Lawmakers in Texas are taking steps to address the escalating homeowners’ insurance costs, though they admit that their influence over such expenses is limited. Recent legislative efforts have focused on imposing restrictions on how much insurance companies can increase rates and improving the insurability of homes. There’s also a push for more transparency from insurers when coverage is declined or canceled.
Texans face some of the most expensive insurance premiums nationally. Recent years have seen double-digit increases in insurance rates, distinct from the previous decade’s marginal changes. Homeowners in Texas experienced a 19% insurance rate rise in 2024, a slight decrease from the over 21% increase the previous year, according to data from the Texas Department of Insurance. Various factors contribute to these rising costs, including soaring property values from population growth, more frequent severe weather due to climate changes, and elevated costs for labor and construction materials used in damage repairs.
Homeowners insurance is indispensable for mortgage approval, making it a non-negotiable cost. Even without a mortgage, going uninsured is risky during disasters. Legislators remain aware that many cost-driving elements, like weather and inflation, lie outside their control. “Controlling the weather or inflation isn’t within our reach,” stated Rep. Tom Oliverson, hinting at the complex nature of the issue.
Faced with this challenge, lawmakers strive to control costs without deterring insurers, which could destabilize the insurance market. A proposal by Sen. Charles Schwertner aims to give consumers more power over steep rate hikes. Presently, insurers in Texas can propose rate increases to the state’s insurance regulator and implement them immediately; however, the regulator can later retract approval if deemed excessive. Senate Bill 1643, having cleared the Senate, proposes that any rate hike over 10% must receive state approval before becoming effective.
While the initiative has faced opposition from the insurance sector, largely for not addressing the core reasons for increased insurance costs, Schwertner argues that it helps regulate unchecked rate increases. Industry representatives warn that insurers may aim for lower hikes to avoid rejection, leading to potential financial liabilities that might result in policy cancellations due to unaffordability.
Consumer advocates believe reform could create a genuine checkpoint against unreasonable hikes, but they fear insurers might circumvent regulations by submitting frequent smaller increases, a loophole left unchecked by the bill. Schwertner assured that insurers would still need to justify each increase, which could be dismissed if found unjustified.
Lawmakers have aligned on some fronts. House Bill 1576, introduced by Oliverson, proposes a state grant program that helps homeowners fortify homes against hurricanes and windstorms, inspired by a similar initiative in Alabama. Strengthening homes could decrease insurance costs and make homes more attractive to insurers.
As the bill has passed the House, the Senate will consider it next. The potential financial allocation for the program is pending completion of discussions between the legislative chambers. Other legislative proposals include broadening the state insurance department’s leadership structure to include consumer advocates, preventing insurers from mandating clients to bundle homeowners and auto insurance, and requiring clear disclosure of coverage denials and policy cancellations.