Insurance Apps & Insurer’s Use of Your Questions

The 2013 Texas Legislature passed two insurance related bills last week.  One makes your life easier, and the other one protects you when you talk with your insurance company.  The bills the Legislature passed address:

  • An App for your smart phone  (see http://bit.ly/111XNnJ for the other proposed bills)
  • What insurance companies can do with the data you provide when you ask a coverage question

Let’s deal with the one that was a slam dunk first, then we’ll address the one that was long overdue and most people don’t know about.

Proof of Coverage App:   Our iPhones and Androids have all kinds of apps loaded on them.  There are apps to identify a song playing on the radio, track your workout, bank, manage your money, tweet, update your Facebook or Linkedin page, read a bar code, take pictures, play games and much more.  Very soon, there will be an app for Texas drivers to show proof of insurance.

State Senator Glenn Hegar of Katy sponsored a bill that passed on April 4th allowing Texas drivers to show proof of insurance with an app provided by their insurance company.

Major insurance companies have already rolled out apps that do this in the six states that currently allow this.  While I’ve not heard any announcements from the companies I work with, I would expect Texas drivers to see apps within the next 1 to 3 months.

One of the concerns raised by privacy advocates about this bill related to whether or not a police officer could look at other content on the phone once you’ve handed it to them showing proof of insurance coverage.  Analysis of the bill concluded handing your smart phone to a police officer showing proof of insurance does not demonstrate consent for a thorough search.  That will require a warrant.

I like this bill and believe it was a slam dunk for Texas consumers.  The second bill, however, has more far reaching implications, is long overdue and I’m thrilled with it!

Customer Inquiries & Insurer’s Use of Data:  The Dallas Morning News reported on January 30th the results of a study conducted by the Texas Department of Insurance (TDI).  The TDI study found several insurance companies use customer inquiries in ways that result in a customer’s policy being:

  • Cancelled
  • Non-renewed
  • Premiums being increased

The report cited two scenarios including:

  • A homeowner calls their agent or insurance company stating they have a roof leak but does not file a claim nor reports repairing the roof before the renewal date.  This results in the policy either being cancelled or non-renewed.
  • A homeowner remodels their home and asks about increased coverage due to the increased value of the home, but does not add it resulting in an automatic increase on the dwelling coverage and/or premium.

State Senator Kirk Watson of Austin sponsored the bill that was also passed last Thursday barring insurance companies from using customer inquiries to cancel or non-renew policies, or to increase premiums for those policies.

I see the results of this practice more often than not when I quote a prospective client’s home insurance.  Once the quote is prepared I run a CLUE report which shows prior claims either on the home they are buying or their current home.

  • I frequently see “claims” where nothing was paid out.
  • In some instances the amount of the repair may not have exceeded the deductible.
  • In numerous cases, no claim was ever filed.  The customer had simply called to ask if something was covered (an inquiry).

While many insurance companies do not adversely rate for inquiries or $0.00 paid claims, some do.  The result is a person being “trapped” with their current carrier paying more than they should for their home insurance and unable to move to another insurance company.

I’m thrilled Senator Kirk’s bill passed.  Customers should be able to ask questions to clarify their understanding of what is and what isn’t covered without fearing repercussions from their insurance company.  After all, an informed customer can make decisions that are in their best interest resulting in a true partnership between the customer, the agent and the insurance company.  When that happens, we all win.

If you happen to know Senators Hegar or Kirk, tell them thank you for their work in getting these two bills brought before the Legislature and pushing them through.  If you have a comment, question or suggestion you’d like to share, then post it in the comments section of our blog or on our Facebook and Google + pages.  I’d love to hear from you!

Evie Wise

Thanks!

Evie Wise
Evie Wise
#getwiseinsurance

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