California, Florida, Hawaii, Texas get F’s for insurance regulation

John Egan

Four states — California, Florida, Hawaii and Texas — got failing grades in The Heartland Institute’s latest report card on the regulatory systems for auto insurance and home insurance in all 50 states.

Overall, the institute says, “burdensome regulation” of home and auto insurance “shows signs of easing” across the United States. The institute says it has seen “a modest, uneven, but nonetheless real trend” toward more freedom for auto insurance and home insurance consumers.

California, Florida, Hawaii and Texas all received F’s. Florida got the lowest score (-35) on the institute’s numerical scale. That scale is based on positive and negative points assigned to nine factors regarding insurance regulation. Florida was preceded by California (-28), Texas (-25) and Hawaii (-22).

The numerical scores were used to compute the letter grades.

Two states — Vermont and Ohio — earned an A+. Vermont’s numerical score was 24 and Ohio’s was 22. Receiving grades of A were Illinois (numerical score of 15) and Maine (numerical score of 13).

As for the other states’ grades:

• Eight received a B+.

• Eight received a B.

• Five received a B-.

• Five received a C+.

• One received a C.

• Eight received a C.

• Two received a D+.

• Two received a D.

• Three received a D-.

“No state does a perfect job of regulating insurance, but some do better than others,” the institute’s report says. “We produce this ranking to give states a sense of what they ought to do if they want to free their insurance markets.”

The report adds: “We believe that an open and free insurance market maximizes the effectiveness of competition and best serves consumers. States in which the industry does not love to operate, such as Maine, rank high … because they have open and competitive markets and no obviously terrible practices.”

The Heartland Institute graded each state on nine factors that it says go into determining preservation of “a free and competitive marketplace” for auto and home insurance. Among those factors are “politicization” of insurance regulation, “clarity” in insurance rules, regulation of insurance rates and healthy competition among insurers.

“A grade of ‘F’ is not an attack on a state’s insurance department, nor is a grade of ‘A’ an endorsement of the people running it,” the institute says.

The Heartland Institute is a nonprofit, nonpartisan think tank that promotes “free market” principles.