Heartland Institute Senior Fellow Questions Texas FAIR Plan Rate Denial

November 19, 2009
Eli Lehrer

Texas Insurance Commissioner Mike Geeslin raised serious and disturbing questions November 17 when he rejected a proposal from the Texas FAIR Plan to increase its rates, a Heartland Institute senior fellow says.

The FAIR (Fair Access to Insurance Requirements) Plan is a government-mandated, rate-controlled mechanism that sells property insurance to high-risk property owners. Roughly 75,000 Texans, most of them in or near major cities, take part in the FAIR Plan. A separate mechanism, the Texas Windstorm Insurance Association (TWIA), also had its rate-filing request denied earlier in the year in a similar order from Geeslin.
 
"This is an anti-consumer action. Without adequate rates in the FAIR Plan, someone else is going to end up picking up bills for people in the plan. While Commissioner Geeslin is well within his rights to reject the rate filing, that may not be the right decision for Texans," said Eli Lehrer, director of The Heartland Institute's Center on Risk, Regulation, and Markets and a Heartland senior fellow. "But I'm really concerned at the rationale he put forward. It appears that following the commissioner’s reasoning could lead to a total rejection of the very concept of private market reinsurance."

Lehrer says any non-private solution could impose a sizeable burden on Texas taxpayers. "If the FAIR Plan or any other agency issues bonds or engages in other financing as Geeslin seems to indicate it should, taxpayers--one way or another--will be on the hook to pay off that financing. That could have severe fiscal consequences for the state."

Lehrer can be reached for further comment at (202) 615-0586 or elehrer@gmail.com.