Texas and Insurance Law

Dating back to 2012, Texas has experienced an uprising in insurance claims relating to wind and weather damage – and many of these claims also involved adjusters or attorneys, about a 900 percent increase, according to statistics published from a state Legislature meeting with Texas Department of Insurance, among other alarming statistical increases related to insurance lawsuits released after the February 2017 meeting. This spurred the formation of the Texas Hailstorm Bill, set to take effect at the beginning of September.

One of the most impacting effects that the Hailstorm Bill will address is the high-volume of lawsuits brought upon casualty and property insurers (note that the bill does not affect claims, but lawsuits) by requiring that the insured policyholder give at least 61 days of advanced notice that a lawsuit is even being filed against an insurer. This is meant to give the insurer time to address the issue directly with a chance of settling it outside of the court system. What some may consider a detriment, however, is that interest rate payouts that normally apply to policyholders should their insurer fail to comply with Chapter 542 of the Texas Insurance Code will be heavily reduced, from 18% to 10%.

Many speculate that this Hailstorm Bill will only add headaches to the process of filing lawsuits for insurance companies that some claim are abusing their policyholders. Bob Hunter, director of insurance for the Consumer Federation of America, believes, “it is less likely that lawyers would want to take even good cases.”

Though the new law seems to be implemented to protect insurance companies from a slew of lawsuits, Hunter believes that many insurers act appropriately anyway, thus limiting the law’s overall impact as it would only serve to protect the abusive insurers if it serves at all.

Hunter also notes, however, that there is great need for reform and restructuring beyond the Hailstorm Bill, making particular note of the National Flood Insurance Program which falls under Federal authority. He mentions the need to update flood zone maps and allowing rates to rise and meet the actuarial, something for which he holds Congress responsible.

Hunter, a former Chief Actuary for the NFIP, cites experience from the likes of Hurricane Katrina and Superstorm Sandy as well. “…there will be a lot of lawsuits filed ultimately, because there is always trouble after these major events.” He says the Hailstorm Bill will only bring about a second crisis when everything has settled from the destruction wrought by Hurricane Harvey.

Others claim that the Hailstorm Bill is a necessity to fend off suit-happy lawyers and contractors that may not get immediate attention following the devastation of weather-related events such as Harvey as well as encourage out-of-state insurance adjusters to come and work in Texas in the aftermath of the horrible event to meet with the demand of insurance claims that will need to be settled. There is also argument that Texas still maintains high standards in regard to insurance claims (as well as lawsuits, stating that policyholders may claim as much as three times the full amount of coverage following fraudulently-acting insurers or insurers that act in bad faith), and the law makes no impact on those claims being filed, nor does it impose any sort of deadlines on behalf of the first-party policyholder.

How Can We Make Health Insurance More Reliable?

The recent attempts by Republicans to repeal and replace Obamacare (also known as the Affordable Care Act or ACA) have failed completely even after years of unanimous Republican votes to axe the individual health insurance mandate. One thing both Democrats and Republicans seem to agree on is this: the ACA isn’t bad at its heart, but it isn’t working as well as promised. Something certainly needs to be done to fix the new healthcare system–especially before a new wave of attacks can perhaps dismantle it for good. But what can we do? Here are a few of the more controversial initiatives that lawmakers have come up with so far.

Some have called for Medicare to open its gates to new recipients starting at age 55 instead of the current 65 in order to help offset some of the costs of rising insurance as people get older and sicker. This program is already extraordinarily expensive, and a lot of other lawmakers don’t want to see those costs rise even more.

Then again, Independent Bernie Sanders has called for a Medicare-for-all bill, and plans to introduce it soon. It almost definitely won’t pass, but that’s not necessarily its primary goal. Sanders is a workhorse when it comes to finding ways of increasing public awareness of newer, more progressive ideas that could benefit everyone. He believes that Americans have the right to free healthcare, and he wants more Americans to become open to the idea. That way, sometime in the future his dreams might actually turn into a reality.

One of the ACA’s most popular moves was allowing young people up to the age of 26 to stay on their parents’ insurance. But some policymakers want to remove that provision altogether, instead moving those same young people to an individual market instead. Even though this was good for the kids and their parents, it wasn’t necessarily good for the markets. In order to have a healthy pool for insurance markets, you need as many people buying in as possible. When kids are on their parents’ policies, that means you actually have less people buying in even though more are covered. This is something that surely needs to be addressed, and soon. The longer we wait, the more costs rise.

The ACA promised a healthy marketplace for insurance, but that promise fell through. There isn’t enough competition to keep insurance rates as low as we’d like, and so other lawmakers are trying to introduce legislation that would force insurers who take advantage of certain other programs to provide fair marketplace coverage in exchange.

Another controversial idea is allowing people to pay premiums using their HSA contributions. These HSAs (Health Savings Accounts) are often used in conjunction with insurance plans with high deductibles to help people pay them when they need to. The money they put into these accounts cannot be taxed by the government, and so it would be especially beneficial to use this money to pay premiums. The problem is, where does that leave out-of-pocket expenses for that same high-deductible account when a health problem arises?

Although some controversial plans are currently being discussed, one thing is certain: there are no easy alternatives, and the machine used to run health insurance is complex and difficult to maintain or fix.

TEXANS HOLDING HARVEY VICTIMS BACK?

Hurricane Harvey in Houston is natural, organic alliteration. So is a terrible tragedy in Texas.

The devastation wrought by Harvey in and around the Houston area was breathtaking, and the full damage may still be assessed even higher than the currently reported death and property-damage totals. But to say tens of billions of dollars is not an outrageous estimate.

Insurance companies – and the government, which supplies flood insurance – have been inundated with property-insurance claims out of Texas because of Harvey, but also are seeing additional claims start to roll in from Florida following the damage wrought by Hurricane Irma over the past week.

In Texas, lawmakers might have handcuffed Texas residents before hurricane season, as a new law went into effect at the start of September that reformed insurance lawsuits in the state. Back in the spring, before the hurricane season started or there was any indication of a major hurricane hitting the Texas Gulf coast, the Texas Legislature passed a bill limiting the interest that insurance companies would owe if they were sued regarding slow or non-payment of property-insurance claims.

The bill reduced the interest payment by 44 percent, lowering the rate from 18 percent down to 10 percent. Just before the law went into effect, a Texas lawmaker asked the governor to bring the Legislature back into special session to address the law and delay its implementation in the wake of Harvey. The argument was that insurance companies would have less incentive to pay claims promptly knowing that their interest penalties would be far less than before.

A lawyer (of all people!) was trying to encourage people who suffered losses from Harvey to file an intent to file lawsuit claim before the September 1st deadline, though not nearly enough time had passed to expect reasonable claim payments in the wake of Harvey, as it had just passed through the area and many areas were still flooded as of the end of August.

Considered an aspect of tort reform, the goal of the bill was supposed to eliminate frivolous lawsuits against insurance companies which already suffer losses by fulfilling claims and then have to invest even more money to defend themselves against impatient policyholders. With lowering the interest cost to 10 percent, they argued, would be enough to keep some plaintiffs from filing a suit for delayed claim payments because the penalty for the insurance company wouldn’t be quite as painful.

Those who opposed the bill, or are pushing for a delay in implementation currently, are looking to give Harvey victims maximum flexibility to make sure they get their claims settled as quickly as possible, and they should have the freedom and opportunity to file lawsuits over excessive delays in settling claims. After all, time is money, as they say.

As he law is now in effect, it will be interesting to see how Harvey and the law affect the numbers of insurance-claim lawsuits in the wake of the storm.  Here is hoping that the help from other private citizens will ease the burden on insurance companies, and these companies will rise up and pay their claims quickly. The longer they take and the more legal fees they rack up, the higher all of our insurance premiums will rise to cover these devastating losses.

The Defense Base Act Helps Protect U.S. Government Contract Employees

The Defense Base Act requires insurance coverage for any American citizen who is working for the U.S. government outside the United States. The Act was passed in 1941 and was designed to provide insurance coverage and protection for anyone who worked on a military installation located outside the U.S.

The Act was amended to include workers who were employed by public works contractors. The Act covered anyone employed by the U.S. government on projects such as schools, dams, roads, and harbors which were located outside the United States.

The Act was again amended to cover any contractor who was working for any federal agency and performing the work outside the United States. This includes both military and non-military projects.

DBA coverage is required for all employees working on a military installation outside the U.S. It is also required for any employees who are working on any U.S. federally funded project located outside the U.S. DBA coverage is required for any employee working on a project for a foreign government if that project has been deemed essential to U.S. National Security. DBA coverage is required for employees who are providing services which are funded by the U.S. federal government if those services fall outside regular military or U.S. diplomatic channels.

If a contractor or company fails to carry DBA insurance on their employees, they can face very stiff fines and penalties. Every government contract includes a provision requiring that contractors have the necessary DBA coverage. If they do not have the necessary coverage, they face losing the contract and paying fines.

Additionally, if a company contracted to provide services for the U.S. federal government fails to provide DBA coverage for its employees, that employee or their heirs can sue the company and do not have to prove negligence. Injured workers cases against the company under the DBA can prove very costly to the employer.

What Is the Patient Protection and Affordable Care Act?

The subject of healthcare has been a hot topic in recent decades, part of which has involved the Patient Protection and Affordable Care Act, which is abbreviated as PPACA or ACA. Enacted on March 23, 2010, the Act changed many aspects of the healthcare system in the US.

President Obama, with a lot of support, enacted this federal statute to help expand the health coverage by the poor in the country. This has earned ACA another name: Obamacare. No matter what you choose to call it, the action had a tremendous impact on the number of people insured and able to obtain medical coverage in states throughout the country.

It provides subsidies and various other funds to help the poor and underinsured. Pre-existing conditions and other reasons that people were often denied coverage were also addressed in the groundbreaking statute. As a result, more people have insurance than ever before.

Although that is the case, there are many people who do not support the ACA and have been working to overturn portions of the act. The current administration is among those who deem the act a burden to taxpayers and an unnecessary area of government control.

Various labor groups and unions have been working to repeal the legislation and there are many who believe that it is going to happen while President Trump is in office. The Supreme Court and other courts are likely to weigh in on cases in the future that involve the act, which could further complicate matters.

Although the statute has helped to provide medical insurance, either through Medicaid or government subsidies of private insurance, it is not clear whether or not that will continue to be the case in the future. This is an important political topic that is sure to see changes at the very least.

Attempts To Stem A Financial Meltdown – The Dodd-Frank Act

In 2007, The United States of America (and indeed the world) was being placed under enormous financial strain through the actions of financial institutions both foreign and domestic.

Global finances were being placed under enormous strain and it was realized that a new approach to policing the actions of financial institutions was long overdue.

This led them President Barack Obama to lead the charge towards the adoption of the ‘Dodd-Frank Wall Street Reform and Consumer Protection Act‘ which became law in mid-2010.

The Act served to consolidate the regulatory agencies that oversaw the financial services sector and also (among other things) set up new oversight mechanisms to police what was by then recognized as a ‘systemic risk’ to the United States economy.

The increased regulation was aimed in large part at making sure that what had been referred to as a ‘Wild West Situation’ around the widespread practice of derivatives trading was made much more transparent.

The consumer would also receive new protections and a new Consumer Protection Agency with widespread powers was established. The days of financial institutions promising returns that were simply not within the realms of sustainability were over.

In essence the Act had two tiers. One was to protect the U.S. economy from the practices of financial institutions that had, until then been a systemic risk to the stability of both the economy and the American dollar. The second was to protect the American consumer from predatory practices that had prior to the passing of the Act caused extreme financial hardship to many individuals and families that had chosen to believe in promises of returns that were completely unrealistic.

The passing of the Act was a clear signal to financial institutions that the era of taking advantage of consumers, as well as presenting a clear and present danger to the American economy would no longer be tolerated.

What Exactly Was The Proposed National Insurance Act of 2006?

The National Insurance Act of 2006 was first proposed back in April 2006. The purpose of this act was to help the Department of Treasury become established as an Office of National Insurance. It was going to be headed by the Commissioner of National Insurance, authorizing the Commissioner to regulate, supervise and provide some type of registration for the insurance self-regulatory organizations. The Commissioner would be responsible for supervising, licensing and chartering National insurers.

What Was Its Main Purpose?

The main purpose was to authorize the underwriting of insurance, and also provide a comprehensive system for supervising and regulating these agencies. It was designed to monitor not only insurance branches in the US, but also non-US insurance companies. Those that would offer national insurance would need to obtain a federal license because they would be converted from state to national insurance agencies. It would also remove state oversight on many of the business practices involved with insurance because they would become federally based.

Did It Go Through?

The bill itself was never enacted. Although introduced in April 2006, Congress did not approve it. It was introduced to the 109th Congress at the time. Although it did not go through, it was a radical idea which made it possible for federal oversight over many of the aspects of providing insurance in the United States. However, Congress deemed that it was not necessary as there are already state laws that govern insurance, providing proper regulation and oversight at the state level.

Though it may have seemed like a good idea, it is clear that since that time, there has been no need to present this to Congress after its failure to pass from a bill into a law. Since there have been no regulatory problems with insurance (like car insurance after a car accident) since that time, there has not been a need to reintroduce the bill in an attempt to get federal regulation over insurance policies and companies.

What You need to Know about the Gramm-Leach-Bliley Financial Modernization Act

Toward the end of the last millennia, the banking trends throughout the industry had been in motion for several decades. Banks number of banks across the US had fallen considerably and the banks that remained had grown in size and financial power. There had been 14,000 banks in 1984 but the number dropped to 9,000 by 1999. This was part of an ongoing effort toward greater consolidation that was moving the financial services business in a new direction.

Furthermore, many of the financial services that had been separated during the second half of the century had suddenly become integrated and this included insurance, commercial and investment banking as well. By the start of the 80s, many of the commercial financial services had begun expanding into the underwriting securities as well. Some of them even began to sell insurance.

By 1999, financial integration was an established practice and Congress decided it was time to act. Bill Clinton signed the Gramm-Leach-Bliley Act at the end of 1999. The Act was named so in honor of the three congressmen that supported the act to approval. This had also been called the Financial Modernization Act would change how the financial sector operated and gave the Federal government special supervisory power.

The GLBA was intended to promote the various advantages of integration in the financial sector for investors and consumers. While still looking to safeguard the stability of the banking and financial system as a whole.

One of the biggest changes the Act introduced was the FHC or Financial Holding Company. This is essentially an umbrella organization that can manage its own subsidiaries in various financial activities. This was considered the happy medium where banks still have certain financial activities restricted but can opt to be a part of a larger organization that is involved in these activities.

Understanding the National Flood Insurance Act of 1968

Extensive loss of livelihoods, property and even life led to the creation of the National Flood Insurance Act of 1968. The legislation has received much recent attention due to the extensive damage caused by flooding in Florida and Louisiana as it did in the violent series of floods in the aftermath of Hurricane Betsy in 1965.

According to the foreword in the US Code Title 42 Chapter 50: National Flood Insurance, the US congress found that the dangers and hazards of sporadic flooding was creating a personal and economic strain on many parts of the US. It was also mentioned that the physical preventative measures, such as dams and embankments, may not always be sufficient to hold back the flood waters and avoid damage.

For these reasons the Federal Government has decided to participate in the National Flood Insurance Program that was hitherto being addressed on the private sector alone. The US Code also mentions some other reasons that would make it “uneconomic” to stay out of the flood insurance program within reasonable terms and conditions.

This piece of legislation in 1968 was the first-time flood insurance was made available on such a massive scale almost available to everyone. Soon after the Flood Disaster Protection Act of 1973 made it mandatory for all people living in Special Flood Hazard Areas to purchase flood insurance to avoid against personal injury lawsuits.

Several important acts followed the National Flood Insurance Act of 1968, besides the Flood Disaster Protection Act of 1973. The most important is the Homeowner Flood Insurance Affordability Act of 2014. The law was meant to ensure that flood insurance premiums were precisely reflecting the risk of flood damage. The result was an increase in premiums that increased the debt of the National Flood Insurance Program.

This act is one of the first times that the federal government became involved with the insurance industry which is usually left for the state government to regulate and monitor.

What is the McCarran – Ferguson Act?

The McCarran Ferguson Act is a law that makes the insurance industry exempt from most federal regulations including some (but not all ) of the antitrust laws. The Act was passed in 1945 after the Supreme Court ruled that the federal government was permitted to regulate insurance companies under the Commerce Clause of the Constitution. This ruling came as a part of the United States vs South-Eastern Underwriters’ Association case.

Senators Pat McCarran and Homer Ferguson sponsored the act, which provides that ‘Acts of Congress’ which are not expressly aimed at the regulation of the insurance industry will not over-rule laws or regulations that are intended to regulate the business of insurance.

The McCarran-Ferguson act still applies today, and it remains an important one. Indeed, one of the recent proposals for healthcare reform made by the Republicans may require the McCarran-Ferguson Act to be modified. In February 2010, the House of Representatives voted in favour of repealing the Act in terms of how it applies to health insurance, but other types of insurance are still covered.

The act protects certain state laws regarding insurance and allows each state to regulate the insurance industry, including establishing their own licensing requirements for insurance. It also exempts insurance companies from federal anti-trust legislation, at least in part, and protects the insurance industry from a federal take-over. It is widely felt that insurance is one of the most regulated industries in the USA, and insurance companies were concerned about the possibility of even more regulation from the federal government, on top of what the individual states were already doing. State insurance regulators were concerned about the outcome of the South Eastern Underwriters’ Association case, and while Attorney General Biddle denied that the government had any intent of increasing regulation, the McCarran-Ferguson Act of 1945 helped to offset those concerns.