Texas Insurance Rates Stabilized in 2025

Insurance prices for Texas drivers rose by less than one percent in 2025, and homeowners rates rose by just 4.3% the same year, according to new data released by the Texas Department of Insurance.

It's the clearest sign that insurance increases from 2022 to 2024 were driven by unique external factors: 40-year high inflation across the economy, combined with an increase in legal system abuse and continued population growth in areas at high risk for extreme weather.

"Texans are working hard to keep up with rising costs, and it's encouraging to see insurance prices leveling off," said David Sampson, president and CEO of the American Property Casualty Insurance Association. "There is more we can do to bring price stability and even reductions to the Lone Star state, and APCIA is working hard toward that goal."

In 2025, APCIA advocated for the Texas legislature to provide grants to Texas homeowners who retrofit their homes to resist extreme storms. APCIA also pushed for lawmakers to restrain abuse of the legal system that drives up costs for small businesses and consumers.

Those reforms did not pass into law, but they remain top priorities for APCIA in the coming months.

"Texas has an opportunity to build on the positive momentum in the property insurance market," Sampson said. "We've seen in other states what happens when you take back control of the justice system from the trial bar and allow a healthy market to work, versus what happens when a state tries to artificially suppress prices."

In Florida, reforms to crack down on lawsuit abuse in 2022 and 2023 have yielded rate decreases in the past year by many companies for both auto and home. In addition, 17 new insurers have entered the state to do business. States like Georgia and Louisiana have followed Florida's example and begun to see similar results.

By contrast, California's dysfunctional insurance market was the result of a years-long policy in which regulators artificially suppressed markets, driving insurers out of the state and reducing options for consumers.

Texas insurance rates began to stabilize in 2024, as auto rate increases were back in line with the average over the past decade, at 4.8%. That same year, 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.

But as historic inflation has eased, price pressure remains. In addition, legal system abuse and extreme weather continue to plague the insurance market.

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 roughly $5,000 a year in higher costs that are due to tort lawsuits, according to the Perryman Group. The legislature last year considered a bill, SB 30/HB 4806,that the Wall Street Journalsaid would "stop lawyers from padding jury awards with inflated and unreasonable charges." Those types of proposals remain a priority to reduce costs.

Texas will continue to face extreme weather. The Lone Star state suffered a record number of Billion Dollar Storms in 2024, the last year for which data is currently available. There were 20 such storms in Texas in 2024, 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 last year 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.

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.