November 29, 2016 Practice Points

Insurer Withdraws Its Proposal to Offer Lower Premiums in Return for Arbitration

By Karl Bayer

The Texas Farm Bureau reportedly has abandoned a proposal that would have allowed insureds to relinquish their right to sue the company in the event of a claim dispute in exchange for a lower premium on their homeowners' insurance policy. Under the proposal, insureds who opt to pre-emptively sign away their right to bring suit, would be required to resolve any disputes through a mandatory mediation-arbitration process with the Farm Bureau.

In July, the Texas Department of Insurance held a public meeting in Austin regarding the insurer's request. Insurance lobbyists, consumer advocates, and attorneys offered comments at a contentious five-hour public meeting. Last week, Texas Farm Bureau formally withdrew its proposal from consideration. At the time, Texas Insurance Commissioner David Mattax had not yet issued a decision regarding the insurance company's request for approval of its proposed endorsement. Although the Farm Bureau's mandatory mediation-arbitration endorsement proposal is now closed, it seems likely that the issue will be raised again at some point in the future.

Keywords: alternative dispute resolution, litigation, adr, homeowners' insurance, pre-dispute arbitration, lower premiums, Texas Farm Bureau

Karl Bayer is the founder of Karl Bayer Dispute Resolution in Austin, Texas.


Copyright © 2016, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).