Texas Farm Bureau has proposed a deal that could potentially save homeowner’s insurance policyholders a quarter of their costs—at the cost of their right to sue the company.
Nonprofit consumer advocate group Texas Watch discovered the controversial deal after it had requested for open records, reported
The Dallas Morning News.
In exchange for a consumer indefinitely waiving his or her right to sue the insurer, he or she is entitled to a 25% reduction on his or her annual homeowner's insurance premium, Texas Farm Bureau proposed.
With the deal, any disputes a consumer would have must be submitted to mediation, then to binding arbitration. An arbitrator selected by the insurer’s company’s handpicked selector would handle the process. Notably, the arbitration process would be held in secret, and the arbitrator’s decision is final.
The company stated that the reason for this deal is due to lawyers who bring a claim against insurers right after big storms.
"We feel that the current litigation environment around severe storm events has created a situation where we need to offer an arbitration alternative in some areas to preserve our ability to write insurance," said Texas Farm Bureau executive vice president Mike Gerik in a statement.
Gerik also reassured that consumers will have the option to choose.
"We believe many of our members will appreciate this option. And again, it is optional. Our members will make their own decision if they want to elect it. It is their choice; under no circumstances are they required to accept it."
The insurer has submitted its request to the Texas Department of Insurance for review. Last week, the federal department announced a public hearing to discuss the proposal and made itself open to consumer inquiries and opinions regarding the deal.
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