The decision of the Texas insurance commissioner to reject a proposal from the Texas FAIR Plan to raise its rates raises “serious and disturbing questions,” according to an industry expert.

Commissioner Mike Geeslin denied the request of the Fair Access to Insurance Requirements Plan, a government-mandated, rate-controlled mechanism that sells property insurance to high-risk property owners.

Roughly 75,000 Texans, most of them in or near major cities, take part in the FAIR Plan. A separate mechanism, the Texas Windstorm Insurance Association (TWIA), also had its rate-filing request denied earlier in the year in a similar order from Geeslin.

Eli Lehrer

“This is an anti-consumer action. Without adequate rates in the FAIR Plan, someone else is going to end up picking up bills for people in the plan,” said Eli Lehrer, director of The Heartland Institute’s Center on Risk, Regulation, and Markets and a Heartland Institute senior fellow, in a statement.

Lehrer said the decision hurts consumers. “While Commissioner Geeslin is well within his rights to reject the rate filing, that may not be the right decision for Texans,” he said. “But I’m really concerned at the rationale he put forward. It appears that following the commissioner’s reasoning could lead to a total rejection of the very concept of private market reinsurance.”

Lehrer says any non-private solution could impose a sizeable burden on Texas taxpayers. “If the FAIR Plan or any other agency issues bonds or engages in other financing as Geeslin seems to indicate it should, taxpayers – one way or another– will be on the hook to pay off that financing,” Lehrer said.