Texas Department of Insurance

Helping Texans with their auto, commercial and residential property insurance needs.

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Legislative Reform (2003)

SB 310

At the beginning of the 78th Legislative Session in 2003, Senate Bill 310 was signed into law requiring rate information to be filed by the top insurers writing homeowners insurance, and also requiring TDI to prepare a summary report of the findings to the legislature. Among the key findings:

SB 14

Based on information obtained from the SB 310 report, legislation was passed in SB 14 designed to bring stability to the market and address the recent problems of availability and affordability experienced by Texas consumers.

Aftermath of SB 14

Two large insurers filed legal challenges to the SB 14 rate reduction orders; one settled with the Department a year later, reducing its rate going forward and issuing a discount to policyholders. The other case remains in the courts, and as of this writing there is an outstanding multi-million dollar refund order pending. A third large insurer filed a legal challenge one year after the SB 14-ordered reductions, and this challenge was eventually settled as well with a rate reduction and refund to policyholders.

TDI has twice used the sanction of prior approval in response to questionable rating practices, and in each case the Department's action was overruled by the courts. Currently the Texas Sunset Advisory Committee has recommended that the Legislature clarify the conditions under which TDI can move a company to prior approval, and this recommendation will be considered in the upcoming legislative session in 2011.

The initial rate reduction orders resulted in an average statewide reduction of 4% (less than projected 12% due to the legal challenges by two large insurers representing 40% of the market). By 2006, under the new system, average statewide homeowners rates were 13.5% lower than 2003 rates ( see Exhibit 1).

The regulatory tools provided by SB 14 have enabled the Department to affect market stability as well as significant savings to Texas policyholders ( see Regulatory actions resulting in policyholder savings).

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