Car Insurance Advisory Board OK’d by Texas Senate

One senator’s call for an advisory board that would provide recommendations on the regulation of auto insurance in Texas now awaits deliberation in the house after gaining approval from the senate last week.

The legislation allows for the advisory board to form recommendations on any part of the law regarding insurance and motor-vehicle repair. But there are a few key areas pinpointed in the bill.

One area includes preventing and penalizing insurers who process third-party claims (insurance claims paid to others involved in an accident that was caused by the policyholder) in ways that violate Chapters 541 and 542 of the state insurance code. Third-party claims-handling practices that violate these chapters include unfair settlement practices and improper recovery of deductibles from third parties.

Other areas suggested in the bill include procedures for vehicle repairs and coverage of towing and storage fees.

The advisory board would comprise three representatives from the auto-repair industry, three representatives from the car insurance industry and three members who represent the public.

The recommendations would be made to the state insurance commissioner.

Commissioner Mike Geeslin and his department highlighted an auto-repair issue in a recent biennial report to the Texas Legislature. According to the report, the department had been receiving complaints that insurers were engaging in the practice of “steering,” which is when coverage providers suggest to policyholders that they must use particular facilities for vehicle repairs.

Companies may try to steer policyholders because they have contracts with certain facilities that establish lower costs in exchange for referrals. While it is legal to engage in these agreements, it is not legal to suggest to a consumer that they are required to choose from a list of preferred facilities.

 

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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