An Overview of the Texas Department of Insurance
The Texas Department of Insurance is a vast regulatory agency that governs the practices of insurance companies in Texas. The department is part of a national network of state agencies that strive to create a uniform set of conditions under which the insurance industry exists.
The department lists three overarching goals. First, it strives to create an overall climate of fairness. Second, it attempts to foster a stable and competitive marketplace. Third, it attempts to provide useful information to Texas consumers. In order to achieve these goals, the department applies all relevant statutory law to the insurance industry and communicates openly both internally and with the public.
One of the department's most important roles is in licensing insurance agents. In order to offer insurance in the state of Texas, a company must go through a rigorous accreditation process with the state. Included in this process are background checks of key employees and tests to ensure that every company has enough funds on hand to pay the claims of its policyholders. The department also makes sure that the variety of insurance policies offered by the company comply with state law. For example, different types of car insurance (owner-operator, lease, commercial) carry different minimum coverages for different types of claims.
A second important role is fraud protection. Insurance fraud is the second most frequent white-collar crime in the United States. The Texas Department of Insurance regulates several types of fraud. First, it ensures that there exist uniform policies for investigating claimant fraud. Claimant fraud occurs whenever a policyholder attempts to file a claim - and receive a settlement - for a non-existent incident, for an incident that does not fit the requirements of the policy, or on a policy that is not current and valid. Claimant fraud is a serious consumer issue because it increases the premiums that everyone has to pay. The more fraud there is, the more insurance companies have to pay out. To compensate for this, insurance companies need to raise the premiums of all of their policyholders. Thus, regulating claimant fraud helps Texas consumers enjoy more affordable insurance.
Another type of fraud is insurer fraud. Insurer fraud occurs when an insurance company or agent attempts to withhold payment to a policyholder for a valid claim. The Texas Department of Insurance educates consumers about their options if their claim is denied. In particular, the department maintains an online form through which consumers can submit complaints in an attempt to resolve the individual issue or reprimand the company.
Agents of The Texas Department of Insurance have full jurisdiction across the state and have full police powers. Together with the administrative arm of the department, they ensure that insurance companies are regulated fairly in order to ensure consumer confidence and protection.