Governor Abbott Reminds Insurers Of Price Optimization Ban Under Texas Law

Governor Abbott Reminds Insurers Of Price Optimization Ban Under Texas Law Governor Greg Abbott today announced that, in response to his directive last week to make property insurance more affordable, the Texas Department of Insurance (TDI) reminded insurers that the practice of “price optimization” violates Texas law for all TDI-regulated insurance products. “The average annual homeowners’ insurance premium in Texas rose 79 percent in six years,” said Governor Abbott. "Price optimization drives up costs for loyal customers. Insurance companies must base rates on risk, not on how much extra money they think a customer will pay. TDI will take action against any company that uses this illegal practice.” Price optimization occurs when an insurance company varies premiums based on factors unrelated to a policyholder’s risk of loss or the company’s expenses, including whether a customer is likely to shop for a new policy or accept a higher price. Two policyholders with the same risk profile can then receive different premium increases. Texas law forbids that result. The TDI Commissioner’s latest Bulletin reminds all insurance companies and their agents and representatives that any use o