'Nothing was done'

Heading into the just-ended legislative session, Texas lawmakers promised to tackle the state's rising home insurance costs. After 140 days in Austin, they opted for minor tweaks, eschewing more fundamental reforms that would have restricted rate increases and helped owners harden their homes against storms.

"I would argue that nothing was done to lower property and casualty rates for the average homeowner," said state Rep. Tom Oliverson, a Cypress Republican.

Oliverson filed legislation to create a statewide grant program to incentivize more resilient home construction, following a national standard called Fortified. "If you're looking for things that can actually move the needle, you're really talking about how do we lessen the severity of a claim?" he said in an interview. "How do we make homes more resistant to damage?"

Texas is the only Gulf Coast state that doesn't offer incentives such as grants to homeowners and mandatory insurance discounts for more resilient home construction, despite leading the country in losses from catastrophic weather.

Experts credit Alabama's Fortified program, which offers grants to homeowners to upgrade their roofs and requires that insurers give them discounts, as stabilizing that state's home insurance market.

During a House committee hearing on Oliverson's bill, the insurance industry overwhelmingly supported establishing a similar program in Texas. Oliverson asked for $500 million to jump-start the program but said that budget writers decided not to allocate the funding.

Soaring increases

Lawmakers also tried to tackle soaring rate increases: Since 2023, home insurance rates have spiked 43.7% statewide, according to the Texas Department of Insurance.

State Sen. Charles Schwertner, a Georgetown Republican, proposed requiring insurers to get approval for rate increases that exceeded 10%. "People are feeling like this is out of the ordinary regarding insurance rates," he said in a March interview. "And I think we, as a body, have to respond to that."

Schwertner also proposed expanding oversight of the insurance department to a three-member commission, including a consumer advocate, saying the change would "reinvigorate leadership to concentrate on overseeing the insurance industry and return consumers to the forefront of their mission."

Both bills passed the Senate despite strong opposition from the insurance industry, but they stalled in a House committee. State Rep. Jay Dean, a Longview Republican and the chairman of the House insurance committee, didn't respond to an interview request.

"I would think that people back home may look back on it and say that one of the major missed opportunities of this session is that we failed to act," Oliverson said. "And as a result, people got zero relief for the rising cost of insurance."

Lawmakers did pass some modest consumer reforms. If insurers use someone's credit score in an underwriting decision, they must update that credit report at least every three years, or annually if the consumer requests, per a bill authored by Schwertner.

Insurers' use of credit scores to decide how much to charge customers is contentious. Another bill, filed by state Rep. Trey Martinez Fischer, a San Antonio Democrat, would have prohibited insurers from using credit scores in auto and homeowners rate making decisions. Several states have banned the practice, citing research that shows that families with bad credit can pay hundreds of dollars more for auto insurance, despite having similar driving records to those with excellent credit. Martinez Fischer's bill was left pending in committee.

Starting in September, home insurers can't impose a so-called widow's penalty, hiking rates after the death of a spouse. State Sen. Lois Kolkhorst, a Brenham Republican who filed the bill, cited data that showed that when widows update their marital status, their insurance rates go up an average of 20%.

"My dad was killed in a car wreck when I was 16 years old," Kolkhorst said in a committee hearing. "My mom, she gritted her teeth and she made it happen. To think that her insurance would go up because my dad was killed in a car wreck is the most egregious thing."

Breaks for the coast

Lawmakers moved to shore up the Texas Windstorm Insurance Association with a measure from state Rep. Todd Hunter, a Corpus Christi Republican, that allows the insurer of last resort to borrow up to $1 billion from the state's rainy day fund to cover claims after a catastrophe.

Currently, TWIA issues public securities to fund its catastrophe reserves, which carry higher interest rates and drive up the cost of debt -- costs that are eventually passed along to policyholders.

Beamon Floyd, a lobbyist who represents major insurers, called the measure "a win-win" by providing stable funding for TWIA and a "secured investment for Texas backed by the entire industry in the state." In the event that TWIA does borrow money from the state, the loan will be repaid through surcharges on home insurance policies statewide.

Albert Betts, executive director of the Insurance Council of Texas, a trade association for insurers, testified that the average homeowner would see a roughly $45 annual charge if TWIA borrowed the full amount from the state.

Hunter also filed a measure that would help coastal school districts offset the cost of property insurance. School districts across Texas have struggled to keep up with rising property insurance costs as severe weather batters school buildings. Insurance costs for districts have increased 44% statewide since 2020, according to financial data from the Texas Education Agency.

Although Hunter's bill stalled in committee, the final version of House Bill 2, the $8.5 billion school finance package, includes $100 million to reimburse school districts in the 14 coastal counties covered by TWIA for property insurance increases above the state average.

"You've got a school funding crisis in the 14 counties, and it's due to outside elements like insurance," Hunter said in a committee hearing.