Texas insurance issues

March 21-25, 2013

Statewide poll
Commissioned by

Background
l Methodology l Statewide sample of 603 active voters l 25% of respondents from cell-phone only households l Interviews conducted March 21-25, 2013 l Typically 12 minutes in length l Margin of error of 4.0% for 603 cases
l Particular care taken to objectively describe legislative & regulatory status quo, fairly represent insurance-industrys positions, and both distribute and rotate order of questions & arguments, to limit any potential bias in results l Survey funded and conducted on behalf of Texas Watch (www.texaswatch.org), a non-partisan consumer-advocacy group

l Contributors l Dr. David B. Hill, Director, Hill Research Consultants l Dr. Stephen H. White, Assistant Director l David J. Benzion, Senior Research Analyst l Jason Nemeck, Project Manager
Leg. Adv. Paid for by Texas Watch; Alex Winslow, Executive Director; 815 Brazos Street, Suite 603, Austin, Texas 78701

Key Findings
part 1 of 4

l Climate of Opinion l A 49% plurality of the electorate thinks the Lone Star state is headed in the right direction l Nearly 1/3rd of active Texas voters identify with the Tea Party l Market Perceptions l Nearly 2/3rds of the electorate is concerned about the high cost of home and auto insurance l By wide margins, voter sentiments reflect a pro-consumer outlook
l Perhaps defying the political assumptions of some, these pro-consumer sentiments earn vigorous agreement even among Republicans and Tea Partiers l Texas generally business-friendly voters also endorse some insurance industry opinions as wellbut with much less intensity and by more modest margins than they do pro-consumer sentiments

Key Findings
part 2 of 4

l Market Perceptions (cont.) l The electorate has reached a broadly shared and intensely felt consensus that
l Insurance companies routinely deny or underpay legitimate claims and unnecessarily delay legal proceedings in the hope policyholders will simply give up before receiving what they are due l The court system generally does a better job than state agencies of holding accountable insurance companies that treat customers unfairly l Policyholders should have easier access to the courtsand companies should potentially face stiffer fines and penaltieswhen a claim has been unfairly denied, delayed or underpaid

l Dispute Resolution l Voters are deeply ambivalent about binding arbitration and wary of too narrowly restricting policyholders access to the courtssentiments in evidence across geographic, partisan and ideological lines

Key Findings
part 3 of 4

l Dispute Resolution (cont.) l To best balance consumers rights with the need to discourage frivolous lawsuits
l Nearly half want policyholders who think theyve been wronged to have a streamlined, simplified process for seeking redress in court l This approach is equally appealing to Moderates, Independents, Liberal Democrats and Tea Partiers alike l Almost 1/3rd are relatively satisfied with the status quo, and want their representatives in Austin to focus on other, more important issues l Only 15% feel that even further shielding insurance companies from potential lawsuits should be a top legislative priorityjust 8% strongly

l On the surface, tort reform enjoys some public support as a generic termbut when asked to ultimately choose among distinct public policy proposals, voters overwhelmingly oppose additional restrictions on policyholders legal rights

Key Findings
part 4 of 4

l Political Accountability l By decisive margins, Texas voters will reward legislators who safeguard the right of policyholders to hire an attorney and seek redress in court
l This is as true across all partisan and ideological linesamong Republicans, Independents and Democrats, and from Austin liberals to suburban Tea Partiers

l Regardless of how the issue is framed

l 7 in 10 voters will reward legislators who believe it should either be easier or at least should not be harderfor a policyholder who believes their claim has been handled unfairly to hire an attorney to represent their interests l 51% hold this position strongly, while just 15% actively embrace the opposite view that is advanced by the insurance industry and its lobbyists

Climate of Opinion
right direction vs. wrong track, and tea party stance

l Among active voters in Texas

State of the State
right direction +/+ 11 + 11 + 16 +1 -3 + 24 +4 +1 + 30 +9 - 20 wrong track

Stance on the Tea Party

member friendly hostile oppose dont care

49% a 49% plurality thinks the state is headed in the right direction 65% 48% 46% 43% 57% 46% 43% 62% 47% 34%

38 26 32 45 46 33 42 42 32 38 54

All voters Men 18-50 Women 18-50 Men 51+ Women 51+ Republicans Independents Democrats Tea Party Dont Care about TP Hostile/Oppose TP

31% 32% 26% 37% 32% 58% 28% 9%

14 11 12 20 13 1 19 25

46 48 54 39 43 34 44 60 nearly 1/3rd overall (and 58% of Republicans) identify with the Tea Party movement

Cost of Insurance
price of home/auto coverage much too high, somewhat too high, about right, or too low?

l Nearly 2/3rds of Texas voters are concerned about the high cost of home and auto insurance, with 3 in 10 acutely worried l 35% are relatively comfortable with current prices l No one thinks they are getting an excessive bargain for their money

Too High 62%

much + some

somewhat too high 33%

about right 35%

much too high 29% unsure 3%

too low 0%

Market Conditions Sentiments

agreement vs. disagreement w/pro-consumer statements

l Opinions regarding Texas current insurance market reflect a pro-consumer outlook that is broadly shared and intensely felt

Market Conditions: Agree or Disagree?

by margin agree/disagree, pro-consumer statements only

strong

agree

+/-

disagree

strong

To help consumers make apples-to apples comparisons and generate price competition, companies should be required to offer option of a standard, full-coverage policy written in plain language that would be consistent across the industry With higher premiums, larger deductibles & expanded exclusions, seems like were paying more and more for home & auto insurance these days while getting less and less in return It is unfair that a company youve paid premiums to for years can automatically raise your rates or deductibles simply because you make a claim, and state law ought to prohibit the practice Texas current system of regulation favors powerful insurance companies and their lobbyists over consumers and homeowners

74

94%

+ 90

60

84% 80% 67%

+ 70

14 19 20

61 39

+ 61 + 47

10 7

intense agreement
9

widespread margins

Dispute Resolution Sentiments

agreement vs. disagreement w/pro-consumer statements

l When asked to reflect on the way in which disputes are resolved between policyholders and insurance companies, pro-consumer viewpoints continue to resonate deeply, and by dominant margins

Dispute Resolution: Agree or Disagree?

by margin agree/disagree, pro-consumer statements only

strong

agree

+/+ 79

disagree

strong

When companies unfairly deny, delay or underpay legitimate claims, customers should have easier access to the courts and stronger legal remedies that impose stiff financial penalties Companies routinely drag out lawsuits as long as possible in the hope people will simply give up before they are paid what they are owed While no system is perfect, judges and juries in the court system do a better job than bureaucrats in state agencies of holding companies accountable when they treat customers unfairly

61

88% 78% 71%

9 14 18

55

+ 64

37

+ 53

intense agreement

widespread margins

10

Conservative Agreement w/pro-Consumer Views

overall & strong agreement even among Republicans and Tea Partiers

l Perhaps defying the political assumptions of some, consumer-rights statements generate widespread and deep enthusiasm even Tea among Republicans and Tea Partiers Party
percentage overall & strongly by party & tea party stance

Stance

Agree with Pro Consumer Sentiment

GOP

IND

DEM

member friendly

dont care

hostile oppose

To help consumers make apples-to apples comparisons & generate price competition, companies should be required to offer option of a standard, full-coverage policy written in plain language that would be consistent across industry When companies unfairly deny, delay or underpay legitimate claims, customers should have easier access to courts & stronger legal remedies , impose stiff $ penalties It is unfair that a company youve paid premiums to for years can automatically raise your rates or deductibles simply because you make a claim; law ought to prohibit With higher premiums, larger deductibles and expanded exclusions, seems like were paying more & more for home & auto insurance these days, getting less & less in return Insurance companies routinely drag out lawsuits as long as possible in the hope that people will simply give up before they are paid what they are owed

74 strong

95%

72 strong

90%

76 strong

96%

74 strong

94%

75 strong

94%

74 strong

96%

54 strong

86% 78% 80% 73%

55 strong

85% 83% 85% 79%

73 strong

91% 80% 89% 83%

56 strong

85% 78% 82% 72%

65 strong

89% 78% 83% 81%

63 strong

85% 93% 92% 86%

55 strong

63 strong

66 strong

55 strong

60 strong

81 strong

54 strong

61 strong

68 strong

58 strong

62 strong

68 strong

45 strong

52 strong

68 strong

46 strong

59 strong

70 strong

11

Industry Sentiments
reaction to statements representative of insurance industrys positions

l Texas generally business-friendly voters also endorse some insurance industry opinions, but with much less intensity and by more modest margins than they do pro-consumer sentiments
Agree or Disagree?
by margin agree/disagree, industry statements only

strong 33

agree

+/+ 47

disagree

strong 10

Tort reform encourages competition, gives customers more choices, and eventually leads to lower premiums by giving companies flexibility they need to innovate & respond to free market Insurance companies large profits some years are balanced out by the bad years when they have to pay-out major claims in response to natural disasters Although public may not appreciate it, companies say it is difficult to operate at a profit in this economic climate, and legislature needs to take steps to help industry reduce cost of fraudulent claims and frivolous lawsuits Current regulations strike a good balance between protecting customers while allowing insurance companies to make reasonable profits in a highly competitive market

68%

21

29

68%

+ 44

24

11

33

64%

+ 32

32

17

20

56%

+ 23

33

15

Less intense and narrower agreement relative to pro-consumer sentiments

12

Ambivalence on Arbitration
reaction to arbitration-related statement reflective of insurance industrys position

l Across geographic, partisan and ideological lines, Texas voters are deeply ambivalent about binding arbitration, and wary of too narrowly restricting policyholders access to the courts
It is in everyones best interest to encourage binding arbitration by limiting consumers access to the courts to resolve complaints against insurance companies
strong

agree

+/-

disagree

strong

All voters Houston/Gulf Coast

Widespread lack of consensus

21 24 17 23 17 7 33 16 29 21
13

48% 45% 41% 50% 50% 32% 53% 44% 44% 46%

+2 -2 - 13 +7 +6 - 27 + 12 -6 - 10 +2

46 47 54 43 44 59 41 50 54 48

23 23 27 21 24 28 20 28 27 28

DFW/Metroplex Austin/S.A. Central Corridor Republicans Independents Democrats

Common ground

Tea Party Member/Friendly Hostile/Opposed to TP Most Likely Voter

Preferred Approach
to regulations governing resolution of disputes between policyholders and insurance companies Currently, insurance laws in Texas try to strike a balance between protecting consumers rights while discouraging frivolous complaints. People across Texas have different opinions about this approach. Which of these points of view comes closest to your own?

STREAMLINE, SIMPLIFY PROCESS strongly somewhat GOOD BALANCE NOW, FOCUS OTHER strongly somewhat SHIELD FURTHER FROM LAWSUITS strongly
Only 15% feel that even further shielding insurance companies from potential lawsuits should be a legislative priority just 8% strongly

49%
35% 13%
Nearly half want policyholders who think theyve been wronged to have a streamlined, simplified process for seeking redress in court

27%
18% 9%

15%
8% 7%

somewhat UNSURE

Almost 1/3rd are relatively satisfied with the status quo and want their representatives in Austin to focus on other, more important issues

9%

Combined, 76% of all voters are content to at least maintain Texas current and balanced approach

14

In-Depth: Preferred Approach

to regulations governing resolution of disputes between policyholders and insurance companies, among select geographic, partisan, ideological and voter model categories

l Regardless of ideology, geography or partisanship, there is no evidence of significant voter desire to further shield insurance companies from policyholder lawsuits l If anything there is plurality (and often majority) support for streamlining and simplifying consumers access to the courts
streamline & simplify current works +/+ 61 + 71 + 56 + 62 + 64 + 65 + 51 + 75 + 65 + 64 shield & limit

All voters Houston/Gulf Coast DFW/Metroplex Austin/S.A. Central Corridor Republicans Independents Democrats Tea Party Member/Friendly Hostile/Opposed to TP Most Likely Voter

49% 54% 48% 49% 46% 55% 50% 55% 51% 53%
15

27 27 25 29 32 24 20 29 28 25

15 10 17 16 14 14 19 9 14 14

Impact on Political Support

more/less likely to support own legislator if they vote to make it easier/harder for policyholder to hire an attorney

l By decisive margins, Texas voters will reward legislators who safeguard the right of policyholders to hire an attorney and seek redress in the courts when they believe a legitimate claim has been unfairly denied, delayed or underpaid by their insurance company l This is as true for Republicans and Tea Partiers as anyone else, and whether framed affirmatively or negatively (i.e., easier vs. harder to hire)
Support for Legislator Who Votes to Make It
EASIER to hire an attorney
strong

HARDER to hire an attorney

strong strong

more

+/-

less

more

+/-

less

strong

55 45 55 65 43 58 63

76% 68% 70% 89% 65% 81% 92%

+ 66 + 52 + 65 + 83 + 49 + 75 + 85

10 16 5 6 16 6 7

5 10 2 3 9 4 1

All voters Republicans Independents Democrats Tea Party Dont Care about TP Hostile/Oppose TP

12 14 10 14 16 11 13

21% 17% 24% 23% 23% 21% 22%

- 44 - 50 - 39 - 42 - 41 - 42 - 39

65 67 63 65 64 63 61

48 51 41 52 47 49 46

16

Political Impact Clusters

more/less likely to support own legislator if they vote to make it easier/harder for policyholder to hire an attorney

PRO CONSUMER --Strongly-more if easier less if harder --Somewhat-more if easier less if harder INDUSTRY --Strongly-more if harder less if easier --Somewhat-more if harder less if easier NEITHER --No Impact-if easier if harder --Unsure-if easier if harder

51%
27% 24%

70%

19%
11% 8%

Regardless of how the issue is framed

9%
6% 3%

15%

7 in 10 voters will reward legislators who take the pro-consumer position that either It should be easier; or It at least should not be harder

6%
4% 2%

7%
4% 3%

14%

... for a policyholder and their attorney to bring a claim against their insurance company 51% hold this position strongly Just 15% actively embrace the opposite view that is advanced by the insurance industry and its lobbyists

8%
3% 4%

17