Texas Farm Bureau moves forward with its controversial deal that would see homeowners’ insurance rates reduced—in exchange for their consumers’ right to file suit against the insurer. The insurer is asking the Texas Department of Insurance to approve new language that would allow it to offer its customers a discount on the condition that they agree to settle disputes out-of-court through arbitration.
If the deal is approved, customer disputes would be first submitted to mediation, then to binding arbitration. An arbitrator chosen by Texas Farm Bureau’s selector would handle the process from there. The insurer’s arbitration process will be held behind closed doors and the arbitrator’s decision considered final.
The state insurance department announced that it would welcome public opinion in an open panel Wednesday on the insurer’s proposal.
“If they [are] slow [to] pay, if they wrongfully deny your claim, if they underpay your claim, you'd never be able to take them to a court of law to hold them accountable,” commented Alex Winslow, executive director of consumer group Texas Watch. Instead, you'd be forced into a biased kangaroo court where the rules of the game are set up by the insurance industry to favor the insurance industry against their own customers.”
Texas’ office of public insurance agreed with Winslow’s sentiments, warning that other companies could look into proposing similar policy changes.
A spokesperson from Texas Farm Bureau told
Fox 4 News that the mandatory arbitration clause would be entirely optional. The spokesperson also claimed that the system would give the company a way to “preserve” its ability to conduct business in "certain parts of the state."
State insurance commissioner David Mattax has the final say on whether or not the insurer’s proposed system is permitted.
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