Texas Insurance Transparency Bill Sparks Debate
The home insurance industry is pushing back against a proposed Texas law that would compel insurers to explain why they cancel or decline to renew homeowner policies. The measure, authored by State Senator Mayes Middleton, a Republican from Galveston, comes as increasing numbers of Texans, particularly in the Houston area, grapple with soaring insurance premiums or the complete loss of coverage.
Houses line the Intracoastal Waterway the day after Hurricane Beryl made landfall nearby Tuesday, July 9, 2024, in Sargent.
Under current Texas law, insurers are only obligated to provide reasons for dropping or refusing coverage if a homeowner specifically requests the information. Middleton’s bill aims to make this disclosure mandatory. During a committee hearing, Middleton emphasized the importance of transparency, stating, “When insurers have to justify their actions, it enables the legislature to better address issues.”
Industry Concerns
The insurance industry has voiced concerns that the proposed requirements represent an undue burden with minimal benefit to homeowners. Jon Schnautz, the legal and legislative advocacy counsel at the Insurance Council of Texas, a trade group, argued that requiring companies to automatically provide this information would entail significant investments in new systems without yielding enough useful information to justify the cost. Regan Ellmer, director of government affairs for the Independent Insurance Agents of Texas, questioned the value of explaining non-renewal if the underlying reason is beyond the homeowner’s control.
“Many times I think it’ll be: ‘Does not fit our underwriting guidelines’,” Ellmer said.
State Senator Charles Schwertner, a Republican representing Georgetown, also expressed skepticism about the data currently available, stating, “How do we know that? We don’t have data regarding declinations, cancellations, and limited data regarding nonrenewals.”
Data Scarcity and Climate Risk
Currently, the state of Texas doesn’t collect comprehensive data on how many homeowners are dropped by their insurance companies, or the reasons behind those decisions. This data is crucial to help lawmakers understand how insurance availability is changing as companies withdraw from areas at high climate risk. Following a federal government report in January on climate change’s effect on home insurance, the Texas Department of Insurance chose not to request pertinent data from providers, leaving Texas blank on related national maps. Schwartner characterized this as “a pretty damning map,” highlighting the lack of information available from the Texas Department of Insurance (TDI).
At a recent committee hearing, House lawmakers signaled that addressing the affordability and availability of home insurance is a high priority for this legislative session. They subsequently requested a more granular data breakdown of issues within the state. TDI Commissioner Cassie Brown stated that the agency is committed to reviewing the existing data and determining what further information is needed to support informed decision-making.
