TDI responds to governor directive to make property insurance affordable

The Texas Department of Insurance (TDI) has suggested multiple legislative and administrative options in response to Gov. Greg Abbott’s directive to make property insurance more affordable. 

Late last month, Abbott asked the department to study the impact of “excessive, unnecessary, and inflated claims costs” on Texas’s commercial and personal auto and homeowners insurance markets. 

Commissioner of Insurance Amanda Crawford responded with a letter last week, stating that the department has evaluated actions available under its existing authority, as well as statutory changes that could further these goals. 

In the letter, Crawford points to a bulletin TDI published earlier this month that reminds insurance companies it’s illegal to use factors other than insurance risk to set home and auto insurance rates. 

She adds that TDI will create an Insurance Fraud Task Force made up of law enforcement organizations, anti-fraud groups, consumers, and other key stakeholders to further prevent and identify fraud in the insurance system. 

A study will also be conducted on available insurance data to provide insight on what drives claims costs in property insurance lines. Data will be pulled from the Market Conduct Annual Statements (MCAS), product and rate filings, and financial statements, Crawford says. She adds TDI will seek additional details on claims closed without payment. 

The study will be published in a web-based format by the end of 2026, the letter states. 

Crawford also points to a July bulletin that sets forth the TDI’s expectations on how regulated entities will govern the development, acquisition, and use of AI technologies in their operations. The bulletin states that companies using AI to make consequential decisions for policyholders must include a human review of the decision. 

Crawford says TDI will conduct another study on the use of AI in claims handling and underwriting decisions, and provide the results during the legislative session. 

TDI also suggests publishing non-confidential financial orders on its website to give policymakers and consumers transparency into company status and the department’s oversight. Currently, TDI only publishes orders of interest and disciplinary orders. 

Crawford also says TDI could create a rule requiring insurance companies to use plain language names or descriptions on declaration pages to increase coverage clarity for consumers. 

The letter provides multiple legislative considerations. 

The legislature could update statute to allow all carriers to assign a rate consequence for moving violations on auto insurance, the letter states. 

Another option would be to disallow advertising expenses in rate filings, which are passed along to consumers, Crawford suggests. 

Delayed implementation requirement for home and personal auto is another option she suggests in the letter. 

“Currently, companies may use new rates as soon as they file them with TDI, even though the department has not had a chance to review them for statutory compliance,” Crawford writes. “If TDI finds an issue in its review, the resolution for affected policyholders is more limited than for a rate not yet in effect. The Legislature could consider adding a delay between a rate filing and its use in the market to allow TDI staff time to review the filing.

Crawford also suggests that the legislature consider requiring a 60-day notice of the renewal premium, which would give consumers more time to shop for a better price or update coverage terms if needed. 

Texas law allows auto and residential property policies to use a Flesch score as a benchmark, the letter states. It adds that this is an outdated metric and the legislature could update statute standards to a more modern plain-language benchmark or allow TDI to adopt one by rule. 

Claims deadline consistency and disclosures are another option the legislature could tackle, Crawford writes. 

“Claim deadlines aren’t consistent across home policies, and claimants may not know what deadlines exist,” Crawford says. “Insurers may deny or reduce claim payments if claimants miss a deadline. Legislators could create consistent deadlines and require personal lines insurers to provide a list of claim-related deadlines, including any applicable repair deadlines, when acknowledging receipt of claim.”

The legislature could clarify statute to require written acceptance, rejection, or denial for all claims, she adds. 

“Many insurers are not affirmatively accepting or rejecting claims, making determination of compliance and prompt payment penalties difficult,” Crawford writes. 

Insurance literacy training programs for secondary and college students, as well as Texans out of school, could be a legislative action, the letter states. 

“This would include basic insurance concepts, shopping for insurance, and how insurance works within the national and global economy,” the letter adds. “It could also include training in insurance-industry and industry-adjacent roles for building a resilient workforce in this area. Funds to create and administer these programs could come from TDI disciplinary action penalties and possibly targeted payments to the funds from settlements with licensed insurers.

Crawford wraps up the letter by saying the TDI will continue implementing the governor’s directives and pursuing the administrative actions identified under its existing authority. 

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