Source reporting: Dallas Express
The Texas Department of Insurance has warned carriers that using a customer’s willingness to tolerate a price increase or shop for another policy when setting premiums violates state law. The Dallas Express reported that the September 2 bulletin applies to every insurance product regulated by the agency and says noncompliant companies may face enforcement action.
The practice, often called price optimization, adjusts premiums using factors that are not tied to a policyholder’s risk of loss or an insurer’s operating expenses. Those factors can include estimates of whether a customer will renew, comparison-shop or accept a higher charge. The result can be different premiums for customers with similar risk profiles.
According to the report, the department characterized its bulletin as a reminder of existing legal requirements rather than a new rule. Texas Insurance Code provisions require rates to reflect considerations such as expected losses, individual risk, expenses, catastrophe exposure, investment income and a reasonable profit. State law also bars rates that are excessive, inadequate, unreasonable or unfairly discriminatory.
Insurers must disclose the considerations used in their rate filings. The bulletin did not accuse a specific carrier of using price optimization, announce refunds or automatically reduce any existing premium.
Gov. Greg Abbott publicized the warning after directing the department in August to address rising property and casualty insurance costs. Abbott said the average annual Texas homeowners premium increased 79 percent over six years. The Dallas Express also cited department data showing average statewide homeowners rate increases of 21.1 percent in 2023, 18.7 percent in 2024 and 4.3 percent in 2025. A rate is only one component of a premium, which also depends on the amount of coverage or exposure.
Abbott’s broader directive asked regulators to consider fortified-roof discounts, prevent residential coverage decisions based solely on a home’s age or the age of components such as a roof, create an insurance-fraud task force and study allegedly inflated claims costs. The department is expected to provide recommendations for further administrative or legislative action by September 14.
The issue has a direct accountability dimension because consumers cannot easily determine whether a renewal increase reflects risk or an insurer’s prediction that they will not leave. Transparent rate filings and enforcement records will be necessary to measure whether the bulletin changes carrier practices and whether Texans with comparable risks receive comparable treatment.