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The Law Governing Homeowners Insurance Rates

• Regulating the Texas Homeowners Insurance Market
• Homeowners Insurance in Texas: By the Numbers
• Understanding Rates vs. Premiums
• The Law Governing Homeowners Insurance Rates
• The Rate Regulation Process
• Brief History of Texas Homeowners Market, 1993-Present
• Homeowners Insurance in Texas Compared to Other States
• Exhibits

Texas law provides TDI with the authority to both prohibit unfair practices and to promote a competitive marketplace.

Texas Insurance Code
Title 10, Subtitle H, Chapter 2251: Rates
Sec. 2251.001. PURPOSE:

1. promote the public welfare by regulating insurance rates to prohibit excessive, inadequate, or unfairly discriminatory rates;
2. promote the availability of insurance;
3. promote price competition among insurers to provide rates and premiums that are responsive to competitive market conditions;
4. prohibit price-fixing agreements and other anticompetitive behavior by insurers; and
5. provide regulatory procedures for the maintenance of appropriate information reporting systems.

SUBCHAPTER B. RATE STANDARDS

Sec. 2251.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY DISCRIMINATORY RATES.

• (a) A rate is excessive, inadequate, or unfairly discriminatory for purposes of this chapter as provided by this section.
• (b) A rate is excessive if the rate is likely to produce a long-term profit that is unreasonably high in relation to the insurance coverage provided.
• (c) A rate is inadequate if:
  • (1) the rate is insufficient to sustain projected losses and expenses to which the rate applies; and
  • (2) continued use of the rate:
    • (A) endangers the solvency of an insurer using the rate; or
    • (B) has the effect of substantially lessening competition or creating a monopoly in a market.
• (d) A rate is unfairly discriminatory if the rate:
  • (1) is not based on sound actuarial principles;
  • (2) does not bear a reasonable relationship to the expected loss and expense experience among risks; or
  • (3) is based wholly or partly on the race, creed, color, ethnicity, or national origin of the policyholder or an insured.