State lawmakers look at rising homeowners insurance costs

Ahead of next year’s legislative session, Texas lawmakers are hearing testimony about homeowners insurance rates. Tuesday, a Texas House Committee on State Affairs heard testimony about the rising costs of homeowners insurance and factors contributing to insurance companies leaving some Texas markets.

‘OUR RATES GO UP EVERY SINGLE YEAR’

Across North Texas, our NBC 5 Responds and Investigates teams have heard from consumers who report seeing higher homeowners insurance premiums.

An NBC 5 analysis found the average Texas homeowners insurance premium went up 44% in nine years.

Texas State Rep. Chris Turner, a Democrat representing parts of Tarrant County, said he’s hearing about it, too.

“I hear from my constituents all the time in Arlington and Grand Prairie and Mansfield about the rising homeowners insurance costs that they're dealing with,” Turner told NBC 5 ahead of the hearing. “As a homeowner myself, I know it's something that I've experienced as well. Our rates go up every single year, even when people don't file a claim or and haven't had a claim in years.”

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Turner is a member of the State Affairs Committee holding a hearing on how the legislature could address the costs Tuesday.

“If you own a home, you've got to have it insured. We need to better understand the root causes of why these rates are going up so quickly and what can be done about it,” Turner said.

LAWMAKERS HEAR FROM INDUSTRY, CONSUMER ADVOCATES

Insurance company reps tell lawmakers the increases are necessary for multiple reasons, including more homes are in regions that are prone to damaging weather. They noted inflation drives up the costs.

“Texas is a very high-expense place to do insurance. We’ve had a big increase in frequency and severity of claims over the past several years,” said Beaman Floyd, an insurance industry lobbyist representing the Texas Coalition for Affordable Insurance Solutions.

Consumer advocates also testified, saying state regulators should do more to examine rate increases.

“What we’ve seen is rates keep going up. You hear from the insurance industry: we’re suffering losses. But in the years where they aren’t, the rates don’t come back on and they’re not forced to come back down either,” said Ware Wendell, executive director of Texas Watch.

In Texas, insurers can request an increase and start charging the new rate before the Texas Department of Insurance formally approves it. The “file and use” system has been in place in Texas since 2003.

In testimony on Tuesday, the TDI’s commissioner told lawmakers that it’s rare to reject an insurance company's rate increase request.

“The rate would be in use potentially. If, ultimately, TDI determines that rate is not meeting statutory requirements, then we could disapprove that rate,” TDI Commissioner Cassie Brown told lawmakers.

Turner asked, “How often does that happen?”

“Rarely,” answered Brown.

Brown told lawmakers that TDI may file objections to seek clarification on rate increases, which may result in an insurance company amending or withdrawing a rate increase request. Brown said TDI rate reviews saved consumers $57 million in costs in fiscal year 2023. According to the commissioner's testimony, consumers paid about $47 billion in premiums for home and auto coverage.

Brown said state law requires rates to be adequate and not excessive, based on sound actuarial principles and reasonably related to expected losses and expenses. Rates must not be based on a consumer’s race, creed, color, ethnicity, or national origin.

So far in 2024, Brown said four insurers exited the Texas market out of 2,500 doing business in the state. Those exits impacted 11,000 residential policyholders across Texas.

As legislators consider new laws next year, Turner said all options should be on the table.

“It is not acceptable to say the status quo is OK because [the] status quo is clearly not OK when consumers are paying more and more out of pocket,” Turner told NBC 5.

Lawmakers are not in session. Every other year, lawmakers in Texas gather to pass a state budget and other laws. The 2025 Texas legislative session begins Jan. 14, 2025.

CONSUMER TIPS

In the meantime, consumers who face a premium increase can shop around. Get quotes from other insurance companies for equivalent coverage and deductibles.

You can start your research by digging out your current policy. The first page or two, the declarations page, summarizes coverages and deductibles. Make sure the amount of coverage for your dwelling is sufficient to rebuild your home. When you shop, compare the coverages on your current declarations page to competing insurance companies.

Homeowners can switch policies anytime, including outside a renewal period. You can find more tips to help you shop premiums here from the TDI.

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