Texas homeowners face 79% premium spike in six years as lawmakers probe AI’s role in pricing
AUSTIN (Nexstar) – Texas homeowners are grappling with a historic surge in insurance costs, as state lawmakers on Wednesday pressed regulators and industry representatives over what’s driving the steep climb and whether artificial intelligence is playing a hidden role in setting rates.
During a Texas Senate Business and Commerce Committee hearing, Insurance Commissioner Amanda Crawford of the Texas Department of Insurance (TDI) laid out the stark numbers: the average annual homeowner premium has jumped from under $2,000 in 2020 to more than $3,500 today — a 79% increase in six years. “That is a tremendous burden for Texans, especially for a necessary product like home insurance,” Crawford told the panel.
Crawford attributed the spike largely to rising home values and escalating claim costs tied to severe weather. Annual homeowners’ losses averaged $5.5 billion from 2015 to 2020, she said, but ballooned to $9.1 billion between 2021 and 2025. “Last year alone, the National Weather Service recorded 902 hailstorms in Texas. The next closest state, Kansas, had 375,” she noted.
While the TDI requires insurers to justify their rate filings, Crawford acknowledged that the state’s rate review process — set by the Texas Insurance Code — does not explicitly consider affordability. “It is about driving market competition. It’s about making sure they’re not excessive, but then they’re also adequate,” she said. “I think that’s an interesting perspective when you look at it, because that really frames the whole rate review process as it has been put into law.”
Industry representatives pushed back against the notion that insurers are profiteering. Scot Kibbe, vice president for state government relations at the American Property Casualty Insurance Association, said carriers are working to contain costs. “Our industry is not just saying, hey, legislators go fix all this. We are working all the time to bring down costs. It’s a good business decision because it helps us be more competitive.”
But some lawmakers expressed concern that advances in technology — particularly AI — could allow insurers to engage in price discrimination or surveillance. Sen. Nathan Johnson, D-Dallas, questioned whether companies are using new tools to pinpoint each customer’s willingness to pay. “It sounds like, to some extent, every industry, with the advent of technological advantages we didn’t use to have, is able to create a special price just for you to find out your breaking point,” Johnson said.
David Bolduc of the Office of Public Insurance Counsel noted that Texas law already prohibits insurers from charging different rates for the same coverage based on non-risk factors, but enforcement remains a challenge. “I don’t know that TDI has the ability to monitor that. I mean, we hear about it,” Bolduc told the committee. He suggested lawmakers consider statutory changes to allow reporting or action on suspected price surveillance.
Earlier this month, TDI issued a bulletin on the use of artificial intelligence, laying out expectations for how regulated entities should govern the development, acquisition, and deployment of AI in their operations. Crawford said the bulletin is designed to reinforce existing consumer protections against unfair discrimination and deceptive practices. “That’s one of the reasons for putting out the AI bulletin — the expectations and the consumer protection around the use of that data, and what they are using that for,” she said.
Bolduc also urged lawmakers to examine ways to make coverage changes more transparent. “Notices of material change don’t seem to be working particularly well in the sense that we get a lot of phone calls from people saying they don’t understand what happened to them,” he said.
Billy Crocker, senior vice president of Alliant Insurance Services, argued that the most effective way to lower prices is to increase competition among carriers. “I think creating a lot of competition is the best way to drive this down, both for personal and business lines. And then that brings the opportunity for access.”
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