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FAIR Plan Member Assessments
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On Dec. 10, TDI issued Commissioner’s Bulletin #B-0020-24, providing a FAQ on the FAIR Plan Association assessment and recoupment process. The FAIR Plan Governing Committee had previously voted to assess insurers $17.6 million for the 2023 deficit and an additional $40 million in 2024 to meet retention requirements and access its line of credit for Hurricane Beryl losses and related expenses. The bulletin also links to the Comptroller's FAQs on taxation of the surcharges.
TFPA General Manager David Durden also clarified timelines for the assessment at the Dec. 9 Governing Committee's quarterly meeting. Notification letters to insurers, which trigger a 30-day payment window, were expected to follow the bulletin's release. Insurers may begin charging a premium surcharge 90 days after they receive FAIR Plan's assessment. Assessment letters were mailed to insurers on Dec. 13.
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Discount interest rate set
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DWC has determined that any interest or discount provided for in the Texas Labor Code will be set at the rate of 7.74%.
The rate was effective as of Jan. 1, 2025, and will be through Mar. 31, 2025.
More information is on the TDI website.
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DWC proposes routine rule review
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DWC will review all sections in the following chapters in Title 28, Texas Administrative Code:
- Chapter 129 (Income Benefits--Temporary Income Benefits).
- Chapter 130 (Impairment and Supplemental Income Benefits).
- Chapter 131 (Benefits--Lifetime Income Benefits).
- Chapter 132 (Death Benefits--Death and Burial Benefits).
- Chapter 133 (General Medical Provisions).
- Chapter 134 (Benefits--Guidelines for Medical Services, Charges, and Payments).
- Chapter 136 (Benefits--Vocational Rehabilitation).
- Chapter 137 (Disability Management).
More details are on the TDI website (PDF).
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Texas Senate Business & Commerce Comittee Releases Interim Report to Legislature
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The Senate Business & Commerce Committee released its interim report to the 89th Legislature on Dec. 20, 2024. Interim reports can guide potential legislation and are based on information from hearings on charges assigned by the Lt. Governor. ICT has been monitoring two of the Committee's charges: the rising cost of insurance and the use of AI in public and private sectors.
On the whole, the report largely reflects the committee’s discussions on these charges at interim hearings in August and October of last year. It is organized into narratives outlining the discussions on each issue, followed by conclusions and recommendations. Below are overviews of the recommendations for the charges of interest. ICT members can view a full recap on the Info Hub.
Charge 7 - Addressing the Rising Cost of Insurance
The report concludes that insight from the Committee's discussion underscore the need to improve TDI’s operations to better align with industry needs and adopt best practices for policyholders across Texas. Recommendations include evaluating organizational changes at TDI to enhance decision-making and engagement with market participants, requiring TDI to monitor trends in nonrenewals and coverage reductions, implementing protections against unfair pricing practices, and supporting efforts by TDI and OPIC to enhance notice to policyholders about rate changes, coverage reductions, and comparison-shopping tools.
Charge 8 - Artificial Intelligence
The report's recommendations on artificial intelligence extend beyond insurance. It proposes creating an ethical code of conduct for state agencies and directing DIR to certify AI systems that contract with agencies and requiring agencies to publish biennial reports detailing AI deployments. Recommendations also include mandatory bias audits for AI in critical sectors (highlighting healthcare, financial services, employment, and insurance sectors), public disclosure of audit results, and protections for individuals to appeal AI-driven decisions. Additionally, it calls for defining liability between AI developers and deployers and safeguarding the identities of individuals in media industries from unauthorized commercial use.
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ICT in the News: Is your home insured for tornado damage?
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Following last week's tornadoes in the Houston area, many homeowners are evaluating their insurance coverage to ensure they are protected against future storms. The Insurance Council of Texas emphasizes the importance of reviewing policies for wind exclusions and considering additional wind coverage if needed.
Key Points:
- Tornado Coverage Basics: Most standard homeowners insurance policies cover tornado damage, but policies in Texas and other tornado-prone areas may have wind exclusions requiring separate wind coverage.
- Insurance Costs: The average cost of a Texas Windstorm Insurance Association (TWIA) policy is around $2,300 annually, in addition to the average $3,200 cost for standard homeowners insurance in Texas.
- Coverage Gap Risks: Rising insurance rates and inflation have led 12% of U.S. homeowners to forgo coverage entirely, a 5% increase since 2019, while insurers like Progressive and Foremost stopped writing new policies in Texas in 2024.
- Steps After Tornado Damage: File claims immediately, document damage with photos and videos, make temporary repairs to prevent further harm, and save receipts for reimbursement.
- Disputing Denied Claims: Homeowners can file complaints with the Texas Department of Insurance (TDI) or hire public adjusters (fees capped at 10% of the claim) or attorneys for assistance in resolving disputes.
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ICT in the News: Auto shop owner expresses safety concerns over new Texas inspection law
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Starting Jan. 1, Texas will no longer require safety inspections for non-commercial vehicles before registration, a move that has sparked debate over its impact on road safety. While proponents argue the inspections have little benefit, critics, including local auto shops, highlight the potential risks of removing these checks.
Key Points:
- Safety Inspection Requirement Ends: As of Jan. 1, non-commercial vehicles in Texas will no longer need safety inspections before registration, though emissions tests remain mandatory in the state’s 17 largest counties.
- Concerns Over Road Safety: Alexi Kavrazonis, a McKinney auto shop owner, warns that eliminating safety inspections could make roads less safe, citing risks such as bald tires and non-functioning lights.
- Shift in Responsibility: Drivers will now bear full responsibility for ensuring their vehicles are safe, with police enforcement likely to address issues like broken lights or bald tires.
- Supporters of the Change: State Senator Bob Hall, who sponsored the bill, argues that safety inspections have no significant impact on reducing accidents and are unnecessary.
- Insurance Impact Minimal: The Insurance Council of Texas stated that removing safety inspections is unlikely to affect insurance rates, as inspection data is not used in rate determinations.
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Global catastrophe reinsurance rates set to fall
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Global property catastrophe reinsurance rates are set to decline by 5% to 15% for loss-free portfolios on Jan. 1, reflecting increased market competition after years of rate hikes, according to reinsurance broker Guy Carpenter & Co. LLC. However, portfolios impacted by catastrophe losses in key regions may face steady or rising rates of up to 30%.
Key Points:
- Declining Rates for Loss-Free Portfolios: Reinsurance rates for property catastrophe portfolios that have not suffered losses are expected to fall by 5% to 15%, signaling increased market competition.
- Impact of Catastrophe Losses: Insurance portfolios in the U.S., Europe, and Canada that have experienced catastrophe losses may face rate increases of up to 30% or unchanged rates.
- Market Recovery and Profits: Reinsurers have grown more willing to take on risk following two years of strong profits and reduced losses in their property books.
- Shift in Market Conditions: The current renewal outcomes mark a shift from recent years, where reinsurers raised prices and restricted coverage in response to increased losses from natural disasters and geopolitical events.
- Statement from Guy Carpenter: Dean Klisura, president and CEO of Guy Carpenter, attributed the rate declines to positive property experiences over the past two years, highlighting the market's recovery.
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Insurance Crisis Could Spark Housing Market Crash Worse Than 2008: Report
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A new report from the Senate Budget Committee warns that the worsening instability in U.S. homeowners insurance markets, driven by climate change, could trigger a housing crisis more severe than the 2008 crash. With insurance critical to obtaining mortgages, the report highlights a growing risk to property values, mortgage markets, and the broader economy.
Key Points:
- Climate Change and Insurance Markets: More frequent and severe extreme weather events are straining U.S. homeowners insurance markets, leading to reduced coverage availability and skyrocketing premiums in vulnerable states like Florida, California, and Louisiana.
- Rising Nonrenewal Rates: Between 2018 and 2023, nonrenewal rates surged in states like Florida (2.2%), Louisiana (1.31%), and California (0.77%), highlighting the link between diminishing coverage and rising costs.
- Impact on Mortgages and Property Values: Homes left without affordable insurance coverage are becoming "unmortgageable," driving down property values and threatening household wealth and market stability.
- Systemic Economic Risks: A nationwide decline in property values could pose a systemic risk to the U.S. economy, potentially surpassing the severity of the 2008 financial crisis due to the permanent effects of climate change.
- Call to Action: The Senate Budget Committee urges individuals and policymakers to address the growing insurance crisis before it expands nationwide, emphasizing the need for immediate action to stabilize markets.
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Shining a Spotlight on Our Members
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Mitchell Williams Law Firm Elects Seven New Members
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. proudly announces the election of Michael Nored and Jeff McWhirt as members of the firm, effective Jan. 1. Their leadership and expertise in insurance regulatory law exemplify the firm’s dedication to exceptional client service and the legal profession.
Key Points
- Firm Leadership Announcement: Michael Nored and Jeff McWhirt have been named members of Mitchell Williams, reflecting the firm’s commitment to growth and excellence.
- Michael Nored's Expertise: With over 24 years of experience, including 10 years as a Texas Department of Insurance regulator, Nored specializes in compliance, licensing, contracts, and administrative proceedings.
- Jeff McWhirt's Expertise: McWhirt brings extensive knowledge of insurance law, regulation, and compliance, with experience in facilitating interactions with regulators and managing due diligence for mergers and acquisitions.
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Check out all things ICT!
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Litigation Costs Drive Claims Inflation
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Join us for an insightful webinar with Martin Boerlin of SwissRe - Explore the complex forces driving claims inflation in the U.S. commercial casualty insurance sector. Over the past five years, losses surged by 11% annually, reaching $143 billion in 2023—33% more than global natural catastrophe insured losses. Martin Boerlin will delve into social inflation, the societal trends and legal dynamics fueling skyrocketing liability claim costs. Discover how factors like large verdicts, litigation funding, and emerging risks impact insurers and businesses. Gain insight into SwissRe's groundbreaking social inflation index, the implications of these trends internationally, and strategies for navigating this challenging landscape.
Register here
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The Insurance Council of Texas (ICT) is on the lookout for knowledgeable and engaging speakers for our 2025 events! We are looking for experts to discuss industry trends at our upcoming gatherings, including:
- Quarterly ICT Webinar Series
- Workers' Comp Conference: September 15-16, 2025
- P&C Insurance Symposium: September 17-18, 2025, in Austin, TX
We’re seeking speakers to cover critical industry trends, topics such as:
- Emerging topics and innovations
- Legal developments affecting insurance
- AI and technology: challenges and opportunities
- Resiliency strategies for businesses and communities
- Insights on the future of the insurance industry
If you have suggested topics, would like to request a speaker or would like to present at one of ICT's events, click here to let us know.
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