Lawmakers examine insurance bundling

Texas lawmakers and an insurance regulator are taking a closer look at bundling and whether insurers should be able to require consumers to buy home and auto policies with the same company.

Customers may see offers to bundle home and auto policies for a discount. It’s typically optional. As of early December, the Texas Department of Insurance said it logged just under 40 complaints about insurance telling customers they must add an auto policy to renew their homeowners insurance.

CONSUMER CONCERN

Last year, NBC 5 Responds reported a North Texas consumer received a nonrenewal notice from her insurance company, Farmers. It said it couldn’t renew her homeowner's policy unless she added an auto policy from the same company.

“This is strong-arming, almost trying to hold me hostage into staying with this particular company,” Sally Little of Azle told NBC 5.

Little said she shopped around. In her case, bundling wouldn’t have been a better deal.

LAWMAKER TAKES NOTE

State Senator Royce West of Dallas filed Senate Bill 213 that would prohibit insurers from making the purchase of both home and auto policies from the same company a condition of coverage.

Tuesday, a Senate Committee on Business and Commerce heard from two consumer groups. They testified that if insurance companies can tell customers they have to bundle to stay with the same company, it would limit choices for Texans when they shop rates.

“If they're forcing you to get their auto policy in addition to your homeowner's policy, they have less incentive to keep those auto rates in line. It can also disadvantage smaller insurance companies when the 800-pound gorillas come in and do this,” said Ware Wendell of Texas Watch.

Ann Baddour of Texas Appleseed said, “It's anti-competitive behavior because it's forcing consumers to make a choice rather than going to the market and looking at their options and choosing what works best for them.”

In an email to NBC 5 Responds this afternoon Farmers wrote, “We do not require homeowners customers to purchase a companion auto policy; as such, this legislation is not applicable to our current guidelines.”

Farmers told NBC 5 Responds customers with home policies who are up for renewal could renew with Farmers – without buying an auto policy. Farmers said it revised its guidelines in December.

Senator West’s bill is pending in committee. He said it would apply to any insurance company.

“I think that Farmers got the message. We want to make sure that other insurance companies get the message,” West said. “Here's the deal, if you're not doing it, then you don't have anything to worry about.”

West said the proposed legislation would not prevent insurers from selling bundles as an option.

A spokesperson for the Insurance Council of Texas, an insurance industry trade group, wrote, “We look forward to continuing our work with Sen. West’s office to develop something that will be good for consumers and still make Texas a strong and competitive market.”

The Texas Department of Insurance is proposing a rule that would prohibit a company or agent from making the purchase of a home policy contingent on buying a personal auto policy and vice-versa. The TDI is taking public comments through 5 p.m. on March 24, 2025. Written comments can be emailed to ChiefClerk@tdi.texas.gov or mailed to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711.

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