Robert Hunter calls for multi-state insurance regulation

Former Texas insurance commissioner said insurance companies are either incompetent or have lied when pushing reform

Insurance News

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Former Texas Commissioner of Insurance J Robert Hunter is having none of it. It being the way homeowners’ insurance rates around the Gulf Coast have been going up and up like the roof of a mobile home caught in a tornado.
 
He says when Hurricane Andrew hit in 1992, loss ratios went from 60% to 120%, and “clearly something had to be done.”
 
At the time, he said he supported structural changes the industry asked for, because he was convinced the changes would lead to greater rate stability. Changes included allowing insurers to use models instead of relying entirely on historical data in setting rates, and carving out areas of coverage to shift some of the liability for storms to homeowners or public agencies.
 
Today, as rates continue to climb in the area, he said he was lied to by insurance companies or “they were incompetent in creating solutions that in the end didn’t fix anything.
 
“I supported them, but now I’m furious,” he said. Hunter today is director of insurance at the Consumer Federation of America.
 
He said if you want to get a handle on property insurance rates in the Gulf area, you need to move beyond state-by-state regulation and create multi-state regulatory authority, so that the larger authority would have more leverage with insurers. He also suggested that states join together and pool the reinsurance business publicly. He said the consortium of states would be able to make a profit on reinsurance while also saving consumers billions of dollars.
 
Between Andrew and Katrina in 2005, “insurance companies made huge profits in the area,” he said and added that because of changes made following Andrew, loss ratios only went from about 60% prior to Katrina to 70-75% in the wake of Katrina.
 
To keep a handle on rates, he said, “regulation simply has to be better.” 
 

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