The Texas Senate has approved a bill that would change how insurance rates are regulated in the state, shifting from a file-and-use system to one that requires prior approval from the insurance commissioner for certain rate changes, according to a report from AM Best.
Senate Bill 1643 would mandate regulatory approval for any proposed rate adjustment, whether an increase or decrease, exceeding 10%. If the commissioner does not act within 30 days, the rate would take effect automatically, unless it involves an increase of 10% or more.
Texas currently allows insurers to implement rate changes immediately after filing, a process that supporters say gives carriers flexibility to respond to market conditions. According to the bill’s analysis, this approach may result in policyholders facing higher premiums before a rate is formally reviewed. SB 1643 seeks to introduce a review mechanism while maintaining some of the current system's flexibility.
Insurance industry groups have raised concerns about the proposal. The Insurance Council of Texas said the existing framework supports actuarially sound pricing and promotes competition in the market.
The American Property Casualty Insurance Association said it agrees with efforts to address rising property insurance costs but warned that SB 1643 may lead to different outcomes than intended.
“We have seen in other states what happens when state regulators try to suppress insurance rates with the hand of big government,” said Scot Kibbe, APCIA vice president of state government relations. “It breaks the link between insurance rates and the cost of loss that insurers are asked to cover.”
Kibbe said the legislature should instead focus on legal system changes and stronger building standards.
If signed into law, the bill would take effect on September 1, 2025, with changes applying to policies beginning in 2026.
Lawmakers who sponsored the bill did not respond to requests for comment.
