Every year a few legislative issues sweep across the country, highlighted by 2013's demand for e-card legislation that allows drivers to use their cell phones to show their insurance identification cards.
Consumers want less paper and more online account features. Insurers, like any other business, want to meet their policyholders' needs and are developing apps and expanding online services to satisfy customer expectations. E-cards are a common-sense switch that can save everybody time and effort.
In keeping with customer demands for technology, e-card legislation also solves a practical problem. Nearly everyone has dug aroundin the glove box, desperately trying to find an insurance card.
With an e-card law, motorists may be able to avoid tickets because they couldn't find a current ID card. The courts win because the docket will be cleared of individuals who had insurance but just didn't have a current ID card. Additionally, e-card legislation brings greater efficiencies for insurers as they are not required to send paper ID cards to each customer.
PCI supports flexible proposals that are not mandatory and give both the policyholder and the insurance company a choice to offer electronic proof of coverage options. This year nearly half of states are considering electronic proof of coverage bills or regulations. These states are discussing e-card proposals: Arkansas, Colorado, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Maine, Michigan, Missouri, Mississippi, Ohio, Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, Wisconsin and Wyoming. And with the strong support these bills often receive, it is clear that many lawmakers are ready to take another step into the electronic age.
In 2012, Arizona, California, Idaho, Louisiana and Minnesota made the change to e-card. Alabama approved regulations allowing electronically displayed proof of insurance at both registration and during traffic stops. Colorado already has a regulation allowing electronic proof of coverage when vehicles are registered, and will consider legislation to expand it to traffic stops this year.
North Carolina Explores Modernization
In North Carolina, many insurers are trying to bring about modernization of another sort to the Tar Heel state. As the only state that still has a rate bureau setting prices for the entire auto insurance sector, a coalition of businesses and insurers have formed FAIR-NC to encourage legislators to modernize the auto insurance rating system.
PCI has joined the FAIR-NC Coalition to help implement free-market reforms and align the state with the rest of the country in serving insurance consumers. The rate bureau system stunts the ability of North Carolina insurers to offer rates consistent with the risks posed by individual drivers and ensures that good drivers cannot be rewarded with discounts as they can in other states.
The North Carolina legislature is considering a law that would give good drivers more opportunity to choose among diverse insurance products, rather than a one-size-fits-all approach that subsidizes poorer drivers and denies better deals to good ones.
The legislation, introduced by Sen. Wesley Meredith and Rep. Jeff Collins, would help insurance consumers shop for rates and products based on their own needs and driving records, give insurers flexibility to price on an individual basis, and encourage more insurers to enter the state, creating jobs and more competition for consumers. It would keep the state's rating bureau but allow insurers to opt out and determine rates individually. These rates would remain subject to the insurance commissioner's approval, and the commissioner would retain the authority to reject rate filings deemed unjustifiable.
PCI believes this proposal is the correct approach and will ultimately provide greater competition and fairness for individual North Carolina drivers.
Sandy Produces Challenges in New York
On the homeowners' insurance front, New York residents are still recovering from the unprecedented damage of Superstorm Sandy.
Responding to disasters and assisting in recovery is our business, and the industry met the challenge. Within the first 100 days following the storm, approximately 90 percent of homeowners' claims had been settled. However, natural catastrophes of the size and scope of Sandy inevitably spawn legislative action as policymakers seek to respond to their constituents. So as policymakers look ahead and consider lessons learned from the storm, PCI urges them to remember the insurance industry's solid record of response. We encourage legislators not to consider passing laws that place unattainable requirements on insurance companies or which would impose additional compliance costs that may serve to make insurance unaffordable. Knee-jerk, anti-insurance company responses will not have a positive long-term outcome for the marketplace or consumers.
Insurers should not be expected to pay claims for losses which are not covered under the policy, operate effectively when rules regarding claims settlement and other matters are changed in the midst of a disaster or meet impossible claims processing deadlines.
Moving forward, consumer education regarding insurance is one clear area where everyone can work together to improve. PCI encourages agents, legislators, regulators, insurers and others to collaborate in developing innovative and effective programs and tools to improve the insurance awareness of consumers. PCI stands ready to begin such collaborative efforts to develop consumer education initiatives which do not just look good on paper, but rather, really make a difference in improving consumer education.
Texas: No stranger to cats
Texas is a magnet for destructive weather from hurricanes, tornadoes, hail and drought, wreaking havoc on families, communities and the economy.
The state's coastal geography and severe weather are major reasons why Texans continue to pay some of the highest prices for homeowners' insurance coverage in the nation. Texas is expected to add nearly 30 million people in the next two decades, creating more insurance risk. With greater population, Texas faces more insurance risk and costlier storms.
This is why reforms to the state's taxpayer-backstopped Texas Windstorm Insurance Assn. (TWIA) made in 2011 must continue in the 2013 Texas legislature. TWIA's losses over the last 5 years have resulted in a total $1.1 billion deficit for both personal and commercial risks. This deficit and looming risk undermine TWIA's sustainability, especially if and when another large hurricane hits Texas.
Although TWIA was not intended to compete against the private insurance market, it has become the primary windstorm insurer in the Gulf Coast region. As of March 31, TWIA insured 245,754 residential and 13,297 commercial policyholders.
Policymakers should consider options to reduce TWIA risk through meaningful financial incentives to private insurers for taking business away from TWIA. Texas should explore increasing contributions to the Catastrophe Reserve Trust Fund so it can be in a stronger financial position to respond to the needs of policyholders in the aftermath of a major hurricane.
Limiting TWIA exposure by reducing the maximum coverage limits available for residential and commercial TWIA policies, increasing deductibles, and limiting time an insurance customer is eligible for TWIA policies before seeking coverage in the private market also helps make the Texas windstorm insurance system more stable and sustainable. These changes to Texas's storm insurance structure will help reduce risks, strengthen finances and get more policy options to homeowners and businesses.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.