Auto insurance premiums are rising across nearly every state, with new tariffs on imported auto parts adding to the cost pressures. Analysts warn that full-coverage premiums could increase by 7% by the end of 2025, driven by higher repair costs, supply chain issues, and inflation. Insurers are weighing these factors in upcoming rate filings, and the impact may vary depending on regulatory responses and future trade policy developments.

Key Points:

1. Premiums on the Rise: Full-coverage auto insurance could hit $2,472/year nationally by December 2025, up 7% from current levels, per Insurify.

2. Tariffs Drive Costs: New U.S. tariffs on imported auto parts are raising repair costs and claims severity, fueling the push for higher rates.

3. $60B Claims Impact: Industry estimates suggest personal auto claims costs could rise by as much as $60 billion over the next year due to costlier parts.

4. Regional Variability: Maryland leads the nation in premium costs at $4,093/year, while New Hampshire remains lowest at $993.

5. Texas Implications: While Texas wasn’t highlighted individually, ongoing trade disruptions and weather volatility could drive local rate pressures in the months ahead.

The Texas Windstorm Insurance Association (TWIA) board has voted to keep residential and commercial rates flat for 2026. Improved rate adequacy, reduced reinsurance costs, and recent legislative reforms helped ease fiscal pressure. For the first time in over a decade, TWIA’s residential and commercial rate gaps have dropped to single digits, eliminating the immediate need for an increase.

Key Points:

1. No Rate Hike for 2026: TWIA will maintain current residential and commercial rates, citing minimal benefit from a proposed 3% and 5% increase, respectively.

2. Narrowing Gaps: Rate adequacy shortfalls are now down to 3% for residential and 5% for commercial — the lowest levels since 2008.

3. Legislative Impact: New laws reducing the probable maximum loss threshold and exempting TWIA from certain taxes have lowered reinsurance and operating costs.

4. Financing Changes Ahead: Starting in 2026, third-party premium financing will be barred for TWIA policies. Policyholders must use TWIA’s no-cost installment plans.

5. Board Appointments: TWIA welcomed new board members Rolando Rubiano (Cameron County) and Mark Shewmaker (Travis County), representing coastal and non-coastal regions, respectively.

Following recent legislative changes, the Texas Windstorm Insurance Association (TWIA) may reset or even redeem some of its catastrophe bonds ahead of the 2026 hurricane season. With the state now requiring funding only to a 1-in-50-year probable maximum loss (PML) — down from 1-in-100 — TWIA’s overall funding needs could decline substantially. The Board has tasked its Actuarial and Underwriting Committee with evaluating reinsurance and cat bond strategies earlier than in past years.

Key Points:

1. New PML Requirement: Texas law now requires TWIA to fund to a 1-in-50-year PML, reducing estimated 2026 funding needs to ~$4.16B — down from $6.23B in 2025.

2. Cat Bond Impact: TWIA may reset or redeem up to $1.55B of in-force catastrophe bonds that currently provide protection above the new statutory funding level.

3. March 2026 Deadline: Adjustments to cat bonds must be made by March 31, prompting TWIA to begin the funding strategy process earlier than usual.

4. Committee Action: The Board has directed its Actuarial and Underwriting Committee to meet this year and review revised catastrophe models to guide funding and risk transfer decisions.

5. Strategic Considerations: Resetting cat bonds within the lower funding tower could reduce the need for traditional reinsurance in 2026, but may increase exposure if major storms hit.

Allstate reported a $16.6 billion increase in revenue and a $2.1 billion rise in net income for Q2 2025, driven by growth in auto insurance, improved underwriting results, and expanded distribution. With a 4% year-over-year increase in policies in force and a sharp improvement in its auto combined ratio, Allstate signaled a return to profitability even in historically difficult markets like California, New York, and New Jersey.

Key Points:

1. Financial Growth: Q2 revenue rose to $16.6B (up 5.8% YoY), with net income climbing to $643M from $301M in Q2 2024.

2. Auto Profitability Returns: The auto combined ratio improved to 86.0, thanks to higher premiums, stabilizing loss trends, and favorable reserve releases.

3. Policy Growth: Policies in force rose by 208M, or 4%, driven by a 24.8% jump in new business — despite retention challenges in NY and NJ.

4. Regulatory Watch: Allstate continues to seek additional rate increases in NY and NJ for new product offerings; restrictions remain a possibility if targets aren’t met.

5. Texas Context: With Allstate regaining traction nationally, Texas agents may see expanded product offerings and growth initiatives, especially in the auto space.