Governor Abbott Directs the Texas Department of Insurance to Address Rising Property and Casualty Insurance Costs: What Insurers Need to Know Now

On August 24, 2026, Governor Greg Abbott issued a formal directive to Texas Insurance Commissioner Amanda Crawford, instructing the Texas Department of Insurance (TDI) to take immediate administrative actions to address rising property and casualty insurance costs. Citing a 79% increase in the average Texas homeowners’ insurance premium since 2020 (from under $2,000 to over $3,500 annually), recently enacted insurance legislation, and current proposals for the 2027 legislative session, the Governor’s directive focuses TDI on taking near term action regarding insurer rating and underwriting practices, claims costs, and anti-fraud initiatives.

Importantly, TDI has been given a short window — until September 14, 2026 — to deliver formal recommendations to the Governor’s Office regarding additional immediate administrative actions and proposed statutory changes ahead of the 2027 legislative session.

I. Core Administrative Mandates to TDI

The directive instructs TDI to exercise its regulatory authority under Tex. Ins. Code § 31.002 (TDI’s duties to promote a stable market and protect policyholders) and Tex. Ins. Code Ch. 544 and § 2251 (governing excessive or unfairly discriminatory rates) to implement the following:

Mandatory Rating Consideration for “FORTIFIED” Roofs: Insurers must include a home’s “FORTIFIED” roof status in their rate-setting calculations.

Prohibition on Age-Based Underwriting: TDI must prohibit insurers from refusing to write or renew residential property policies based solely on the age of the property or individual components, specifically including roof age.

Banning “Price Optimization” via Bulletin: TDI is directed to issue a bulletin for all TDI-regulated products banning “price optimization” — defined in the directive as the practice of utilizing personal data unrelated to insured risk to set rates.

Establishment of an Insurance Fraud Task Force: A new task force will be created to target insurance fraud as a driver of premiums.

Claims-Cost Impact Study: TDI will study the impact of “excessive, unnecessary, and inflated claims costs” across Texas commercial auto, personal auto, and homeowners insurance markets.

II. Legislative Context: 2025 Retrospective and 2027 Outlook

The directive highlights four key pieces of legislation signed into law during the 2025 session:

1. House Bill (HB) 2067 established strict requirements for carriers to notify policyholders of the specific reasons why their coverage is being declined or canceled;
2. Senate Bill (SB) 213 protected consumer choice by prohibiting insurers from requiring the bundling of residential and personal auto policies;
3. SB 1238 eliminated the “widow penalty” in personal auto insurance; and
4. SB 1644 addressed credit-based pricing by mandating that carriers use up-to-date credit scores if credit history is factored into premium rate calculations.

Looking forward to the 2027 session, Governor Abbott has previously announced that he will work with the Legislature to expand statutory consumer protections and curb premium hikes, including:

1. Establishment of a state-funded Texas Roof Fortification Program to mitigate wind and hail damage; and
2. Statutory authorization allowing all auto insurers to consider good driving habits (telematics/behavioral rating) to reduce premiums.

III. Strategic Guidance: Action Items for Insurers

As TDI begins implementing these directives under a tight timeline, insurers operating in Texas should proactively take the following steps:

1. Audit Underwriting Guidelines on Property and Roof Age: Insurers must prepare for new TDI rules or bulletins prohibiting policy non-renewals or declinations based strictly on property or roof age. Underwriting departments can begin to prepare for these new requirements by reviewing existing TDI rules and guidelines and identifying alternative risk-based metrics that anticipate more restrictive regulation.
2. Assess and Update Homeowners Rating Plans: Insurers should evaluate how their current homeowners rating accounts for resilient construction standards, specifically the “FORTIFIED” roof designation. If an insurer’s existing rating plan does not explicitly reward “FORTIFIED” status, product and actuarial teams should begin analyzing and preparing appropriate rate-differential models.
3. Review Data Analytics and Pricing Methodologies: TDI’s forthcoming bulletin on “price optimization” will apply broadly to all regulated insurance products. Insurers should audit their proprietary pricing algorithms to ensure they can demonstrate clear risk-correlation for all pricing factors, thereby insulating their models from “price optimization” challenges.
4. Prepare for Regulatory Data Requests and Studies: The creation of the Insurance Fraud Task Force and the launch of the commercial auto, personal auto, and homeowners claims-cost study will likely trigger formal TDI data calls. Compliance and claims departments should organize historical claims, litigation, and fraud-detection metrics to ensure prompt, accurate, and strategic responses to TDI inquiries.
5. Engage in Regulatory Advocacy Ahead of September 14: With TDI’s recommendations due to the Governor’s Office by September 14, 2026, industry stakeholders have a critical, narrow window to engage with TDI. Expressing industry perspectives on claims-cost drivers and the feasibility of immediate administrative changes will be vital as TDI drafts its report and the legislative agenda for the 2027 session takes shape.
6. Monitor proposed legislation: With Texas legislative committees currently meeting to study issues in advance of the 2027 legislative session — including the House Insurance Committee’s scheduled property & casualty insurance-focused October 5th & 6th interim committee meeting dates — insurers should monitor how the issues raised by Governor Abbott are being addressed by the Legislature, and engage with key legislators and the Governor’s office to help craft the legislation that ultimately gets filed.

Foley’s Government Solutions and Insurance Practice Groups will continue to monitor TDI’s upcoming bulletins, rulemakings, and legislative reports. For assistance in assessing compliance or engaging with TDI or the Legislature during this interim period, please contact the Foley Texas Government Solutions team or your Foley relationship partner.

About Foley’s Texas Government Solutions Group

Foley & Lardner’s Texas Government Solutions team provides clients with unparalleled legal and legislative representation and counseling. The attorneys and lobbyists manage legislative and regulatory proposals at the Texas Capitol and before state agencies. The group counsels clients regarding key governmental processes and areas of law based upon decades of collective legal or governmental experience. Our Austin office is also home to a unique federal, state, and local government enforcement defense and investigations (GEDI) and litigation defense team, as well as several members of Foley’s national State Attorneys General practice.

About Foley’s Insurance Practice Group

Foley’s Insurance attorneys share a deep industry knowledge and provide legal solutions — encompassing everything from mergers and acquisitions to intellectual property services — reflecting and anticipating all aspects of an insurer’s operations.  It is well-positioned to advocate on your behalf in front of key regulatory and legislative authorities in connection with insurance matters, laws and regulations.