October 28, 2009

Texas Automobile Insurance Plan Association to Raise Rates by More than 2%

According to the Life Insurers Group news site, the Texas Automobile Insurance Plan (TAIPA) intends to raise auto insurance rates for its high-risk policyholders starting November 2009. TAIPA, the state’s high-risk driver plan, assigns insurance coverage to drivers who can’t get policies from private companies due to their high-risk status.

Known as the “assigned auto insurance market,” TAIPA issues policies that offer basic liability insurance as required by Texas state law, as well as limited collision and personal injury protection. In 2008, the association assigned 12,000 policies to drivers who were, for the most part, considered high-risk because of poor driving records or high claims rates. To be eligible for the coverage, the drivers were required to certify that two private auto insurance companies rejected them within the last 60 days. Like most state-sponsored auto insurance programs, TAIPA insurance coverage costs more than policies from other private companies. TAIPA’s high-risk policyholders pay surcharges, also called additional premiums, for any traffic convictions. They are also required to pay higher premiums than others in the event of an accident. According to Jerry Johns, a spokesperson for TAIPA, the association projects it will assign least 10,000 policies this year. With this in mind, and the fact that costs of claims are constantly rising, an increase in insurance rates has been deemed necessary.

According to the State Department of Insurance, The Texas Commissioner of Insurance issued an order on Aug.19, 2009, relating to changes in the rates for private passenger and commercial Texas auto insurance provided through TAIPA. While the rates charged for bodily injury liability, personal injury protection, and uninsured or underinsured motorist coverage were decreased by 4.1, 8.2 and 2.4 percent respectively, rates were increased by 8.3 percent for property damage liability. Therefore the overall increase to the private passenger auto insurance rates provided through TAIPA is 2.2 percent. These changes will go into effect Nov. 1, 2009.

According to Johns, the auto insurance rate increase is needed because of the rising costs of hospital services, physicians’ fees, along with the costs to repair damaged vehicles. TAIPA customers can download and view the new private passenger and commercial auto insurance rate pages (rate bulletins) in Excel and PDF formats from the Texas Department of Insurance website. They cannot, however, escape the fallout from the accidents of the previous year.

There is hope, however, for concerned policyholders wishing to turn things around. According to the Texas Department of Insurance, the state is encouraging private insurance companies to take policyholders out of TAIPA and insure them at lower rates after a year without tickets or accidents. The rules also require companies to offer cheaper “voluntary” policies to their TAIPA policyholders who have gone three years without tickets or accidents.