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Texas Observer EDITORIAL Start the Charade The session hasn’t started yet, but the insurance reform chess game is already beginning. It began predictably, with Governor Perry moving his pawn,Troy Fraser, the Republican Senator from Horseshoe Bay. A friend and frequent water-carrier for Perry, Fraser has pre-filed a set of bills that seem to reflect the governor’s preferred reform model for the muchmaligned industry. The bills take on some controversial practices, such as using customers’ credit ratings to set premiums and refusing mold coverage to policyholders with past water damage claims. Fraser’s package would also limit cherry-picking, that is, pulling out of unprofitable lines, such as home insurance, while still writing policies in others, like auto coverage. But the Fraser reforms stop short of true rate regulation. Due to a loophole in the existing law, rates for most home policies and many auto policies are currently not regulated at all. Fraser is calling for a so-called “file and use” system, in which companies inform the Department of Insurance of what rates they plan to charge, and the challenge the rates, after which they automatically go into effect. Consumer advocates have criticized file and use as too heavily weighted toward industry. In order for it to work, they say, regulators must have ready access to data about pricing and risk that the insurance companies have fiercely protected in the past. Critics instead favor a return to something like the benchmark system created ten years ago, in which the Department sets a target rate for each type of policy and companies are required to charge customers premiums that fall within a given range of the target. If re-regulation of rates is inevitable, file and use is the industry’s preferred model, and Fraser has made it clear tough talk notwithstandingthat he is their dog in the fight to come, at least in the Senate. Less clear is who will be fighting for policyholders this session, after the rout the Democrats suffered at the polls in November. Presumptive Speaker of the House Toni Craddick has promised to appoint Democrats to at least a few committee chairs. Presumably, he’ll pick from those who were the first to jump ship after the election returns came in, including a dozen or so members of the Mexican American caucus. But the insurance committee will be headed by one of his own and stacked deep with industry-friendly R’s. How do we know? Craddick has already unveiled his own package of “bills”: Bill Ceverha, Bill Miller, and Bill Messer. These current and former lobbyists are heading up his transition team and coordinating his late train fundraising binge. if you want access to the Speaker’s office this session, you’ll have to go through these men.For the insurance companies, access to the Bills and thus to the Speakeris a given. All three men have insurance connections. Ceverha is not currently a registered lobbyist, but as the head of the PAC that worked for Craddick’s Republican House majority, Ceverha managed to wring $150,000 out of Farmer’s Insurance. This donation came while the company was locked in a rhetorical battle with the governor’s office and threatening to leave the state. Bill Miller, meanwhile, is still acting as Farmer’s spokesman in the high-profile battle.The third Bill, Mr. Messer, is currently representing State Farm. With Craddick on their side, the industry can stop worrying about fighting off a benchmark system and start working on their own wish list, which inevitably includes more, yes more, tort reform. N.B. VOLUME 94, NO. 23 A Journal of Free 1/bites Since 1954 Founding Editor: Ronnie bugger Editor: Nate Blakeslee Managing Editor: Barbara lielejack Associate Editor: Jake Bernstein Managing Publisher: Jim Ball Circulation Manager: Rosie Bamberger Art Director: Julia Austin Poetry Editor: Naomi Shihab Nye Copy Editor: Roxanne Bogucka Development Director: Charlotte McCann Interns: Jessica Chapman, Rachel Proctor, Emily Rapp Seitz. Allison Stuntz Contributing Writers: Gabriela Bocagrande, Robert l3ryce, Louis Dubose, Michael Erard, James K. Galbraith, Dagoberto Gilb, Steven G. Kellman, Lucius Lomax. Char Miller, I bbie Nathan, Karen Olssonjohn Ross, Brad Tyer. Staff Photographers: Alan Pogue, Jana Birchum. Contributing Artists: Sam Hurt, Kevin Kreneck, Michael Krone, Gary Oliver, Penny Van Horn, Gail Woods. Editorial Advisory Board: I I Sissy Farenthold, John Kenneth Galbraith. Lawrence Goodwyn, Jim Hightower. Maury Maverick Jr., Kaye Northcott, Susan Reid. In Memoriam: Cliff Olofon. 1931-1995 Texas Democracy Foundation Board: Ronnie bugger, Marc Gmssberg, Molly Ivies, IBernard Rapoport. Geoffrey Rips. The Texas Observer entire contents copyrighted 2002, is published biweekly except every three weeks during January and August \(24 issues profit foundation, 307 West 7th Street, Austin, Texas 78701. Telephone: E-mail: [email protected] World Wide Web DownHome page: . Periodicals Postage Paid at Austin, Texas. Subscriptions: One year $32, two years $59, three years $84. Full-time students $18 per year: add $13/year for foreign subs. Back issues $3 prepaid. Airmail, foreign, group, and bulk rates on request. Microfilm available from University Microfilms Intl.. 300 N. Zeeb Road, Ann Arbor, MI 48106. Indexes: 1 he 7ias Observer is indexed in Aaess:The Supplementary Index to Periodicals: 7VaS htileX ;Ind, for the years 1954 through 1981, The lexas Observer I n dex. POSTMASTER: Send address changes to: ‘The eliwas Observer, 307 West 7th Street, Austin.Texas 78701. 7he Books t.; . the Culture section is partially l/ended throat’/, .qtmrt Ann the City of Austin under the auspices of the Austin \(.0111111iSSiiitt and the ‘rice’ Leave of ‘h. both in cooperation with the ias Commission on the Arts. 12/6/02 THE TEXAS OBSERVER 3