APCI - American Property Casualty Insurance Association

06/03/2025 | Press release | Distributed by Public on 06/03/2025 15:11

Texas Legislators Wisely Avoid Over-Regulation, but Insurance Market Still Needs Legal Reforms

AUSTIN, TX - The American Property Casualty Insurance Association (APCIA) today released the following statement, attributed to Scot Kibbe, vice president of state government relations at APCIA:

The Texas Legislature heard calls this session to address the costs of insurance. Lawmakers enacted a handful of consumer protection bills, and they resisted the temptation to go down the road of California-style rate suppression. California's experience has shown that price controls drive out insurers and reduce consumer choices, all while increasing the amount of risk property owners take on by blinding them to the true cost of that risk.

The consumer protection measures respond to concerns raised by policy holders. One of these bills, supported by APCIA, codifies the right to appraisal that is included in nearly all personal auto and homeowner policies today. It's important to note that insurance costs are stabilizing after an inflationary spike that began in 2022. This is especially true of auto insurance, where data from the Texas Department of Insurance shows that in 2024, auto rate increases were back in line with the average over the past decade, at 4.8%. Auto rates increased by double-digit percentages in 2022 and 2023, as a result of 40-year highs in inflation across the economy, along with an increase in legal system abuse. TDI data showed homeowner rates down in 2024 from 2023, but still at a double-digit increase. However, S&P data for the top 10 homeowner insurance writers in Texas showed an average increase in the mid-single digits, significantly lower than 2023, when the average increase for the top 10 writers was in the mid 20's.

Texas will continue to face extreme weather. The Lone Star state suffered a record number of Billion Dollar Storms in 2024. There were 20 such storms in Texas last year, up from 16 in 2023. The other 49 states, combined, only had 7 Billion Dollar Storms in 2024. Lawmakers can't control the weather, but they can help prepare the state for future storms. APCIA supported a measure this session that would have established a grant program to help Texas residents retrofit properties to meet the gold standard for storm-resistance established by the Insurance Institute for Business and Home Safety (IBHS). Lawmakers will also need to consider ways to slow the building of new homes and structures in areas at high risk for flooding and hurricane damage. Texas has over 8 million homes at significant risk from various types of storms, and 63,000 homes in Texas have been built in just the last five years that are in areas at high risk for flooding.

Lawmakers can also do more to rein in the abuse of our legal system by trial lawyers that is burdening everyday Texans. Texas has seen nuclear verdicts - awards of $10 million or more - go up in recent years. Texas has had 130 of them over the past decade, the fourth-highest number of nuclear verdicts. These penalties are often excessive and are being driven by shadowy investors who treat our legal system like a casino, financing lawsuits and hoping for a big return on their investment. Texas families pay $4,594 per year in higher costs that are due to tort lawsuits, according to the U.S. Chamber of Commerce Institute for Legal Reform. These added legal burdens affect every business and drive up the costs of all goods and services, including insurance.

Contrary to some misleading press coverage, Texas insurers are not getting rich off higher rates. In fact, they've been losing money. From 2015-to-2024, insurers paid out $1.05 in claims for every $1 in premium they collected. The rate increases of 2022 and 2023, while painful, were necessary to keep companies solvent so they can pay out future claims for Texans.

APCIA will continue working with lawmakers to address these challenges, working toward a healthy and robust insurance marketplace that can support Texans when they most need it.

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