Senate Subcommittee Examines Texas Insurance Problems

Texas homeowners insurance rates are coming under close scrutiny during this Interim, as both rates and claims continue to rise. Today, Monday, March 18, 2002, The Senate Business and Commerce Committee Subcommittee on Interim Charge #2 heard from representatives of the insurance industry on why rates are rising.

Diana Lee from the National Association of Independent Insurers described the problems companies have faced over the past decade and how they have affected policy pricing. Jay Thompson from the Association of Fire and Casualty Companies of Texas blamed recent rate increases not on the rate regulatory system, but rather on recent losses and high claims. Denise Ruggerio of State Farm Insurance said that Texas is currently the only state suffering with homeowners insurance problems. Senator Leticia Van de Putte asked how the companies justified doubling insurance premiums to consumers with no claims, Ruggerio replied that they are simply spreading the increased risk and costs among all consumers.

Rita Nowak of the Alliance of American Insurers said that mandatory water damage coverage has contributed to the increase in premiums. Ron Cobb of the American Insurance Association also testified.

Consumer representatives followed the industry witnesses. Rob Schneider of Consumers Union testified that consumers are complaining that rates are being raised not due to losses, but due to factors such as consumers' credit scores and that the commercial market is much more stable than the residential markets. He suggested establishing a prior approval system where rates would be approved by the state.

Also testifying today were Dan Lamb of Texas Watch, Burnie Burner of the Texas County Mutual Association, Willie Graves of Progressive County Mutual, Bo Gilbert of Independent Insurance Agents of Texas and Rick Villarreal of the Concerned Insurance Texas Agents.

Senate Subcommittee Examines Prevailing Wages

The Senate Business and Commerce Committee Subcommittee on Interim Charge #5 is examining the prevalence of prevailing wage rates in state procurement contracts. Today, Monday, March 18, 2002, the committee heard witness as it tries to determine if identified variances justify the use of new ways to determine prevailing wage rates. In other words, the state is trying to determine if certain wages paid by subcontractors are fair and consistent with the local market. State agency representatives updated the subcommittee on what wages their contractors and subcontractors were paying. John Davenport from the Texas Building and Procurement Commission, Mark Hughes from the Texas Workforce Commission and Thomas Bohuslav from the Texas Department of Transportation were the first witnesses.

Labor representatives also testified. That panel included Danny Tilley of Texas Building and Construction Trades Council, Bob Salvatore of the San Antonio AFL-CIO, Rick Lord of the Plumbers and Pipefitters union local in Houston, Ronnie Raspberry of Houston Building Trades and Gordon Byram of IBEW Local 326 in Austin. They related how federal and state regulations affect wages in their various areas. Also appearing today were representatives from other labor organizations located along the Rio Grande.

The two subcommittees of the Senate Business and Commerce Committee meeting today were composed of Senators Mike Jackson of Pasadena, Troy Fraser of Horseshoe Bay and Leticia Van de Putte of San Antonio. Both adjourned subject to call of the chair.

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