Home insurance rates are through the roof. Can Texas lawmakers do anything?

Texas Lawmakers continue to look at ways to cut property taxes and increase homestead exemptions, but there’s another part of the home affordability equation that’s also key to driving costs down: Addressing rising Insurance rates.

Texas home insurance premiums jumped by 22% in 2024, according to the Texas Department of Insurance. It’s just one of the many costs potential buyers must factor in as they weigh whether to buy a home in Texas and what they can afford.

The climbing insurance costs are deterring some potential buyers, said Paul Epperley, president of the Greater Fort Worth Association of Realtors.

“When they get to that point of finally seeing what their insurance rate is going to be, I do feel like there are people that just either drop out or they drop down,” Epperley said.

Can state lawmakers do anything to help? Epperley acknowledges that it’s a bit of a balancing act for policymakers.

“The Legislature, while we don’t believe they can regulate insurance companies without some sort of state intervention or takeover, which may not be the best answer for the free market, we’ve seen some solutions come up that would allow more of a balance,” Epperley said.

Some proposals related to property insurance are making their way through the Texas Legislature as lawmakers meet in Austin, including state approval for raising rates over a certain amount and a grant program to prepare for storms.

The session runs through June 2, though Gov. Abbott could call lawmakers into overtime in one or more special sessions.

How can lawmakers rein in home insurance costs?

Epperley isn’t expecting to see reforms that drive down home insurance rates this session.

Bills seem to be moving slowly this session, Epperley said. Thousands of bills are filed each session and most do not become law.

“If there is anything hidden in there that we haven’t discovered in those bills, I don’t know if they would get to it this session,” Epperley said.

But others see promising reforms before lawmakers— though some could use tweaking, said Ware Wendell, executive director of Texas Watch, a citizen advocacy group.

The rising cost of insurance was a focus of state senators and state representatives between legislative sessions.

Between both chambers, recommendations included more regulatory oversight and transparency, incentives for insurers that serve high risk or underserved areas, organizational changes within the Texas Department of Insurance and guardrails to prevent unfair pricing practices.

A proposal by Sen. Charles Schwertner, a Georgetown Republican, says an insurance company must get approval from the Texas Department of Insurance to increase or decrease a person’s property or auto insurance by more than 10%. Lt. Gov. Dan Patrick noted the bill, S.B. 1643, while addressing rising home and auto insurance rates during an April 3 press conference.

Schwertner and Rep. Jay Dean, a Longview Republican who chairs the House Insurance Committee, were not available for interviews.

The proposal is backed by Texas Watch because it would put Texas’ insurance system more inline with what they support: A model in which insurers must get permission from the Texas Department of Insurance to increase rates. Wendell did note that the bill should ensure the 10% increase cumulative over the course of a year. Otherwise, companies could increase rates multiple times to a number that exceeds 10% overall, he said.

“I think it’s really important right now for the public to raise their voices, to contact their lawmakers, to remind their state representatives and their state senators, ‘We’re the ones who sent you to Austin, and we sent you there to protect us,” Wendell said.

The bill is opposed by the Texas Coalition of Affordable Insurance Solutions, which is made up of a group of large insurance companies.

The coalition and other groups representing insurer interests favor legislation that reduce losses and manage risks.

“The insurance market for insurers is cost driven,” said Beaman Floyd, the group’s director. “We pay out of lots of claims. Billions and billions of dollars worth here in Texas, and that’s what drives our business model and that’s specifically what drives the rating. So if those costs go down, rates will go down.”

In an email, Insurance Council of Texas spokesperson Richard Johnson pointed to a roofer licensing bill and a bill creating a grant program to help Texans retrofit their homes to withstand wind and hurricane damage as examples of ideas they support.

“While addressing rate hikes is important, it’s critical to focus on solutions that prevent losses and help mitigate future risks, which, in turn, can reduce pressure on rates,” Johnson said. “We must be mindful of solutions that may appear effective but ultimately could undermine market stability.”

Scot Kibbe, VP of state government relations for the American Property Casualty Insurance Association, encouraged lawmakers to respond to increased insurance costs with “market-driven solutions” rather than “pursuing the types of government regulations that have contributed to a shortage of insurers, and consumer choice, in California.”

Epperley also noted the grant program bill, House Bill 1576 by Rep. Tom Oliverson, a Cypress Republican, among possible solutions to rising rates, though his organization would like insurers to give discounts to those who make the effort to weather-proof their homes with the grant dollars.

Incentives to keep insurers in the state, providing a clear rationale for why rates are rising, more transparency around a property’s claim history and “common sense” regulations for insurers are ideas supported by Greater Fort Worth Association of Realtors, Epperley said.

Other bills before lawmakers include Senate Bill 1642, also by Schwertner, which would put the Texas Department of Insurance under the leadership of three commissioners instead of one. Senate Bill 213 by Royce West, a Dallas Democrat, bars insurers from tying car and home insurance together.

Insurance bills have also been filed that deal with rate increase approvals, credit scores processes and transparency around why a policy is canceled or renewed.

Texas Governor, Lt. Governor on rising home insurance

Much of the 2023 legislative session was focused on driving down property taxes for Texans in the form of lower school property tax rates and increased homeowner exemptions.

The House and Senate have again made lowering property taxes a priority this session, though the specifics of a proposal that’s agreeable to both the House and Senate has yet to be revealed.

“We’re cutting property taxes, and then it costs more to buy your insurance,” Patrick told reporters on April 3. “There’s a fine line here that we have to deal with the home insurance companies, because if they feel like they’re not getting the right return, they’ll just pick up and leave the state, and there is no insurance.”

Abbott is focused on attracting a wide variety of insurers to lower rates for Texans, spokesperson Andrew Mahaleris said in a statement.

“The Governor will continue working with the legislature to contain insurance costs and will review any proposals they send to his desk,” Mahaleris said.

A spokesperson for House Speaker Dustin Burrows, a Lubbock Republican, did not return emails seeking comment.

Patrick said he doesn’t understand the rapid rate increases.

“It’s an issue we’re focused on and trying to wrangle, and there’s got to be that spot where you can negotiate lower premiums without them saying, ‘we can’t make a profit’ and leaving the state,’” Patrick said.

He also pointed to housing affordability as a solution to higher insurance costs, using a bill that would shrink lot size requirements in certain cities. Supporters say the measure would make it easier to build smaller, lower-priced homes. Some Tarrant County mayors oppose the proposal.

“If you lower the cost of housing, you lower the cost of the insurance,” Patrick said.

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