Texas House Bill HB3858

Texas 2009 - 81st Regular

Caption

Relating to the writing of and rate regulation for residential property insurance in this state.

Impact

The changes outlined in HB 3858 are significant for the insurance industry in Texas. By mandating a rate assessment process regulated by the state's commissioner, the bill seeks to ensure that insurance rates are adequate, not unfairly discriminatory, and reflect the true risk of insuring residential properties. This legislative move could also potentially reduce the number of unexpected rate hikes faced by consumers, fostering a more stable insurance environment. Importantly, these provisions will only apply to policies issued or renewed after the bill's effective date, meaning existing contracts will retain their previous regulatory framework.

Summary

House Bill 3858 aims to amend Texas Insurance Code by establishing regulations regarding the writing and rate assessment of residential property insurance in the state. The bill introduces a structured process for insurers to file their rates with the Texas Department of Insurance, requiring that all residential property insurance rates must be reviewed and approved before being implemented. The intention behind this legislation is to safeguard consumers from excessive or unjustified increases in property insurance premiums by creating a transparent rate filing process.

Contention

One of the notable points of contention may arise regarding the bill's provisions that prohibit insurers from using credit information when underwriting policies. Critics argue that eliminating credit scoring in determining insurance rates may lead to higher premiums for lower-risk applicants who do not have an established credit history. Supporters, however, advocate that this change promotes fairness and protects consumers from biases linked to credit scoring. The bill also addresses insurance company withdrawal plans, which ensures that any exit from the market by insurers must follow an orderly and communicative process to affected policyholders.