Consumer groups: Rep. Wolens' HB 600 offers real insurance reform (Feb. 2003).

Bill requires prior approval for rate increases, rolls back rates

A coalition of the state's leading consumer organizations has lined up in support of a bill introduced by Rep. Steve Wolens, D-Dallas, which meets key criteria for bringing immediate rate relief and real insurance reform to Texas homeowners.

HB 600 establishes a prior approval system before rates can be increased, requires insurance companies to use fair underwriting, and orders a rate rollback.

"AARP is delighted with Rep. Wolens' bill," said Luis Wilmot, State Director of AARP Texas. "HB HB 600 is an aggressive consumer protection bill that will bring real savings to Texas policyholders."

Wolens' legislation contrasts with proposals for a "file-and-use" system, which allows rate increases to take place unless the insurance commissioner takes action to stop them. Consumer groups support Rep. Wolens' "prior approval" proposal as better protection for Texas policyholders because rate increases could not be enacted until approved by the commissioner.

"Other proposals, including the file and use system, offer far too little protection for Texas consumers," said Dan Lambe, Executive Director of Texas Watch. "A prior approval system puts the burden on insurance companies that want to raise rates to justify those increases."

HB 600 also bans the controversial practice of credit scoring and requires underwriting guidelines to be fair. "We support Rep. Wolens' efforts to make insurance underwriting guidelines fair — particularly by banning the use of credit scoring in insurance," said Ana Yañez-Correa, Policy Director with League of Latin of United Latin American Citizens of Texas.

"This is an aggressive, consumer oriented bill," concluded Rob Schneider, Senior Staff Attorney with Consumers Union. "It is the kind of tough approach that Texans need so they know they will be treated fairly by insurance companies, and they will see the rates they pay go down."