HB 1433 will keep MRP’s out of Texas.
Everything is bigger in Texas, especially when it comes to hail and severe weather events. In fact, Texas continually ranks #1 for most natural disasters each year. Property damage insurance is a critical part of living in the Lone Star State – as is the ability for policyholders to choose their contractor when making repairs. That could soon change unless a loophole is closed that forces insurance carriers to follow Texas law.
Fellow Texans may remember a law passed in 2019 that requires all policyholders to show proof of their deductible payment when filing a property damage claim. Known as HB 2102, this law made headlines for setting strict fines and even jail time for those who did not comply. However, this law does not apply to insurance companies. Texas law carriers can waive deductibles without consequence. This loophole creates a situation ripe for insurance carriers to use steering tactics like Managed Repair Programs (MRP’s), which negatively impact policyholders and free-market contractors.
HB 1433 will close this loophole, but that’s not enough. Lawmakers need to hear from policyholders and to VOTE YES for HB 1433 and force insurance carriers to follow the law just like everyone else.
How Will HB 1433 Protect Policyholders?
House Bill 1433 has been introduced to amend HB 2102, a bill passed in 2019 that changed the Texas Insurance Code and is now state law.
HB 2102 solved several issues regarding property damage claim deductibles by requiring proof of payment and making violations a Class B misdemeanor offense. However, these changes only impact the policyholder and contractors. Under the existing law, insurance carriers can waive deductibles as they see fit and without any consequences.
HB 1433 will protect policyholders by leveling the playing field against big insurance carriers. Without this legislation, insurance carriers will use deceptive programs and claim practices like Managed Repair Programs (MRP’s).
What Is A Managed Repair Program?
Manage Repair Programs (or MRP’s) are steering programs deployed by insurance carriers to lower property damage claim payouts. They brush up against issues like price-fixing and collusion. At a minimum, they pose a major conflict of interest with policyholders.
There are several problems with MRP’s. The biggest is that they lead to underpaid claims and shoddy workmanship – problems policyholders are stuck with long after a property damage claim is finished.
Here’s how most Managed Repair Programs work:
- Insurance carriers partner with a network of “preferred contractors” or vendors they select
- Insurance carriers offer to waive the deductible if the policyholder goes with their vendor
- These contractors use cheap materials and untrained labor to keep costs low
- Insurance carriers save money on claims due to the cheap work
- Policyholders are left with shoddy work, unrepaired homes, and lingering damage
Learn more about the harmful effects of MRP’s here.
The loophole in HB 2102 must be closed to keep MRP’s out of Texas
HB 1433 will do that and change the language in the Texas Insurance Code and prevent insurance carriers from waiving deductibles. Without this as an incentive, insurance carriers will be less inclined to use managed repair programs in Texas. This keeps policyholders protected and helps prevent insurance carriers from undervaluing a property damage claim.
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