On September 2, 2026, the Texas Department of Insurance told every insurer it regulates to stop doing something most policyholders never knew was happening: setting your renewal increase partly on how likely you are to shop around.
The practice is called price optimization. TDI’s Commissioner’s Bulletin B-0007-26 defines it as varying premiums based on factors unrelated to a policyholder’s risk of loss “so that the company can charge the highest price that policyholders will tolerate before shopping for a new policy.” The Department’s summary of the problem is one sentence long: “Price optimization turns loyalty into a pricing factor.”
If you have ever wondered why your neighbor’s premium went up 6% and yours went up 19% on a nearly identical house, this is the bulletin that addresses the question. Its central holding is that any practice resulting in two policyholders with the same risk profile getting different premium increases is unfairly discriminatory under Texas law, and that using price optimization in ratemaking, pricing, or a rating plan violates the Insurance Code.
What is price optimization?
Traditional insurance rating looks at the risk: the age of your roof, your claims history, the construction of your home, where it sits relative to hail alley. Price optimization looks at you — specifically, at how much of an increase you will absorb before you start calling other agents.
The inputs are behavioral rather than actuarial. How long you have been with the carrier. Whether you have ever shopped. Whether you bundled. Whether you pay in full or monthly. Whether people in your ZIP code with your profile historically tolerate increases. A loyal customer who has never called for a quote in eleven years is, in this model, a customer who can be charged more — not because the risk changed, but because the elasticity of demand is low.
That is the part TDI objects to, and the bulletin points at three chapters of the code to explain why. Chapter 2251 lists what insurers must consider in setting rates — loss experience, the hazards of individual risks, catastrophe exposure in this state, expenses, investment income, a reasonable profit margin — and requires that rates not be “excessive, inadequate, unreasonable, or unfairly discriminatory.” Chapter 544 prohibits unfair discrimination between individuals of the same class and essentially the same hazard, including in the premium charged. Chapter 560 requires rates to be just, fair, reasonable, and adequate.
Read together, TDI argues, those provisions require insurers to classify risks on cost-based considerations and to disclose those considerations fully in their rate filings. Your willingness to switch carriers is not a loss cost. The bulletin closes by stating that failure to comply is a violation of Texas law and that “appropriate enforcement action will be taken.”
Is this a new law?
No, and the distinction matters if you are deciding what to do about it.
A commissioner’s bulletin is guidance and an enforcement posture. It tells the industry how the Department reads existing statute and signals that the Department intends to act on that reading. It is not a bill passed by the Legislature, and it is not an adopted rule that went through notice and comment. The underlying prohibition on unfairly discriminatory rates has been in Chapter 2251 the whole time. What changed on September 2 is that TDI said out loud that it considers elasticity-based pricing to fall inside that prohibition.
The practical effect is still real. Carriers writing in Texas now have a written statement from their regulator that a specific modeling practice is a violation. Most will adjust rather than litigate the point.
There is a second date worth marking. The bulletin arrived alongside a broader push from the Governor’s Office on homeowners rates, and TDI’s recommendations to the Governor are due September 14, 2026. Expect more specifics then — and expect them to be recommendations, not rules, for some time after that.
How can I tell if my renewal used it?
You cannot read price optimization off a declarations page directly. It does not appear as a line item. But you can gather the evidence that would show it, and you are entitled to most of it.
Compare declarations pages year over year, not just the premium. Pull last year’s dec page next to this year’s and look at the coverage limits first. Most Texas homeowners policies carry automatic inflation adjustment, so Coverage A often rises several percent on its own. If your dwelling limit went from $380,000 to $402,000, part of your increase bought more coverage. That is not price optimization. That is arithmetic.
Then look for what changed on the risk side. A roof that aged past a carrier’s threshold, a claim inside the experience period, a change in deductible structure, a lost discount because a bundled auto policy moved. Any of these explains an increase on risk grounds.
Ask for the rating basis in writing. If the coverage is materially the same and no risk factor moved, ask your carrier or agent to identify the rating factors that produced the increase. Put the request in writing and ask for a written answer. A clear, factor-by-factor explanation is a good sign. A vague reference to “market conditions” on a policy where nothing about the risk changed is the answer worth pursuing.
Get a comparison quote from a different market. This is the most direct test available to a consumer. If three other carriers will write the same house at materially less than your renewal, the renewal is not being driven by the risk. Independent agencies can do this in one sitting because we place business with multiple carriers rather than one.
File a complaint if the answer does not hold up. TDI takes consumer complaints at tdi.texas.gov. Complaints are how a bulletin turns into enforcement; the Department cannot examine a practice it never hears about.
What if the increase was legitimate?
Frequently it will be, and it is worth being honest about that. Texas homeowners premiums have risen sharply on genuine loss costs — hail severity, reconstruction costs, reinsurance pricing. Abbott’s office cites an average Texas homeowners premium that rose roughly 79% in six years, from under $2,000 to over $3,500. Very little of that is behavioral pricing.
Which means the useful question is not only “was I optimized” but “is this the right structure at the right price.” Three things move the number more than anything else on a Central Texas home:
- The wind and hail deductible. It is a percentage of your dwelling limit, not of the loss, and it grows every time the dwelling limit adjusts. We walk through the math in What Is a Wind and Hail Deductible in Texas?
- Roof settlement basis. Whether your roof is settled at replacement cost or actual cash value changes both the premium and what you collect after a hailstorm.
- Where the policy is placed. Carrier appetite in Texas shifts by county, roof age, and construction. The same house is priced very differently across markets in the same year.
What to do with your renewal this year
Bring us the renewal offer and the prior year’s declarations page. We will line the two up, identify which portion of the increase bought additional coverage, which portion tracks a change in the risk, and which portion has no explanation on either. If it is the third category, you have grounds for a written explanation from the carrier and a complaint to TDI. If it is the first two, you have a coverage decision to make rather than a grievance — and remarketing the policy is usually the faster remedy.
You can start a home insurance review or send documents through the client center. Either way, keep the old declarations pages. In a year when the regulator is actively examining how increases were built, the year-over-year comparison is the most valuable document you own.
