We try to avoid taking political positions, but we thought it would be fun to analyze how the various candidates might impact the insurance industry as a whole if they’re elected, specifically how they’ll be bad for insurance. What benefits they might bring is a whole separate series. We’ll kick off our series on Presidential candidates and how each is bad for insurance below with Ted Cruz.
Why Ted Cruz? Because we expect him to be in the race for quite some time. It’s not really worth analyzing what impact Carson might have on, well, anything at all because the chances of him becoming President are effectively zero. Cruz, on the other hand, could very well end up in the White House so it’s important to consider his possible impact.
The real answer, of course, is that we don’t know if Ted Cruz is bad for insurance, or for consumer access to insurance, because he hasn’t spoken much about it. It is incredibly unlikely that anyone from the Cruz campaign will ever see this article, but if they do, we welcome feedback on points addresses and will be happy to edit in any statements from the campaign.
In other words, Senator, if you’re reading and you think we have you all wrong, please pick up the phone and give us a call, we will gladly update this article in the event that we’ve misunderstood your position on any issue.
Ted Cruz Is Bad For Insurance Because He Conflates Government Facilitation Of Commerce With Government Intrusion On Liberty
Liberty is a good thing. It’s part of the fabric of our nation, and it needs to be be protected. But Ted Cruz seems to think that any government action is an attack on liberty. That’s not to say that such things don’t sometimes happen under cover of “good laws.” But in the case of the PPACA, the exchanges don’t prevent liberty or intrude on your rights.
Ted Cruz said that the health insurance exchanges were at odds with freedom of choice and liberty. There are a few issues with that.
The state has a compelling interest in making sure that people are able to pay for losses which impact someone else.
In other words, the state has a compelling interest in making sure that people have insurance when there’s a possibility of a serious loss which impacts someone else. All states require financial responsibility in the event of an auto accident, for example. There are a few states which do not per se require insurance, but they still require financial responsibility and insurance is the easiest way to do that.
As a result, the state has a compelling interest in facilitating the transaction between an individual and an insurer, as well as regulating that insurance product in such a way that there are reasonable odds of the insurance product offering the kind and amount of coverage that the state expects people to have available for the benefit of others to whom they may cause injury.
Neither of these two goals are at odds with freedom, liberty, or any of the other values which Cruz espouses. But to hear him speak, you’d think that the British had pressed the HMS Queen Elizabeth into early service and were coming back with a full component of aircraft and warships to turn us all into British subjects. Just so we’re clear, such an invasion is not expected now or in the foreseeable future.
Does Cruz Think That Mandatory Insurance Of Any Kind Is Dangerous To His Liberty?
Cruz appears to believe that mandating insurance which protects other people, the organizations providing and funding healthcare, and the government which funds hospitals from significant losses caused by or to the insured individuals is a travesty on the order of the British burning of Washington. It would be bad for insurance, to say the least, to have a President who did not believe that it was right to require insurance so that people can make good on losses to others.
It would be worse for insurance to have a President Cruz who believed that the state had no compelling interest in ensuring the availability of those insurance products, whether for health or property and casualty. Does the state of Colorado not have an interest in making sure that Colorado Renters Insurance is available?
Of course they do. If we accept that a given insurance product should be available, then it’s only natural to accept that there be standards on what it covers, what exclusions might be found, and even how one might acquire coverage that doesn’t meet those standards.
What If Coverage Is Mandatory And You Just Can’t Find Insurance At Any Price?
Addressing the latter first, there are renters and homeowners who simply can’t find coverage on the voluntary market. Perhaps someone not only has previous claims, but actively runs a business with client foot traffic in and out of their home and no one on the voluntary market will cover it.
Would a FAIR plan, the insurer of last resort, want to take on the business risk along with the typical risk of a renters insurance policy with claims history? It’s pretty unlikely. That pushes the person into the non-admitted market. Carriers who do business in surplus markets are often able to modify their policy forms and coverage in ways that simply wouldn’t fly for a product in an admitted market.
But even those excess lines products are regulated to some degree by the state in which they’re actually written. The state absolutely has a vested interest in making sure that the company is solvent and that claims can be paid when there is a loss. That’s exactly why Santa Fe Insurance is no longer in business in Cruz’s home state of Texas.
Regulation Of Insurance Protects Consumers, But Regulation Also Helps Make It Easy To Buy The Right Coverage
While there must be regulation of some kind surrounding the insurance products that protect others from us as individuals, there also needs to be facilitation of a market for insurance. What Cruz perceives as an intrusion onto his liberty is little different than a state making sure that there is an insurer of last resort and that there are laws and procedures in place allowing people to purchase coverage from admitted carriers.
Ted Cruz may be bad for insurance as an industry because he is so in fear of onerous over-regulation or over-facilitation by the state that he appears to be convinced there should be no requirement for coverage at all. We strongly prefer not to imagine the intractable nightmare which would result if there were no requirement that people have auto insurance.
Requiring Minimum Coverage Is Not Forcing Cruz To Do Something A Reasonable Person Wouldn’t Want To Do Anyway
One of the things that Cruz misses, and which is among the most concerning, is that his worries over the ACA and how it might be bad for insurance are apparently without any context at all. The requirement in question is designed to make available to everyone the minimum reasonable amount of coverage. There’s even a catastrophic plan for those who are young and truly want the absolute bare minimum.
Contrary to Senator Cruz’s own beliefs, no one is being forced to buy a plan which covers absolutely everything, or a plan which pays the first dollar of even a very small loss. In fact, if such plans were to be available, companies would not be in business for very long. The mandate and the exchange which so concern him are no different from the way that auto insurance is regulated in his own home state, and indeed little different from how it’s regulated in Colorado.
Ted Cruz could legally choose to drive around in his vehicle of choice with nothing but $30,000 per person/$60,000 per accident bodily injury and $25,000 of property damage liability coverage. This mandate does not seem to bother him, and in fact we can safely assume that he chooses to carry substantially more coverage than that.
In reality, he has likely added other types of coverage to that very basic state minimum policy. He’s likely to want coverage for uninsured motorist bodily injury, as well as for property damage caused by that same person without coverage. He might want PIP coverage, he might not, but it’s his option.
Collision and comprehensive are popular types of coverage, as well. They’re prudent to have. But no one is forcing Cruz to buy them. We don’t disagree that mandating physical damage coverage on a fifteen year old Toyota is probably bad for insurance and bad for the consumer. No one is talking about any such level of mandate in P&C, obviously. By the same token, the Affordable Care Act which so angers the candidate does not speak to anything more than the minimum a plan must cover.
An Uncompensated Loss Is A Bigger Affront To Your Liberty Than Being Forced To Buy Minimum Coverage
Senator Cruz apparently thinks that his liberty trumps his right to be made whole, or anyone’s right to be made whole. He also apparently thinks that America can continue to pay for uninsured losses, and that it’s not necessary to create regulatory tools to ensure that people are buying what they think they’re buying, or that the company will still be there when they need it. A President who values his own personal right to choose a bad insurance policy (remember those short-term health plans and pre-existing condition exclusions?) trumps the right of everyone in America to understand the insurance they buy, or to even have access to the type of policy that is worth having. That’s bad for insurance in general, and that world view is bad for insurance on your home, as well.
Ted Cruz May Be Bad For Insurance Because He Doesn’t Think Employment Should Equal Coverage
We’ve established that Cruz doesn’t think that the government should interfere with or facilitate the availability of insurance. It goes without saying that he doesn’t want a single-payer program, that would be anathema to everything he preaches. But does Ted Cruz think that you should get insurance through your employer?
Cruz is on record as saying that millions of people have been “forced into part-time employment” as a result of employers being required to offer health insurance. While that’s not even a true statement – and the people who suggest that it is are not the sort of source we’re comfortable linking to – there’s a bigger problem. What Cruz is (inaccurately) saying is that Americans have been forced into part-time work because employers don’t want to pay benefits. In other words, employment shouldn’t come with insurance.
If employment shouldn’t come with insurance, and insurance markets shouldn’t be facilitated by the government, where does Cruz think that people will get insurance from? The problem isn’t limited to health insurance, either. It sounds a great deal like Cruz is saying that insurance in general isn’t something that the government should “interfere” with by helping to make available. That’s deeply concerning in a world where spilling your coffee on someone could result in a significant liability claim against you personally, which can destroy your life.
When listening to Cruz speak about Obamacare – which is merely a proxy for regulation of insurance in general – think about what the individual insurance market used to be like in healthcare. COBRA coverage was simply unavailable to the vast majority of Americans who qualified for it because of cost. Without it, any coverage you bought on your own, if you could afford it, wouldn’t cover any condition you already had because there was a lapse in coverage.
Regulators tried, but the individual market pre-ACA was very much a Wild West of policies that didn’t cover what you thought they did, lack of recourse, lack of availability of coverage, insurers making seemingly arbitrary decisions, and health expenses that were out of control. Based on how Ted Cruz feels about insurance in general, it appears that he might like to see not only health insurance returned to that Wild West, but also property and casualty. That’s bad for insurance, and it’s bad for you.
- Financial and insurance products must be regulated to offer a sense of security that you’re not buying a policy from the Madoff General Agency. Lack of any and all regulation is not only bad for insurance, but that’s also not what “MGA” stands for in the context of Colorado Renters Insurance!
- Ted Cruz does not appear to want any sort of minimum standard for coverage. That would interfere with his liberty, it seems. Unfortunately, lacking that minimum standard in the P&C world would mean that someone could sell you a policy where the bodily injury per accident limit was also the lifetime maximum of the policy. “We’re not going to pay to fix your car even though you have collision coverage, because we paid out $60,000 on the bodily injury claim. Doesn’t matter that you paid for the coverage, you’re at the lifetime maximum. Time to refund the premium and rescind the policy.” That scenario would be bad for insurance and for you.
- Ted Cruz wants you to take “personal responsibility,” but wants to take away all of the tools and standards that you as a consumer use in order to make sure that you’re buying a policy which offers enough coverage to allow you to take that personal responsibility for damages you cause to others.
So Is Ted Cruz Bad For Insurance?
He could be. If he applies his views of health insurance to the property and casualty industry, you could find it nearly impossible to get the coverage you need for your home or your car. You could find that coverage didn’t offer nearly as much security as you thought that it did. You might find those things at the worst possible time.
Without even considering his stance on other issues, those in the insurance industry and those who have or need insurance should all be concerned about a President Cruz being bad for insurance all around.
On the other hand, he really hasn’t spoken that much about property and casualty insurance. There are things we don’t know about his plans for the economy, jobs, taxes, and healthcare that might be quite relevant but on which he hasn’t yet touched. Is Ted Cruz bad for insurance? The truth is that we just don’t know!
What we’d very much like for Mr. Cruz to do, should his campaign see this, is to offer his thoughts on insurance, both health and property and casualty:
- Where do you see the pain points in the industry, both for insurers and for consumers?
- What will you do to make sure everyone has access to health insurance, since your stated intention is to repeal the ACA?
- What will you do to make sure that insurance companies are offering comparable products to consumers in a way that allows consumers to know for sure what they’re buying?
- Will you repeal first and then replace the ACA with something else, which could take a very long time, or will you combine those two actions (which seems the more prudent course)
- What problems have you personally faced with insurance – of any kind – that would have been difficult for the average consumer to solve? How did you solve them? Would the average consumer have had more trouble solving them than you did?
How Can I Get Renters Insurance In Colorado ASAP?
That’s easy! Effective Coverage has the best options for the coverage you deserve. Renters insurance in Colorado today is not a difficult thing to find, and it’s often affordable.
The national average price of renters insurance is just $187.00, according to the III. That works out to as little as fifteen dollars per month. The vast majority of families can budget renters insurance easily at those prices.
Additionally, it's important to note that renters are at a significantly higher risk of experiencing loss than homeowners. Renters occupy roughly one third of total housing stock in the country, and yet they are fully fifty percent more likely to experience theft than homeowners, according to the Bureau of Justice Statistics.
It only costs a few dollars a month to protect your family, and this cheap renters insurance is a great way to mitigate the additional risks that come with being a renter.
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