Texas Insurance ReformKey Bills from 89th Legislative Session

What Texas Insurance Reform Actually Accomplished

The 89th Legislature approached insurance from several directions. Property and casualty measures gave consumers more freedom when shopping for home and auto coverage, required clearer explanations when insurers reject or drop customers, and preserved appraisal as a way to resolve disputes over the value of covered losses.

Health insurance legislation placed limits on automated adverse decisions, revised the state’s prior authorization “gold card” program, extended certain newborn enrollment periods, and continued protections involving emergency ground ambulance billing.

At the same time, lawmakers stopped short of imposing broad prior approval on large homeowners insurance rate increases. In other words, the session changed many of the rules surrounding insurance, but it did not install a magical lever in Austin labeled “Make Premiums Cheap.” Insurance, regrettably, remains less cooperative than that.

HB 3689: A Major Rewrite of TWIA Catastrophe Funding

House Bill 3689 was one of the session’s most consequential property insurance measures. It restructures how the Texas Windstorm Insurance Association, commonly called TWIA, can obtain money to pay claims after a catastrophic coastal storm.

Replacing expensive bond financing

TWIA is the insurer of last resort for wind and hail coverage in designated coastal areas. When premiums, reserves, assessments, and reinsurance are insufficient after a major hurricane, the association needs access to additional funding. The previous structure relied heavily on public securities, which could be difficult and expensive to issue after a disaster.

HB 3689 creates state-supported financing arrangements, including access to as much as $1 billion from the Economic Stabilization Fund for certain excess losses. The financing would be repaid through catastrophe surcharges on covered property and casualty policies across the state. That means the financial burden of an extraordinary coastal event can extend beyond TWIA policyholders themselves.

A lower catastrophe-funding benchmark

The legislation also changes TWIA’s minimum funding benchmark from a one-in-100-year probable maximum loss standard to a one-in-50-year standard. Supporters expect the change to reduce the amount of costly reinsurance TWIA must purchase each year. Critics may reasonably ask whether a lower benchmark leaves the system more dependent on post-disaster financing.

The practical goal is to make catastrophe funding more workable and reduce financing expenses, not to eliminate hurricane risk. Mother Nature has not agreed to any legislative amendments.

SB 213: Insurers Cannot Force Home and Auto Bundling

Senate Bill 213 prohibits covered insurers from requiring a customer to purchase residential property and personal automobile insurance from the same company or an affiliated insurer as a condition of issuing or renewing coverage.

Voluntary bundling remains perfectly legal. Insurers can still offer multipolicy discounts, and customers can still bundle coverage when the combined price and service make sense. The reform simply prevents an insurer from effectively saying, “We will insure your roof only if you also bring us your pickup truck.”

The law includes exceptions involving products such as TWIA coverage, National Flood Insurance Program policies, and personal umbrella policies. Consumers should therefore review the specific policy and insurer involved before assuming every multipolicy requirement is prohibited.

For shoppers, the benefit is flexibility. A homeowner can compare the best available property policy separately from the best auto policy instead of being locked into a package that is attractive on one side and expensive on the other.

HB 2067: Written Reasons for Rejections and Nonrenewals

House Bill 2067 addresses one of the most frustrating experiences in insurance: receiving a declination, cancellation, or nonrenewal without a useful explanation.

For covered decisions made after January 1, 2026, insurers generally must provide written reasons when they decline a completed application, cancel a policy, or refuse to renew it. Previously, some customers had to request this information, and requirements were not consistent across all affected lines.

Why the explanation matters

A specific written reason gives the consumer something actionable. A homeowner may learn that the issue is roof age, previous claims, brush exposure, outdated wiring, vacancy, or another underwriting concern. Some problems can be corrected; others help the customer and agent identify a more suitable carrier.

Insurers must also submit periodic reports summarizing their reasons to the Texas Department of Insurance. TDI can publish aggregated information organized geographically without identifying individual insurers. Over time, this data may reveal whether particular ZIP codes are experiencing concentrated availability problems.

HB 2067 does not force an insurer to accept a risk it does not want. It does, however, make “because we said so” a less acceptable customer-service strategy.

SB 458: A Right to Appraisal in Home and Auto Policies

Senate Bill 458 requires personal automobile and residential property policies covered by the law to include an appraisal provision. The requirement applies to policies delivered, issued, or renewed on or after January 1, 2026.

Appraisal is designed to resolve a disagreement about the amount of a loss. Suppose an insurer agrees that hail damage is covered but estimates repairs at $18,000, while the policyholder believes the covered damage totals $31,000. Appraisal gives both sides a structured method of determining the value without immediately turning the dispute into full-scale litigation.

Each side typically selects an appraiser, and an umpire may become involved when the appraisers cannot agree. Subject to limited exceptions involving matters such as fraud, material mistake, or lack of authority, the resulting loss amount is binding.

Appraisal does not determine whether the policy provides coverage in the first place. It settles the size of the covered loss, not every legal dispute hiding in the claim file. The law also excludes certain policies, including TWIA and commercial coverage.

SB 1644: Updating Credit-Based Insurance Pricing

Texas insurers may use credit information when underwriting or pricing certain personal property and casualty policies. Senate Bill 1644 adds an important update requirement for companies that use this information.

An insurer using credit scoring must generally review and update an insured’s credit report at least once every 36 months, reassess the policy rating, and adjust the premium based on the updated score. At renewal, a policyholder or the policyholder’s agent may also request re-underwriting and re-rating using current credit information, subject to statutory limits.

This reform can help consumers whose credit improved after the insurer’s original review. Without periodic updates, a customer could remain stuck in a less favorable pricing tier based on old information. However, the law does not guarantee a discount. Updated information can move pricing in either direction, because insurance has never met a guarantee it could not surround with conditions and exclusions.

Consumers should review notices carefully and correct errors with the relevant credit reporting agency. A re-rating request is most useful when the underlying credit information is accurate.

SB 815: Limits on AI in Health Insurance Decisions

Senate Bill 815 responds to growing concern about artificial intelligence and automated systems in health insurance utilization review.

Under the law, a utilization review agent may not use an automated decision system to make, wholly or partly, an adverse determination that proposed or completed health care services are medically unnecessary, inappropriate, experimental, or investigational. Automated systems may still be used for administrative support and fraud detection.

The distinction is important. Technology can sort documents, identify missing fields, and flag unusual patterns, but it cannot become the digital bouncer that independently keeps patients outside the treatment door.

TDI may audit or inspect a utilization review agent’s use of automated systems. Notices of adverse determinations must also include the principal reasons, clinical basis, relevant screening criteria, review procedures, and information about complaints and appeals.

The provisions apply to utilization reviews under covered health plans issued or renewed on or after January 1, 2026. The law does not prohibit all insurance-related AI; it draws a firm line around adverse medical-necessity decisions.

HB 3812: Reforming the Prior Authorization Gold Card

Texas created its prior authorization exemption system in 2021. Physicians and providers who consistently receive approval for a particular service can earn a “gold card,” allowing them to provide that service without repeatedly requesting preauthorization.

House Bill 3812 revises the program by extending the evaluation period from six months to one year and requiring insurers to consider a broader set of qualifying requests across affiliated plans. A physician or provider generally must have at least a 90% approval rate and must have provided the service at least five times during the evaluation period.

The legislation also creates an independent review process for initial gold card denials, restricts when an existing exemption can be rescinded, and requires annual reporting to TDI. In addition, utilization review must be conducted under the direction of a physician licensed to practice medicine in Texas rather than a physician holding only an administrative medicine license.

For doctors, the reform may reduce repetitive paperwork. For patients, the hoped-for benefit is fewer delays between a treatment decision and the treatment itself. No patient has ever placed “waiting for a prior authorization fax” on a list of treasured health care memories.

Other Consumer-Focused Insurance Bills

SB 916: Ground ambulance billing protections

Senate Bill 916 extends Texas payment standards and balance-billing protections for qualifying emergency ground ambulance services through September 1, 2027. It allows political subdivisions to submit and adjust regulated ambulance rates within statutory limits while strengthening enforcement against intentionally incorrect reporting or repeated violations.

SB 896: More time to enroll a newborn

Senate Bill 896 extends the enrollment period for newborn children under certain health plans from 31 days to 60 days. The additional time recognizes that new parents may be handling medical appointments, birth records, sleepless nights, and the discovery that a tiny human can generate an astonishing volume of laundry.

SB 1238: Protection for widowed policyholders

Senate Bill 1238 prohibits insurers from treating an individual differently because the person is widowed or because the person’s marital status reflects the death of a spouse. The measure is intended to prevent an automatic rate increase or other unfavorable treatment based solely on becoming widowed.

HB 2516: Medigap access for certain Texans under 65

House Bill 2516 expands access to Medicare supplement coverage for Texans under age 65 who qualify for Medicare because of amyotrophic lateral sclerosis or end-stage renal disease. It also establishes pricing protections for specified plans, addressing a market in which younger Medicare beneficiaries could otherwise face extremely high premiums.

What the Legislature Did Not Do

Despite extensive discussion about homeowners insurance affordability, lawmakers did not enact comprehensive rate regulation. Senate Bill 1643 would have required prior approval for certain property and casualty rate changes exceeding 10%, but it failed before the regular session ended.

That omission is significant. The enacted bills improve transparency, preserve dispute-resolution rights, and revise catastrophe financing, but they do not cap homeowners premiums or require regulators to approve every large increase before it takes effect.

Insurance prices remain tied to construction costs, reinsurance expenses, catastrophe losses, litigation trends, inflation, property characteristics, and carrier appetite. Legislative reform can influence those systems, but it cannot instantly erase the underlying cost of Texas-sized hail, hurricanes, wildfires, and tornadoes.

Practical Experiences: How the New Laws May Feel in Real Life

The following examples are illustrative composites rather than accounts of particular individuals. They show how Texas insurance reform may change everyday interactions among consumers, agents, insurers, physicians, and health plans.

A homeowner shops home and auto insurance separately

Consider a homeowner in Fort Worth whose property insurer also covers two family vehicles. The auto renewal rises sharply after a teenage driver is added, but moving the auto policy previously threatened the home policy as well. Under SB 213, a covered insurer generally cannot make the home renewal conditional on keeping the personal auto coverage with the same company or affiliate.

The homeowner can now compare auto insurers without automatically sacrificing the property policy. The result may be meaningful savings, or it may reveal that the bundle discount was still the best deal. The reform creates choice, not a guaranteed bargain. The smart approach is to compare total premiums, deductibles, liability limits, endorsements, and service records rather than staring only at the largest discount printed in bold type.

A nonrenewal finally comes with a useful explanation

Imagine a Central Texas customer receiving a homeowners nonrenewal notice. Instead of a vague statement about underwriting requirements, the written explanation identifies the roof’s age and a history of water-related claims. The customer may replace the roof, document repairs, ask the agent to submit updated information, or shop for a carrier with different guidelines.

The insurer is not required to reverse its decision merely because the customer disagrees. Still, HB 2067 turns a mysterious rejection into information that can guide the next step. That is a modest reform on paper but a substantial improvement for someone trying to avoid a lapse in coverage before a mortgage company begins sending increasingly unfriendly letters.

A hail claim goes to appraisal

After a severe storm, a homeowner and insurer agree that roof and siding damage is covered but disagree sharply about repair costs. Litigation would be expensive and slow. Under a policy governed by SB 458, the policyholder can use the required appraisal process to determine the amount of loss.

The experience will not necessarily be effortless. The policyholder may need to hire an appraiser, understand deadlines, share estimates, and pay a portion of the process costs. Appraisal nevertheless provides a focused route for resolving a valuation dispute. If the underlying disagreement concerns an exclusion or whether damage occurred during the policy period, appraisal alone may not settle it.

A patient receives a human-reviewed adverse decision

Suppose a health plan questions whether a proposed procedure is medically necessary. An automated system may organize records or detect missing documentation, but SB 815 prevents the system from making any part of the adverse determination. The denial notice must explain the clinical basis, guidelines, review process, and appeal options.

For patients, the practical lesson is to keep the notice and act quickly. The treating physician can compare the insurer’s criteria with the medical record, submit missing evidence, request peer review, or pursue an independent appeal. The reform improves accountability, but it does not make every treatment request automatically approvable.

A physician earns a broader gold card exemption

A specialist who routinely receives approval for the same procedure may qualify for a prior authorization exemption based on a full year of requests across affiliated plans. Once granted, the exemption can reduce repetitive submissions and treatment delays. Patients may not know that a gold card is operating behind the scenes; they may simply notice that scheduling takes days instead of weeks.

New parents receive breathing room

Finally, consider parents whose newborn spends the first weeks of life receiving medical care. Extending the enrollment deadline to 60 days provides additional time to notify the health plan and pay any required premium. Parents should not treat the longer period as an invitation to wait until day 59, but it creates a valuable safety margin when family life is operating on little sleep and a great deal of coffee.

Conclusion: Targeted Reform, Not an Instant Insurance Reset

Texas insurance reform from the 89th Legislative Session delivers meaningful procedural and consumer protections. Homeowners and drivers gain greater shopping flexibility, clearer explanations for adverse policy decisions, and access to appraisal for covered loss disputes. Credit-based ratings must be refreshed, TWIA receives a new catastrophe-financing structure, and health insurance decisions face tighter rules involving automation and prior authorization.

These bills can improve fairness, transparency, and administrative efficiency. They do not guarantee lower premiums, broader carrier availability, or approval of every insurance claim. Texans should continue comparing policies carefully, documenting property conditions and claims, reviewing insurer notices, and tracking TDI rules that implement the new laws.

The 89th Legislature did not rebuild the entire insurance house. It repaired several doors, added clearer signs, replaced part of the storm shelter, and told the robots they cannot decide who receives medical care. In the world of insurance reform, that qualifies as a busy renovation.