Politician Attorney Fights Insurance Companies


Politician-Attorney Fighting For Plaintiff’s Lawyers

It’s all about protecting one’s profession and not at all about protecting consumers. It’s all about government taking care of people who are too stupid to take care of themselves. It’s all about government interference in a free market economy where sellers and buyers choose who to do business with. 

Hinojosa fights insurance companies on arbitration clause

By Matt Woolbright of the Caller-Times

July 07, 2016

There’s a battle brewing in Austin, and Coastal Bend residents could be significantly impacted by the outcome when the next big storm hits.

The Texas Farm Bureau Insurance company has requested a change in state policy that would allow them to offer discounted home insurance premiums in exchange for customers agreeing to let independent arbitrators determine the outcome of claim disputes rather than suing the insurance provider.

State Sen. Juan “Chuy” Hinojosa believes the policy threatens to take advantage of residents who don’t understand the rights they are voluntarily waiving but do understand “25 percent discount.” He also said any changes in regard to an arbitration clause should be made by elected lawmakers — not regulatory agencies.

“Safeguarding my constituents is a top priority and I fear that many South Texas homeowners will readily sign up for a large discount on their homeowner’s insurance without understanding the serious consequences,” Hinojosa wrote in a letter to Texas Department of Insurance Commissioner David Mattax on Wednesday.

He said those consequences include residents being unable to appeal arbitrators’ decisions, not being able to sue insurance companies and forfeiting their right to a trial by jury.

“It’s like the payday lender industry that preys on people being under informed and needing the extra money,” Hinojosa said.

Mark Hanna, a spokesman for the Insurance Council of Texas, said the requested change was prompted by a hailstorm in Hidalgo County in 2012 that led to “tens of thousands” of lawsuits against insurance companies but just a handful of complaints to the Texas Department of Insurance that regulates the industry.

“The farm bureau, through all of these lawsuits from the hailstorm damage, has lost a ton of money, so they’re trying to avoid running into more lawsuits from trial lawyers that are suing to get more money than they can get from claims,” Hanna said.

Hanna emphasized the policy choice would be optional and residents who chose to decline the offer would not have their rates increased as a result.

“This is the farm bureau saying, ‘we don’t want to get sued every time we do business in this area,'” he said.

Hanna added 30 to 40 percent of all claims filed in Hidalgo County in 2012 wound up the subject of a lawsuit.

Accepting the policy would not bar homeowners from contesting the arbitrator’s ruling with the state regulatory agency, Hanna explained.

But that recourse doesn’t protect homeowners the same way that attorneys and a jury can, Hinojosa said.

“That’s not the way the system actually works,” he said. “You can file a complaint with the state, but the state is not there to represent you on an individual basis.”

Jerry Hagins, a Texas Department of Insurance spokesman, declined to comment on how this specific proposal could affect the consumer complaint process already in place, but said the agency does have ways to prevent companies from cheating customers.

“We can’t compel a company to pay a claim, but if we do see a violation of the law we could refer it to our enforcement arm for action,” he said.

The proposal was first made in September of last year, but the insurance company agreed to a state request to waive the typical 60-day decision deadline, Hagins said.

“We’re taking a very hard look at it because our No. 1 concern is what’s fair for Texas consumers,” he said.

There is no timeline on when that decision will be made, Hagins added.

Twitter: @reportermatt