Travis County were built before 1972.

Insurers say the new restrictions are an inevitable reaction to huge losses over the past several years. Last year, according to an industry trade group, insurers paid $1.2 billion in water-related claims made over the past two years. Mold and water-damage claims have skyrocketed.

In 1999, the latest year for which rate comparisons are available, the average Texas homeowners premium was $861, nearly twice the national average. That figure will likely increase dramatically by the end of this year.

In the past year, more insurers have offered policies with less coverage, which they say brings their Texas policies more in line with those they offer in other states.

Claim, then canceled

That doesn't assuage homeowners who expect water-related claims to be addressed -- with no repercussions.

Judy Long said her $105,000 house in Round Rock had a water leak in November that turned into a claim for damage caused by mold. She doesn't yet have an estimate for what the repairs will cost, but she says her insurance company recently notified her that it will cancel her policy on Aug. 17.

"I'm just flabbergasted," says Long, who has lived in the house for 15 years. "You pay premiums for years, and then when you need insurance, they pay off your claim and cancel you."

So far, she says, she has not been able to find another policy.

"I called my independent agent in town. They said they couldn't find anyone to write it. She (the agent) said I would love to help you, but nobody's going to write you a policy with an open claim."

Robin and Jim Lucas of Luling spent $30,000 fixing up the house her grandfather built in 1946. But last year, a leaking pipe caused substantial water and mold damage.

The Lucases say their insurance company, State Farm, responded promptly to their claim and has paid them more than $300,000 for damage to the house, contents and additional living expenses. When they totaled the costs of repairing and renovating the house, they decided it made more sense to raze the house and build a new one.

They're using the insurance money along with their own money to pay for the new three-bedroom, 2 1/2-bathroom house. They plan to break ground next month.

But they got a rude awakening when they began inquiring about insurance.

"Our problem now is we can't get insurance," said Robin Lucas. She, her husband and two sons, 19 and 23, are living in a trailer on the land until the new house is completed. "No one will insure us on a brand new house because we've had a mold claim."

Had they not been able to come up with the money on their own, they might not have been able to get financing for the new house, because mortgage companies require homeowners insurance to protect their investment.

"I couldn't borrow money because I didn't know if we could get insurance," Robin Lucas said.

If anything happens to the new house, she said, "we'd lose everything."

Frustrated buyers

Most of the time insurance is available for consumers, but not without cost -- in time and money.

Bill Stinson, vice president of governmental affairs for the Texas Association of Realtors, said most people eventually find coverage and aren't losing their homes. Mortgage companies often find coverage through another company -- or in a worst-case scenario, might insure the house themselves.

What Stinson sees, however, is buyers and sellers so frustrated in their search for insurance that they call off sales.

Rod Bordelon, the state's public insurance counsel, said the situation should improve in coming months. Mold losses appear to be easing, he said. And rates should stabilize with the policy changes the state is approving that limit mold and water coverage.

Consumers who are repeatedly rejected can have their agent contact a so-called surplus line carrier. There are some disadvantages -- the companies are not licensed, for example -- "but when the regular market isn't working, they're sometimes a line of last resort," said Lee Jones, a spokesman for the Insurance Department.

The department says surplus-line insurance is usually more costly, but some companies' rates are in line with regular insurers.

July 17, 2002

Missouri

Governor signs Credit Bill into Law!

Governor Holden of Missouri signed a bill on July 13 regulating insurers' use of credit-based insurance scores in auto and property insurance. The legislation, effective as of July 1, 2003, prohibits insurers from using credit-based information as the sole factor in underwriting decisions and would require insurers to disregard it as an underwriting factor if the individual has no credit history. They are also prohibited from basing decisions on credit information contained in a credit report that the insurer knows is in dispute. It also provides that they may not use credit information in renewing a contract until at least three years after the policy was issued.

July 2, 2002

We need help, Austin!

Re: "Homeowner premiums go through roof – Most rates exceed state benchmark; insurers cite mold losses, scale back," June 2.

This article about the huge increase in homeowners insurance premiums was very interesting, especially since I received my renewal notice the day before. The cost of my homeowners policy, without coverage for mold or water damage, rose 40 percent over last year. With full coverage it would increase 218 percent. My cousin's 120-year-old restored wooden farmhouse in Connecticut is insured by the same company as my home. His is valued over $350,000 yet his premiums are $500 less than mine for a home valued at slightly over $100,000. Clearly, there is something terribly wrong with Texas insurance regulations.

During the weekend I noticed TV commercials for two of the major companies mentioned in the article. They both should consider pulling these commercials until the current insurance crisis is resolved. One reminds me of a "good neighbor" who plays loud music, never mows or paints and borrows things never to return them while the other has its "good hands" in our pockets rifling our wallets.

Homeowners in Texas can only hope that our next governor and representatives draft intelligent and fair insurance regulations to protect citizens from such future abuse. It will be interesting to see if what we hear from Austin is simply election year rhetoric.

Art Roy, Mesquite

June 18, 2002

New page added: Industry vs. Consumer II  - The "700 Club", Unfair Discrimination, Fraud

Pages updated today:

An interesting bit of information came my way by an article at Insure.com:

The article states:

"During the sale of the house, the homeowner discloses to you a previous claim for a burst water pipe in his basement for which his insurer paid, but he doesn't bother to mention the leaky faucet. After all, it is repaired and he spent his own money to fix it. But when you go to purchase a policy for this home, you're denied based on the fact that the home has had two claims in the past three years: the burst pipe and the leaky faucet.

What has happened, according to Wilson, is that the homeowner's insurer opened a claim file on the leaky faucet as soon as he called and then later marked it "closed, with no payment" when he decided to fix the leak himself. Insurers say it is standard procedure to record such telephone inquiries in this manner."

And for AUTO at Insure.com:

"While auto insurance companies insist they want to know about the smallest accident, it's clear that if your deductible is more than the cost of your repairs, you are better served to pay the bill yourself and leave your claim unreported.

There is no law that requires you to report an accident to your insurance company, and you should remember that every time you file a report with your auto insurer, even if the damage is less than your deductible, it goes on your insurance record."

So this appears that the company DENIED the claim and it can count against you. How many of these "false" claims were included in the studies between credit and claims? Would this not have to be verified and accounted for in the studies?

June 14, 2002

Pennsylvania

Pennsylvania State Senator Anthony Williams has introduced SB1456 to fight the practice of insurance credit scoring in Pennsylvania..

"Under Williams’ bill, an insurance company would not be permitted to deny coverage or increase
 a customer’s insurance premium by more than 20 percent as a result of credit grading. Insurance
 companies that violate the law would face penalties ranging from fines to license revocation."

In addition, Senator Williams has set up an Insurance Credit Scoring Hotline for PA residents 
to share their Insurance Credit Scoring stories:

Insurance Credit Scoring Hotline:  1-800-468-0092 beginning Monday, June 17.

Live Insurance Credit Scoring Web Chat with Senator Williams at www.pasenate.com.
Monday June 17, 10:00am EST

June 7, 2002

I just received a Pre-Approval Notice for Insurance from Progressive Insurance. It looks like and reads like a credit card application! They offer a FREE evaluation, how nice. The minute I have to pay to talk to a potential insurer will be the day I consider moving out of the state. On the back of the form, it says:

"You were selected to receive this offer for insurance because you satisfied our pre-selection criteria for insurability, based wholly or partially upon your consumer report information (read: credit report). The Insurance may not be extended if, after you respond to this offer, we determine that you do not meet our other pre-established insurability requirements."

This is getting out of hand. Auto and Homeowner's insurance companies are not extending credit. You don't pay, you're not covered. Period.

Sorry Rhode Island and South Carolina.

Rhode Island has just passed a Bill that allows insurance credit scoring in auto and homeowner's insurance underwriting.

S-2348-Sub A- An insurance score may be used as the sole basis for underwriting or rating if a consumer's score declines due to  bankruptcy, tax lien, garnishment, foreclosure or judgment, or if a score taken six months later confirms a worsening score.

South Carolina

Four bills restricting or prohibiting insurers from using credit scores in rating or underwriting insurance, HB 4734, SB 545, SB 798, and SB 1032, died at the end South Carolina's 2002 legislative session.  .

The Department of Insurance issued a bulletin to establish guidelines for the use of credit scoring in  private passenger auto insurance:

• Allows insurers to request that their credit score data be kept proprietary as a commercially valuable trade secret;

• Allows insurers to check or recheck a policyholder's credit history before renewal;
  (existing customers)

• Specifically prohibits insurers from refusing to insure, cancel or non-renew policies based solely on a consumer's credit history or credit score, or refusing to insure based on credit history that the insurer knows is inaccurate or incomplete;

• Requires insurers to justify the use of credit in their filings by demonstrating the relationship between credit score and the loss experience;
  
• Reiterates the role of the federal Fair Credit Reporting Act as a mechanism for the investigation and correction of disputed information; and (what about notification requirements?)

• Requires insurers to disclose at the time of application that it may or will gather credit information. (and adverse action notification?)

June 1, 2002

Disturbing news out of Austin, Texas:

Allstate requires good credit for policy
05/30/2002
Associated Press

AUSTIN - Starting next week, Allstate Insurance Co. will stop writing new homeowners insurance policies for customers who are in the lowest three tiers of its five-point credit-scoring system.

The company also will impose new requirements on existing customers who want to insure new houses. For example, existing customers with lower credit scores can get policies only if they have not filed claims in the past three years.

Allstate, however, won't explain the criteria for its credit-scoring system, not even to its agents. The company is the third-largest home insurer in Texas.

An Allstate spokesman told the Austin-American Statesman for its Thursday editions that the company is making the changes to stay ahead of potential new regulations, such as limits on the use of credit-scoring.

In a May e-mail to its Texas agents, the company said it was making the changes "to ensure that we focus on attracting and retaining high lifetime value customer segments."

"We are being more careful with the new business we take on," said spokesman Michael Trevino. "We are not shutting off the valve. What we want to do is manage our growth in a time that is clearly an unstable time for the homeowners market in Texas right now."

Insurers and consumer advocates say there is an insurance crisis in Texas, with rising claims for mold damage and steeply rising premiums. The Texas Department of Insurance says there is little it can do because 95 percent of home policies are issued by insurers that are not subject to the state regulation.

Other major insurers aren't writing new policies or have established stricter requirements as well. State Farm Insurance has not written a new homeowners policy in Texas this year, and Farmers Insurance Co. will accept only new customers who have not filed claims in the past five years.

Gov. Rick Perry this month called for new regulation of the industry and restrictions on the use of credit scores in setting premiums.

Consumer groups say credit scoring is discriminatory; a class action lawsuit has been filed in Texas alleging that it is similar to redlining, which has been banned. The insurance industry maintains that credit scores are a reliable predictor of whether someone will be a high or low insurance risk.

"We leave it to our members to use, but we stand by the fact that it's an accurate measure," said Doug Johnson, spokesman for the Insurance Council of Texas.

D.J. Powers, a lawyer for the Center for Economic Justice in Austin, said the Allstate moves shows how "arbitrary and capricious the whole credit scoring thing is."

"If it had anything to do with risk, you would apply it in a consistent manner," he said. "So if I currently have Allstate insurance and I have a three, I'm not risky. But if I walk in as a three, I am riskier? Their own application shows that it doesn't deal with risk; it deals with a marketing scheme."

Texas Watch recently held a meeting in Dallas and it was a great success! They had consumers from come from near and far willing to stand up for your rights when it comes to the insurance industry.

A meeting will be held in Houston this week, if you would like to get involved, this Consumer Activist Training Session is for you! They will teach you how to take a stand against consumer abuses.  If your insurance rates have gone through the roof, or if you are encountering red tape and stall tactics after filing a claim, and you want to fight back, then these meetings are for you!

Houston
Consumer Activist Training Session
Thursday, June 6, 2002
6 p.m. – 7 p.m.
Freed-Montrose Public Library
4100 Montrose
Houston, TX 77006
Map

Meetings are free and open to the public.  Reservations are requested.  To RSVP or for questions, call Stacey toll-free at 1-888-738-4226.   

Texas Watch will be holding these meetings in several Texas cities throughout the year.  To find out when we are coming to a city near you call Stacey toll-free at 1-888-738-4226.  

May 17, 2002

New page added: Homeowner's Insurance in Texas

New info received: It appears that there is not a "good insurance credit score" discount. Poor scorers pay a "credit surcharge" making it appear that good scorers are receiving a discount. If you have good credit, you can still expect your homeowner's insurance to increase about 25%. Poor scorers are seeing increases of 50-300%.

Article in the Dallas Morning News

"Governor Perry strikes at property insurers"

Governor Perry announced yesterday (May 16) that "the practice should be banned unless a company can prove a connection between a consumer's credit history and insurance risk."

What proof? In it's current form? Or proof with causation? The industry feels they have proven it, the consumers do not.

Maryland signs HB 521 into Law! Story in the Baltimore Sun.

Maryland's Governor, Parris N. Glendening, "signed a bill yesterday that will bar insurers from raising policyholders' premiums or denying them coverage because they run into credit trouble."

"The legislation will prohibit the use of credit scores in making decisions about homeowner's insurance. It does allow an individual's credit history to be used as a factor in setting initial auto insurance rates, but it prohibits companies from denying coverage or raising rates because of bad credit scores."

"The American Insurance Association said the law would hurt consumers with good credit and threatened to take the state to court in an effort to get it thrown out."

Insurance hearings may end credit ties . Story in the Detroit News.

"Outrage over the insurance industry's use of credit scores to set rates has prompted Michigan regulators to schedule statewide hearings that could end the practice."

May 10, 2002

Pages updated today:

Get Involved - Complaints received from consumers in Florida and Louisiana.

The Studies

Industry vs. Consumer

In Texas

About this Site

New page added: The Income vs. Insurance Scores studies.

Coming Soon:  Consumer Stories

Editorial, Kansas City Star (Missouri), May 8, 2002