A recent study by the American Consumer Institute (ACI) shows that regulating homeowner insurance prices leads to higher insurance prices, not lower prices. As ACI president Steve Pociask explains, “The study shows that regulating prices ironically leads to higher consumer prices and more insolvent insurers – exactly the opposite of what consumers want.”
Mr. Pociask continues, “encouraging price flexibility, attracting capital back into the state and curbing regulatory costs are among the ways that policymakers could strengthen the market and protect consumers from catastrophic losses.”
The study, which concludes that price regulation of property and casualty insurance in Texas is leading to an insurance market that is increasing consumer prices and reducing solvency, shows that Texas is following the very same mistakes observed in the Florida insurance market, where prices are the highest in the nation.
These findings by the American Consumer Institute echo those of the Texas Public Policy Foundation. In our study, “Consumers, Competition, and Homeowners’ Insurance,” Bill Peacock notes that Texas’ uncertain regulatory approach to homeowners’ insurance has caused less investment and ultimately led to higher costs. For Texas to have lower insurance rates, we need to deregulate the insurance market, or at least move to a true file and use system.-Ryan Brannan