Texas lawmakers want to lower homeowners' insurance costs but have few options

DALLAS — Texas lawmakers hope to rein in homeowners' rising insurance bills even as they acknowledge there's only so much they can do to tackle costs.

Legislators have advanced bills to limit how much insurance companies can hike rates and help homeowners make their homes more insurable. They've also sought to compel insurers to be more upfront with homeowners when they decide to yank coverage, or deny it in the first place.

Texans pay some of the highest insurance premiums in the country. On average, Texas homeowners saw their insurance rates spike by double digits in recent years — a far cry from the previous decade, when such increases were unheard of. Homeowners' insurance rates climbed by nearly 19% in 2024, according to the Texas Department of Insurance, slightly down from more than 21% the previous year.

A number of factors have spurred insurance costs in recent years, insurance experts say. For one, property values in Texas surged amid the state's population boom — raising the cost to ensure homes and businesses. Climate change has intensified extreme weather events like hailstorms, hurricanes and winter freezes and made severe weather more common. With the state's population growth, more people have moved into the path of that severe weather. Higher labor and construction material costs have driven up the cost of repairing damage.

Buying homeowners insurance isn't an optional cost. Lenders require homebuyers to purchase insurance to obtain a mortgage. Even if a home is paid off, insurance experts say it's unwise to go without coverage in case disaster strikes.

Even as lawmakers look for ways to tackle the insurance crisis, they acknowledge many of the drivers of insurance costs are beyond lawmakers' control.

"We can't control the weather; we can't control inflation," state Rep. Tom Oliverson, a Cypress Republican behind one such proposal, told a House committee last month. "I can't control the availability of building materials, and I can't control how the houses that are already built were built, what standard they were built to."

And they find themselves in the position of trying to rein in exorbitant insurance costs without scaring off insurers and cratering the state's insurance market.

One proposal by state Sen. Charles Schwertner, R-Georgetown, aims to give policyholders a check against steep rate increases. In Texas, insurers can file proposed rate increases with the Texas Department of Insurance, the state's insurance regulator, and implement the new rates right away. If the agency later decides the increase is unreasonable, they can disapprove it.

Senate Bill 1643, which has cleared the Senate but awaits a committee hearing in the House, would require the insurance department to approve any rate increase above 10% before it can go into effect.

"As companies make significant rate changes, it is incumbent upon the Legislature to ensure that the regulatory environment is giving these filings the level of scrutiny they necessitate," Schwertner said ahead of a Senate vote on the bill in April.

That proposal has drawn pushback from the insurance industry. Capping rate increases does nothing to address the underlying drivers of the rising cost of providing insurance, said Beaman Floyd, who heads the Texas Coalition for Affordable Insurance Solutions, a group that represents major insurance companies including Allstate, State Farm and USAA. Insurers might pursue lower rate increases than they otherwise would have if they worry regulators wouldn't approve larger ones, Floyd said — leaving them with mounting financial liabilities that could lead to policy cancellations because insurers can't afford to provide coverage.

"That's not good for consumers," Floyd said.

Requiring the state insurance regulator to review rate increases above 10% doesn't necessarily mean the regulator will automatically reject those increases, Schwertner said in a statement. The bill "simply seeks to curb unchecked rate filing and review practices," he said.

Consumer advocates argue that the state's current system doesn't provide a real check on insurers — one that Schwertner's proposal could theoretically help create. But they also worry insurers will thwart the intent of the law simply by asking for multiple rate increases, a practice the bill doesn't cap. Ware Wendell, executive director of the consumer rights group Texas Watch, posited that an insurer could theoretically file a 9% increase one month and seek the same increase the next month.

"Insurance companies could come in and nibble," Wendell said.

The Texas Department of Insurance would still require insurers to justify their rate increases even if they filed multiple increases a year, Schwertner said. If those increases aren't justified, the state could still reject the increase, he said.

Insurers and consumer groups agree on some proposals. House Bill 1576, authored by Oliverson, would create a state grant program to help homeowners retrofit their homes to withstand hurricanes and windstorms, modeled after a similar program in Alabama. The idea is that insurers will be more likely to insure a home if it's hardened against severe weather, and the cost of insuring that home will be lower.

"It's a very unique way for us to basically drive the cost of insurance down by encouraging folks — not mandating, this isn't a mandate — to rebuild your home to a higher standard that experiences less risk and less cost," Oliverson told the House Insurance Committee in April.

That bill cleared the House late last month. The Senate has yet to take action. How much money the state would spend on the program depends on the bill clearing both chambers, and on the outcome of budget negotiations between the House and Senate.

Lawmakers have considered other ideas. The state insurance department is overseen by a single commissioner appointed by the governor. Another Schwertner proposal would expand that to three commissioners, one of whom would be required to have expertise in consumer advocacy. Lawmakers have also advanced bills to prevent insurers from forcing consumers seeking homeowners insurance to also purchase auto insurance, and to require insurers to actively disclose why they may deny coverage to homeowners or cancel their policies.