TDI Bans Abusive Insurance Policy Clauses

TMA's dogged support of an Office of Public Insurance Counsel's proposal to rein in abusive insurance company policies paid off again this month when Texas Commissioner of Insurance Mike Geeslin banned discretionary clauses in insurance policies [PDF]. The clauses, sometimes found in health, life, and disability insurance contracts, give insurers the nearly unfettered right to interpret policies and decide what benefits must be paid. The provisions alter the way courts review insurers' decisions on appeal, and they make meaningful reviews of an insurer's decision virtually impossible, Commissioner Geeslin said.

TMA persistently urged state regulators to prohibit the clauses because they are unjust, they encourage misrepresentation by insurers, they are deceptive because they mislead patients regarding the terms of the coverage, and they constitute a conflict of interest for the insurer.

The commissioner's ban takes effect on Feb. 1 for some types of disability insurance and on June 1 for all other health, life, and disability insurance policies issued in Texas. Twenty-three states prohibit discretionary clauses in some fashion. 

Public Insurance Counsel Deeia Beck said her agency proposed the rules to "ensure that health and life insurance benefits are contractually guaranteed, and to avoid the conflict of interest that occurs when the carrier responsible for providing benefits has discretionary authority to decide what benefits are due."

Ms. Beck specifically said support from TMA, among others, for her petition was instrumental in getting the new rules adopted. "It was a privilege and honor to work with these fine people to ensure that Texans will receive the full benefit of the insurance coverage they purchase."


Action, Dec. 15, 2010

Last Updated On

December 14, 2010

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