For the first time since 2008, TWIA’s rate adequacy analysis for both residential and commercial policies shows single-digit indications – breaking a long streak of double-digit gaps that rarely translated into approved rate changes.
According to the Texas Windstorm Insurance Association, its 2025 assessment indicates a 3% rate increase is needed for residential policies to reach adequacy. Commercial lines require a 5% adjustment. In comparison, the 2024 indications were 38% for residential and 45% for commercial.
TWIA is required to post its rate adequacy analysis at least 14 days prior to a board vote on the final rates it will seek. The board meeting is scheduled for July 14.
TWIA spokesperson Aaron Taylor attributed the change in part to new legislative measures. House Bill 3689, which modifies the probable maximum loss standard from a one-in-100 year to a one-in-50 year event, has lowered reinsurance costs.
In addition, House Bill 2517, authored by Rep. Jeff Barry of Brazoria County, exempts TWIA from premium and maintenance taxes. Taylor said both laws contributed to the shift in adequacy figures.
Despite earlier internal findings pointing to substantial inadequacies, rate increases have been limited. TWIA data show that the last residential rate hike occurred in 2022 at 5%, even though the indicated increase that year was 39%.
For 2025, TWIA requested a 10% increase for both personal and commercial lines. The Texas Department of Insurance denied the request, resulting in no rate change for either category.
Under Texas statute, TWIA is restricted to a 10% average rate increase per year, with a 15% cap on individual rating classes. These limits can be suspended following a catastrophe, but changes must follow notification and hearing procedures.
Market share data from BestLink show that in 2024, the top five homeowners multiperil insurers in Texas by direct premiums written were State Farm Group (19.25%), Allstate Insurance Group (15.44%), USAA Group (10.57%), Liberty Mutual Insurance Cos. (7.26%), and Farmers Insurance Group (6.72%). For commercial multiperil (non-liability) insurance, Hartford Insurance Group led with 9.76%, followed by Travelers Group (8.49%), Chubb INA Group (7.05%), Allstate Insurance Group (6.08%), and State Farm Group (5.62%).
Do the single-digit indications suggest a trend or a temporary shift? Share your thoughts in the comments.
