Texas House Bill HB431

Texas 2021 - 87th Regular

Caption

Relating to the regulation of property and casualty insurance rates in certain areas after a disaster declaration.

Impact

The legislation's impact centers on ensuring that communities recovering from disasters do not face unfair insurance rate increases based on losses that occurred within their areas. By isolating the rating impacts strictly to designated disaster areas, the bill seeks to stabilize insurance rates for policyholders who have not experienced similar conditions. This could encourage insurers to continue offering policies in affected regions without the burden of potentially inflated rates based on broad disaster experiences.

Summary

House Bill 431 aims to regulate property and casualty insurance rates specifically in areas that have been designated as disaster areas by the governor. The bill introduces a significant amendment to the Texas Insurance Code by preventing insurers from using loss and expense experiences caused by a disaster in the designated area to influence rate settings for risks outside of that area. This provision is particularly relevant in the aftermath of natural disasters, where property and casualty rates can fluctuate dramatically based on recent local catastrophic events.

Contention

Despite its intentions, HB431 may face differing opinions regarding its effectiveness and implementation. Some stakeholders may argue that isolating the rating experience based on geographic boundaries could lead to disparities in premium costs across neighboring areas, thereby generating an uneven playing field for policyholders. Factors such as the aggregate risk of nearby areas might not be accurately reflected in rate setting, potentially undermining housing and recovery efforts after disasters.