Texas Governor Calls for Action on Rising Insurance Premiums
Texas Governor Greg Abbott has called for urgent action to address the soaring property and casualty insurance premiums, which have increased by 79% since 2020. The directive to the Texas Department of Insurance (TDI) highlights the need for immediate interventions in underwriting and rating practices, claims costs, and anti-fraud strategies.
The Governor's call to action is set against a backdrop of significant and rapid increases in insurance premiums affecting Texas homeowners, as well as pending legislative proposals for 2027. In response, TDI has until September 14, 2026, to formulate recommendations that may include both administrative actions and suggestions for statutory amendments. This initiative is critical to preparing for the upcoming legislative session that seeks to enhance consumer protections and stabilize the insurance market in Texas.
Insurance Companies Face New Mandates
To mitigate the premium hikes, TDI has issued several key directives. These include mandating insurers to account for resilient building improvements, such as "FORTIFIED" roofs, in their rate calculations. By doing so, insurers are encouraged to lower premiums for properties with heightened resistance to damage. Additionally, insurers can no longer deny or non-renew policies solely based on the age of a property or its components, like roofs, ensuring wider access to coverage for owners of older homes.
Clamping Down on Price Optimization and Fraud
In an effort to promote fairness, TDI's new bulletin bans "price optimization" practices, which rely on non-risk-related customer data when setting rates. The emphasis on fairness extends to combating insurance fraud, a factor identified as contributing to the rising premiums. A task force will be established with the aim of reducing fraudulent claims, thereby curbing unnecessary claims costs.
| Directive | Description |
|---|---|
| Mandatory Resilient Roof Considerations | Insurance companies must factor in fortified roofs in rate calculations. |
| No Denial Based on Age | Policies cannot be denied due to property age or component age, like roofs. |
| Banning Price Optimization | Prohibits rate setting based on data unrelated to risk factors. |
| Anti-Fraud Task Force | Establishes measures to combat insurance fraud contributing to premium spikes. |
As these measures are implemented, insurance providers operating within Texas are advised to adjust their practices according to the new directives. These changes aim not only to bring immediate relief to policyholders facing escalating costs, but also to ensure a more stable and equitable insurance market in the state.