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Enactment of Insurance Reform in Texas Good for Consumers

Dec. 10, 2004

Baylor Expert Says Insurance Will Become a 'Better Deal'

A Baylor University insurance and finance professor says the state of Texas took a "sorely needed step" yesterday in the direction of more competitive insurance markets by adopting an alternative rate regulation protocol known as "File and Use" in place of "Prior Approval."

Dr. James R. Garven, The Frank S. Groner Memorial Chair of Finance at Baylor's Hankamer School of Business, says under "Prior Approval," insurance companies had to submit proposed rate changes to the state insurance regulator for formal approval. The new "File and Use" protocol, which was enacted Dec. 1, requires that rate changes be submitted to the state insurance regulator, but they do not require formal regulatory approval.

"Both insurers and consumers tend to be better off under competitive markets than under rate regulation," Garven says. "Over time, consumers can expect to see lower insurance rates and enhanced availability, which will cause insurance to become a 'better deal.'"

Garven regularly contributes to a weblog called "RMI@Baylor," which offers insights, information and research concerning issues of risk management, insurance and related subjects.  The address for this online resource is

Garven can be reached directly at (254) 710-6207 or at

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