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Thursday, 23 June 2011 16:42

Texas Insurance Commissioner Repeats Warnings to Insurers

Texas Commissioner of Insurance Mike Geeslin has warned auto insurers in a bulletin that some claims settlement practices may be in violation of Texas law. Geeslin's bulletin says that reports of steering, limiting labor/reimbursement rates, and other potential unfair claim settlement practices continue to be received by his department.

In a department bulletin, addressed to insurers writing property casualty insurance for autos, the commissioner repeated his charge that some insurers' practices may be in violation of the Texas Insurance Code and or the Texas Administrative Code. In a direct address to the issue of steering, Geeslin says that insurers must not "directly or indirectly" require a claimant to use a specific repair facility or to select a specific facility from a list provided by the insurer.

 

Citing Texas law, Geeslin says suggesting to a consumer that they may be responsible for paying certain repair costs out of pocket if they choose a repair facility that is not on the insurer's list is an indirect limitation of coverage under their policy and in conflict with the law.

The bulletin says that although an insurer is not required to pay more than a reasonable amount for repairs or repair parts, neither the prescribed notice to the consumer nor policy language can suggest that the reasonable amount for repairs or parts be based on the amounts charged by a limited number of DRP facilities.

"The Department continues to have concerns that setting reimbursement rates artificially low for specific motor vehicle repairs and parts that are used to make the repairs may lead to substandard repairs, which may also impact vehicle warranties," Geeslin says in the bulletin. "It is an unfair claim settlement practice for an insurer to pay a claimant [an amount] that is not a reasonable amount for repairing or replacing the property with other of like kind and quality, or is not sufficient to make the repairs necessary for the manufacturer to honor the vehicle warranty."

Geeslin adds, "The Department will enforce the provisions of the Texas Insurance Code and Texas Administrative Code to make certain that insurers are in compliance and are not engaging in unfair claim settlement practices.

"The Department takes all allegations of unfair claims settlement practices seriously and will investigate in the context of both individual cases and general business practices. The Department will investigate such allegations through complaint handling, market conduct exams and other reviews deemed necessary, taking appropriate enforcement action when evidence of unfair claim settlement practices or other statutory violations are demonstrated," the bulletin concludes.

 

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