Critics Call Insurance Bill “Excessive,” Harmful to Consumers

by Eric Galatas/TNS

AUSTIN, Texas – A bill making its way through the Texas Legislature would eliminate penalties for insurance companies when they’re late paying claims.

The author of SB 1628, Senator Larry Taylor (R-Friendswood), says it would stop what he terms “lawsuit abuse by storm-chasing trial lawyers.” Taylor owns an insurance agency.

Tim Morstad, associate state director for AARP Texas, says anyone who owns property in the state is getting caught in the crossfire.

“People pay their premiums on time, and when they need their insurers to help repair damage, the insurers should pay in full on time as well,” he says.

Morstad adds the new law could be devastating for older Texans living on fixed incomes. The bill, which has already cleared the state Senate, was advanced by the House Insurance Committee on Friday without any public testimony. It could be called to a vote by the full House at any time.

One of the bill’s provisions eliminates a long-standing Texas law which ensures insurance companies pay claims on time and in full. Critics say the change would incentivize “low and slow” payments.

Morstad says if a homeowner has a damaged roof and the insurer only offers to pay 60 percent of the cost, the insurer would only be penalized for the unpaid portion of a valid claim.

“You can’t put on 60 percent of a roof,” he says. “You either get paid in full and you replace your roof, or you don’t. This bill really stacks the deck against consumers.”

Morstad argues there are better ways to deal with litigation that insurers feel is excessive. He says it isn’t right to punish honest people who’ve already been victimized by weather-related catastrophes by delaying their claims and giving them little recourse.