Reviewed by Ahmad Aburas, Esq.
Your car insurance renewal just jumped 20 percent. Your neighbor, with a similar car and a clean record, got a 6 percent increase from the same company. Did your risk really change that much — or did the company charge you more because it figured you would pay it and stay?
On September 2, 2026, the Texas Department of Insurance (TDI) answered that question. In Commissioner’s Bulletin B-0007-26, TDI stated that “price optimization” — setting premiums based on how likely you are to tolerate a price hike instead of shopping around — is unfairly discriminatory and violates the Texas Insurance Code. This article explains what the bulletin says, who it covers, what other states are doing, and what to check on your next renewal notice.
What Is Price Optimization?
Price optimization is an insurer’s practice of varying premiums based on factors unrelated to your risk of loss or the company’s expenses, so it can charge the highest price you will tolerate before shopping for a new policy. The key input is “elasticity of demand”: a model of how likely you are to renew, shop for a lower premium, or simply accept an increase.
Traditional rating looks at risk: your claims history, where you live, your car’s value, your roof’s age. Price optimization looks at you: how long you have been with the carrier, whether you have ever shopped around, whether you pay in full or monthly, and whether people with your profile have historically absorbed increases without leaving.
TDI’s position is blunt. Texas law requires rates to be based on risk, not on whether a customer is likely to tolerate a higher price. The bulletin states that any practice resulting in two policyholders with the same risk profile getting different premium increases is unfairly discriminatory under Texas law.
What TDI’s Bulletin Says — and Who It Applies To
Bulletin B-0007-26 is addressed to all insurance companies and their agents and representatives, and it covers all TDI-regulated products. That includes both auto and homeowners insurance, not just one line of business.
The bulletin rests on three chapters of the Texas Insurance Code, read together:
- Chapter 2251 (rates): governs rate setting and lists the factors insurers must consider, including loss experience, the hazards of individual risks, catastrophe exposure in Texas, expenses, investment income, and a reasonable profit margin. Rates may not be excessive, inadequate, unreasonable, or unfairly discriminatory.
- Chapter 544 (unfair discrimination): prohibits unfair discrimination between individuals of the same class and essentially the same hazard, including in the premium charged.
- Chapter 560 (rates): requires rates to be just, fair, reasonable, and adequate, and provides that rates may not be confiscatory, excessive, or unfairly discriminatory.
TDI’s conclusion: read together, these chapters show that Texas insurance rates must be based on cost-based considerations of losses and expenses, disclosed fully in 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.
One precision matters here. The bulletin is a statement of TDI’s position under existing law, not a new statute. It names no company and finds no violation against any specific insurer. It tells the industry that TDI considers the practice already illegal and intends to enforce. Michigan, by contrast, enacted an actual statutory ban — which is the next section.
How the Ban Started: The Governor’s August Directive
The bulletin did not arrive out of nowhere. On August 24, 2026, Governor Greg Abbott directed TDI to take five actions to make property and casualty insurance more affordable for Texans. One of those actions was to issue a bulletin for all TDI-regulated products banning price optimization. The directive followed a stark figure from the Governor’s office: the average annual homeowners insurance premium in Texas had risen 79 percent in six years.
TDI issued Bulletin B-0007-26 nine days later, on September 2. On September 16, the Governor’s office confirmed TDI would enforce it, alongside the other directed actions — including a separate bulletin requiring insurers to account for a home’s FORTIFIED roof status in rate setting.
Why Other States Are Following
Texas was first, but it is no longer alone. Three more states acted within six weeks:
- Michigan — September 21, 2026. Michigan signed Senate Bill 1013 into law, adding Section 2027a to the Michigan Insurance Code. Unlike Texas, which relied on existing statutes, Michigan codified a standalone prohibition: it is an unfair method of competition and an unfair or deceptive act or practice for a property and casualty insurer to use price optimization in ratemaking. The law took immediate effect upon signing.
- West Virginia — October 9, 2026. The Offices of the Insurance Commissioner issued Insurance Bulletin No. 26-03, reaching the same conclusion as Texas under existing state law.
- Washington — October 12, 2026. The Office of the Insurance Commissioner issued Technical Assistance Advisory 2026-011 to property and casualty insurers, again relying on existing law rather than new legislation.
The pattern is the same in each state: regulators are saying that pricing on a customer’s tolerance for increases, rather than on risk, is unfair discrimination. Texas drivers should expect this issue to keep appearing in renewal notices and in the news.
What This Means for Your Auto Policy at Renewal
The bulletin does not set your premium, order refunds, or lower anyone’s rate directly. What it does is draw a legal line: if two Texas drivers have the same risk profile and one gets a larger increase, that difference cannot lawfully rest on who is more likely to shop around.
At your next renewal, that gives you a concrete way to read the notice:
- Check the declarations page. Confirm your coverage limits, deductibles, and listed vehicles and drivers are the same as last term. A premium jump with no coverage change deserves a question.
- Ask what changed. Call your agent or insurer and ask which rating factors drove the increase. A risk-based answer names things like claims, territory, or vehicle value. A vague answer is a reason to press further.
- Compare on equal terms. Get quotes for identical limits and deductibles, not just a lower headline premium. A cheaper quote that quietly drops coverage is not a comparison.
- Keep the paper trail. Save the renewal notice, the prior term’s declarations page, and any written explanation of the increase. If you ever need to show a pattern, contemporaneous documents matter.
The Coverage Link That Matters After a Crash
Renewal pricing and accident claims connect in one practical place: coverage limits. Texas requires only minimum liability limits of $30,000 per person, $60,000 per accident, and $25,000 for property damage — written as 30/60/25 — under Texas Transportation Code § 601.072. That is a legal floor, not a recommendation. A serious injury can exhaust a $30,000 per-person limit quickly.
Two related coverages fill the gap when the other driver has too little or no insurance:
- Uninsured motorist (UM) coverage applies when the at-fault driver has no insurance, is covered by an insurer that cannot pay, or flees the scene without being identified.
- Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but not enough to cover your injuries.
Under Texas Insurance Code § 1952.101, insurers must include UM/UIM coverage in auto policies unless the named insured rejects it in writing. A rejection made once is not automatically reversed at renewal, so a policy you bought years ago may still lack coverage you assumed you had. Checking your declarations page for UM/UIM — and for the limits, not just the presence of the coverage — is one of the highest-value steps at renewal time. It pairs with the practical steps in what to do in the first 48 hours after a Dallas car accident: coverage only helps if you also protect the claim itself.
What to Do If Your Renewal Jumped
These are general information steps, not advice for any specific policy:
- Read the renewal notice line by line. Note the old premium, the new premium, and any change in limits, deductibles, or listed drivers.
- Ask your agent or insurer for the rating factors in writing. If the explanation does not rest on risk, note that.
- Shop with identical coverage. Compare at least two other carriers on the same limits and deductibles before accepting a higher renewal.
- Contact TDI if you suspect unfair pricing. The TDI Help Line is 800-252-3439. TDI’s bulletin is a statement of enforcement position, and complaints are how regulators learn where a practice continues.
- Review your UM/UIM limits while you are at it. A renewal is the cheapest moment to fix a coverage gap, before a crash tests it.
Texas Price Optimization FAQ
Is my insurer allowed to charge me more than my neighbor with the same risk profile?
Under TDI’s stated position, no — not if the difference rests on price optimization. Any practice resulting in two policyholders with the same risk profile getting different premium increases is unfairly discriminatory under Texas law, according to Bulletin B-0007-26.
Does the bulletin lower my premium?
No. The bulletin states TDI’s legal position and warns of enforcement action. It does not set rates, order refunds, or guarantee any individual premium change.
Does this apply to my auto policy, or only homeowners insurance?
The bulletin covers all TDI-regulated products, which includes both auto and homeowners insurance.
What if my renewal already jumped before the bulletin?
The bulletin states TDI’s position that price optimization already violates existing Texas law, not only from September 2 forward. If you believe your increase rested on loyalty-based pricing, keep the renewal documents and consider contacting TDI at 800-252-3439.
The Bottom Line on the Texas Price Optimization Ban
Texas has drawn a clear line: premiums must be based on risk, not on how much extra a loyal customer will pay. The bulletin does not rewrite your policy or cut your rate by itself, but it gives Texas drivers a standard to hold a renewal increase against — and a regulator to call when an increase cannot be explained by risk.
If an insurance dispute or an accident claim has left you unsure where you stand, contact Aburas Law, LLC at 862-213-9093 or aburaslaw.com.
Attorney Advertising. This article is for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every situation is different. Please contact an attorney about your specific circumstances. Prior results do not guarantee a similar outcome.
