The Law Governing Homeowners Insurance Rates
Texas law provides TDI with the authority to both prohibit unfair practices and to promote a competitive marketplace.
Texas Insurance Code
Title 10, Subtitle H, Chapter 2251: Rates
Sec. 2251.001. PURPOSE:
- promote the public welfare by regulating insurance rates to prohibit excessive, inadequate, or unfairly discriminatory rates;
- promote the availability of insurance;
- promote price competition among insurers to provide rates and premiums that are responsive to competitive market conditions;
- prohibit price-fixing agreements and other anticompetitive behavior by insurers; and
- provide regulatory procedures for the maintenance of appropriate information reporting systems.
SUBCHAPTER B. RATE STANDARDS
Sec. 2251.051. EXCESSIVE, INADEQUATE, AND UNFAIRLY DISCRIMINATORY RATES.
- (a) A rate is excessive, inadequate, or unfairly discriminatory for purposes of this chapter as provided by this section.
- (b) A rate is excessive if the rate is likely to produce a long-term profit that is unreasonably high in relation to the insurance coverage provided.
- (c) A rate is inadequate if:
- (1) the rate is insufficient to sustain projected losses and expenses to which the rate applies; and
- (2) continued use of the rate:
- (A) endangers the solvency of an insurer using the rate; or
- (B) has the effect of substantially lessening competition or creating a monopoly in a market.
- (d) A rate is unfairly discriminatory if the rate:
- (1) is not based on sound actuarial principles;
- (2) does not bear a reasonable relationship to the expected loss and expense experience among risks; or
- (3) is based wholly or partly on the race, creed, color, ethnicity, or national origin of the policyholder or an insured.
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