Texas Senator: How Can We Lower Homeowner Insurance Costs?

A Texas lawmaker has asked the state insurance department to come up with suggestions for ways to lower homeowners insurance rates in the state.

Texas has consistently been ranked, along with Florida and Louisiana, one of the top three states with the highest homeowners insurance rates in the country.

During an interim hearing of the Senate Business and Commerce Committee, Sen. John Carona pressed Texas Insurance Commissioner Julia Rathgeber to explore ways to “achieve lower rates in this state.”

Carona, who chairs the committee, said legislators are aware “that simplicity of forms and other like issues are important. … But what are other things we could do, whether it’s a particular form that’s not presently offered?” he asked. “How might we offer something to consumers that at least gives them the opportunity, albeit for less coverage, to be able to pay less price?”

The senator noted that the committee had asked the same question of the previous commissioner but “didn’t feel like we got a very sufficient answer.”

Carona suggested that although the insurance industry is typically opposed to it, a stripped down policy might be the answer.

Rathgeber said such an option might be possible “as long as we have really strong disclosure.”

She said there should be a focus on enabling increased competition in the marketplace.

“Where we’ve seen lowering of rates it’s because of competition. We’ve certainly seen that in the auto market,” Rathegeber said.

Weather is a major factor in homeowner insurance costs in the state, she said.

“We also have relatively high supplies costs. So rebuilding is more expensive in Texas, in part because we have a booming oil and gas industry …” Rathgeber said. “We have relatively high reinsurance rates as a result of some of the storms that have happened recently. And we have relatively valuable property in Texas.”

Consumers need to know what coverage they do have in their policies, she said.

“I think incumbent upon us to increase competition in the marketplace by bringing in more companies and providing better disclosures,” Rathgeber said.

The commissioner cited Senate Bill 112 by Sen. Eddie Lucio as an example of legislation that requires increased consumer information in insurance policies.

Passed by the legislature in 2013, the bill “requires insurance companies to include the declarations page with their policy forms with the exact dollar amount of each deductible in the policy,” Rathgeber said.

She said carriers are already responding with new declarations pages. The new dec pages, which are subject to departmental review, provide consumers with better information and a “better understanding of how much of the claim they’ll be responsible for,” Rathgeber said.