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Books & the Culture is funded in part by the City LVV… of Austin through the Cultural Arts Division and by a grant from the Texas Commission on the Arts. EDITORIAL False Claims IIn mid-January, Gov. Rick Perry launched his bid for re-electiona quest to become Texas’ longest serving governorwith a 12-stop “Proud of Texas” campaign tour of the state. The for mer Aggie Yell Leader began his campaign accentuating the positive. \(There must be something about cheerleading that makes for talented modern campaigners; President Bush, let’s not initial round of television ads, timed to air with his campaign swing, features the governor putting a happy face on a dismal record and then asking “I’m proud of Texas, how ’bout you?” On his recent campaign tour, Perry boasted of progress on a litany of issues, including offering this stunner: “Homeowners’ insurance rates are going down,” Perry told crowds, according to press accounts. The veracity of that statement, with apologies to Bill Clinton, depends on your definition of “going down.” As you may recall, homeowners’ insurance was the signature issue of Perry’s last campaign, in 2002. The state had descended into an insurance crisis, and some homeowners saw their premiums double that year. Perry promised insurance reform in the 2002 campaign and declared it an emergency issue when the Legislature convened in 2003. The resulting reform bill went easy on the industrynot surprising since insurance lobbyists largely crafted the bill. Instead of mandatory rate rollbacks, the legislation empowered the Texas Department of Insurance to simply check a company’s rates and ask for reductions if state regulators thought the prices were too high. The bill also allowed insurers to remove coverage for mold and water damage from some policies. Did it work? According to the Department of Insurance, nine of the top 10 insurance underwriters in Texas have agreed to lower their rates by 5 to 20 percent. That sure sounds good. But the one company that hasn’t complied is State Farm, which is the state’s largest insurer, accounting for 30 percent of the market. That means overall rates have dropped by just a few percentage points. And keep in mind that the baseline industry rates are different than the actual premiums that homeowners pay, which vary by individual policy. Texas’ average premiums are still far and away the highest in the nation. At an average of $1,328, Texas’ premiums were more than double the national average in 2003, according to a recent report from the National Association of Insurance Commissioners. In 2004, average premiums in Texas inched down to a whopping $1,248, according to numbers compiled by the state Office of Public Insurance Counsel. “We were all told that our rates would come back down,” says Alex Winslow, director of the consumer advocacy group Texas Watch. “What actually happened was they went up and stayed up.” While rates remained high, the reform bill did reduce the money that Texas insurers paid out, and insurance company profits have soared. In 2001 and 2002, insurance companies were losing money badly, paying out as much as $1.18 in losses for every dollar they earned in premiums. But by 2004, claims had fallen such that insurers were earning about 50 cents of pure profit on every dollar they took in. That’s a nice take, and well worth the millions in contributions that the insurance industry made to Perry’s 2002 campaign and to the Republican takeover of the Texas House. \(Insurance money was a main source for the coordinated efforts of the Texas Association of Business and Rep. Tom DeLay’s Texans for a Republican Taking pride in Texas will be much easier if and when state lawmakers pass, legislation that actually benefits homeowners and not just the people who fund their campaigns. THE TEXAS OBSERVER I VOLUME 98, NO. 2 I A journal of Free Voices Since 1954 Founding Editor Ronnie Dugger Executive Editor Jake Bernstein Editor Barbara Belejack Associate Editor Dave Mann Publisher Charlotte McCann Associate Publisher Julia Austin Circulation Manager Lara George Art Director/Webmaster Matt Omohundro Poetry Editor Naomi Shihab Nye Copy Editors Roxanne Bogucka, Laurie Baker Staff Writer Forrest Wilder Editorial Interns Leah Caldwell, Rachel Mehendale, Sofia Resnick, Kelly Sharp, Elizabeth L. Taylor Contributing Writers Nate Blakeslee, Gabriela Bocagrande, Robert Bryce, Michael Erard, James K. Galbraith, Dagoberto Gilb, Steven G. Kellman, Lucius Lomax, James McWilliams, Char Miller, Debbie Nathan, Karen Olsson, John Ross, Andrew Wheat Staff Photographers Alan Pogue, Jana Bitchum, Steve Satterwhite Contributing Artists Sam Hurt, Kevin Kreneck, Michael Krone, Gary Oliver, Doug Potter Editorial Advisory Board David Anderson, Chandler Davidson, Dave Denison, Sissy Farenthold, John Kenneth Galbraith, Lawrence Goodwyn, Jim Hightower, Kaye Northcott, Susan Reid Texas Democracy Foundation Board Lou Dubose, Molly Ivins, Susan Hays, D’Ann Johnson, Jim Marston, Gilberto Ocarias, Bernard Rapoport, Geoffrey Rips, Sharron Rush, Ronnie Dugger In Memoriam Bob Eckhardt,1913-2001, Cliff Olofson, 1931-1995 The Texas Observer \(ISSN 0040-4519/ righted 2005, is published biweekly except during January and August when there is a 4 week break between non-profit foundation, 307 West 7th Street, Austin, Texas 78701. Telephone E-mail World Wide Web DownHome page . Periodicals Postage paid at Austin, TX and at additional mailing offices. Subscriptions One year $32, two years $59, three years $84. Full-time students $18 per year; add $13 per 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 The Texas Observer is indexed in Access: The Supplementary Index to Periodicals; Texas Index and, for the years 1954 through 1981, The Texas Observer Index. POSTMASTER Send address changes to: The Texas Observer, 307 West 7th Street, Austin, Texas 78701. JANUARY 27, 2006 THE TEXAS OBSERVER 3