What we’re paying attention to in Texas

Texas is no stranger to extreme weather. From 1980 through 2024, Texas was affected by 190 weather and climate disasters that each caused at least $1 billion in damage, according to data from NOAA’s National Centers for Environmental Information. And between 2020 and 2024 alone, Texas experienced 68 billion-dollar disasters, which is more than any other state during that period.

As we’ve seen across the country, extreme weather and catastrophic losses have become major contributors to rising homeowners insurance costs. Repeated natural disasters not only strain construction material and labor supply chains, but can also drive up reinsurance rates (insurance for insurance companies), which can ultimately affect what homeowners pay.

The rising cost of insurance has created a serious affordability problem for Texas homeowners. In an August 24 press release, Texas Governor Greg Abbott said the average annual homeowners insurance premium in Texas had risen 79% in six years.

“High insurance costs hit Texas families hard,” Abbott said in announcing a series of directives to the Texas Department of Insurance (TDI).

So, what exactly has Abbott directed TDI to do, and what could it mean for Texas homeowners? Let’s take a look.

Give FORTIFIED Roofs Credit When Setting Rates

Abbott directed TDI to:

“Require insurers to include a home’s FORTIFIED roof status in their rate-setting calculation to reduce the cost of insurance premiums.”

No, a FORTIFIED roof doesn’t mean you have to flip your house into a medieval castle. Although, your insurance company and your neighbors might find that pretty cool.

FORTIFIED is an official construction and roofing standard developed by the Insurance Institute for Business & Home Safety (IBHS) to help homes better withstand severe weather. Homeowners seeking a FORTIFIED Roof designation work with a certified FORTIFIED Evaluator, who documents whether the roof meets the program’s requirements. A FORTIFIED designation lasts five years before it needs to be renewed.

Abbott’s directive calls for insurers to account for that added protection when calculating rates, potentially giving homeowners another financial incentive to make their roofs more resilient.

Stop Using Roof Age Alone to Deny Coverage

Abbott also directed TDI to:

“Prohibit insurers from refusing to write or renew residential property insurance policies based on the age of the property, including individual components such as the age of the roof.”

Just as you should never ask a woman’s age or a man his salary, Texas may soon be telling insurance companies to think twice before asking the same question about your roof.

Older roofs can make homes harder to insure because insurers may associate age with a greater likelihood of damage or future claims. But age alone doesn’t necessarily tell you what condition a roof is actually in.

Abbott has directed TDI to prohibit insurers from refusing to write or renew a residential property policy based on the age of the property or individual components such as the roof. How TDI implements that directive, and what role the actual condition of a roof will continue to play, is something Texas homeowners should keep an eye on.

Crack Down on “Price Optimization”

Abbott directed TDI to:

“Issue a bulletin for all TDI-regulated products that bans the practice of ‘price optimization,’ whereby insurers use personal data unrelated to insured risk to set prices.”

And this is one area where TDI has already taken action.

On September 2, TDI reminded insurers that price optimization violates Texas law for TDI-regulated insurance products. Price optimization happens when an insurer varies what someone pays based on factors unrelated to that person’s actual insurance risk or the company’s expenses, for example, whether data suggests a customer is unlikely to shop around or is willing to accept a higher price.

In plain English, it’s sort of like saying: “Hey, our data suggests you probably won’t leave if we raise your price, so… we’re raising your price. Thanks!”

Bad news for insurance price poachers.

TDI says insurance rates must instead be based on the costs associated with risk and has warned that it can take enforcement action against companies that violate the law.

Create an Insurance Fraud Task Force

Abbott also directed TDI to:

“Create an Insurance Fraud Task Force to clamp down on insurance fraud, which harms all consumers by making insurance more expensive.”

Insurance fraud can include everything from staged car accidents and fake thefts to fraudulent billing and intentionally inflated claims.

Those losses don’t exist in a vacuum. Fraud adds costs to the insurance system, and those additional costs can ultimately affect the premiums paid by honest policyholders.

Abbott’s directive calls for TDI to create a dedicated Insurance Fraud Task Force focused on combating that problem.

Study Inflated and Unnecessary Claims Costs

Finally, Abbott directed TDI to:

“Conduct a study on the impact of excessive, unnecessary, and inflated claims costs on the Texas commercial auto, personal auto, and homeowner insurance markets.”

The study could give Texans a better picture of how claims costs affect insurance premiums across the state and potentially identify areas where changes could help control those costs.

So, What Does This Mean for Texas Homeowners?

Some of these changes could eventually affect how insurers evaluate homes, calculate premiums, and decide whether to write or renew coverage. Others, like TDI’s action on price optimization, are already moving forward.

There are also still important details to work out. A directive from the Governor doesn’t necessarily mean every proposed change takes effect immediately, and TDI's implementation will determine what some of these changes actually look like for homeowners and insurance companies.

At Hey Charley, we’ll be watching what happens next and breaking down what these changes actually mean for your insurance.

We’re fierce advocates for transparency in the insurance industry, and we want you to know your policy as well as we do. Because insurance shouldn’t require a law degree to understand.

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