Misinformation and Inaction Stall Proper COVID Auto Insurance Relief in Texas

In another setback to ensuring that Texans get appropriate auto insurance refunds due to COVID-related reductions in claims and driving, the Texas Department of Insurance (TDI) released misleading information to public officials in November asserting an unsupported claim that drivers have seen $1.4 billion in overcharges returned to their wallets.

Five consumer groups, including CFA, sent a letter to TDI and Texas legislators highlighting the erroneous and misleading information that TDI has used to justify their failure to provide premium relief to consumers. In their letter, the groups point out that the $1.4 billion dollar figure is “…at best, a compilation of non-comparable actions by insurers — combining future rate reductions with second quarter premium rebates — and, at worst, a misleading statement to obscure TDI’s lack of action to protect consumers.”

The letter comes after months of conversations and letters between the consumer groups and the agency. The organizations first urged the agency to act starting in the spring, when there were widespread stay-at-home orders. The groups then provided additional information and data as the pandemic continued, and had a follow up meeting with the Department in August. In one of these meetings, TDI noted that it “needed to wait for more data to assess the situation — despite the fact that insurers themselves were able to determine by the beginning of April that their rates were excessive.”

“Instead of ensuring that insurers’ premium relief was sufficient, TDI waited for data. When public insurers announced to investors for the second quarter 2020 windfall profits for auto insurance due to huge reductions in claim costs, TDI waited for data. When public insurers announced to investors more windfall profits for the third quarter of 2020, TDI waited for data. Based on our November 23 conversation, TDI indicated a need to wait further, until January or February of 2021 for additional data,” the consumer advocates stated.

“We have been evaluating different state responses to the pandemic all year, and while some have required refunds for consumers, Texas’ response has fallen short,” said CFA Director of Insurance J. Robert Hunter. “The Texas Department of Insurance has not ensured that all Texans get the relief they deserve. As a former Texas Insurance Commissioner, I am very disappointed,” Hunter added.