State-backed Insurance Group to Raise Premiums


A state-sponsored insurance association in Texas auto insurance plans to increase rates by November 1, says its spokesperson. According to Jerry Johns, a representative of Texas Automobile Insurance Plan Association, the organization is set to implement an increase in premiums this coming November to pay for the increasing cost of medical and repair expenses.

State-backed Insurance Group to Raise PremiumsThe Texas Automobile Insurance Association or TAIPA for short, is an auto insurer that provides adequate protection and coverage to Texans with poor driving records. Most of the organization’s policyholders are motorists that private insurance providers have turned away because of their driving histories. The state government mandated the creation of the insurance provider as the last resort of erring drivers.

The TAIPA plans to raise its premiums by 2.2 percent to cover for more expensive car repair and hospital costs. Although the increase may seem insignificant, it has drawn criticism from some Texans who believe that the organization should avoid placing more financial burden on already-suffering motorists. Some critics point out that the economic slump makes it hard for many Texans to pay for expensive car insurance.

Johns, however, reiterated the need for an increase, citing rising medical costs. The TAIPA assigns motorists with poor driving records to private insurers. These providers then insure the drivers with the minimum liability coverage at the expense of the association and the state government. In recent years, there have been calls for the abolishment of the organization, with some people expressing their anger because tax money is being used to pay for risky drivers.

Even so, sources from the TAIPA point out that the assigned drivers themselves pay for their insurance. The motorists get the same basic coverage as other policyholders like the state-mandated minimum liability amounts. Assigned drivers can also get limited collision coverage as well as personal injury protection.

In 2008, the association handled and assigned some 12,000 high-risk drivers to particular private insurers. Johns says that the organization is expected to assign some 10,000 drivers this year.

Not all drivers availing of TAIPA’s are considered unsafe drivers, experts say. Many of the assigned drivers have relatively clean driving records but have high claims rate. Insurers often compute rates based on driving history and claims history. The more insurance claims filed, the higher the likelihood that a motorist’s insurance premium will increase.

Some Texans have expressed their disappointment over the plans and the overall state policy regarding high-risk drivers. They explain that public insurance is often more expensive than private insurance and that any increase would take away money that car owners can use to help revive the economy.