Effective loss mitigation benefits homeowners, insurers, and the broader insurance market by reducing the frequency and severity of losses. TDI encourages all property and casualty insurance companies operating in Texas to develop meaningful, actuarially supported premium discounts that allow homeowners who invest in loss mitigation to share in the financial benefits of the risk reduction they create. These include building or retrofitting homes to resilient construction standards like IBHS FORTIFIED Home™, using impact-resistant roofing materials, and proactively protecting against wildfire.
As Texas homeowners continue to face catastrophic events—from hurricanes to wildfires to severe hailstorms—proactive loss mitigation is vital. Homeowners who invest in proven loss mitigation measures are taking affirmative steps to reduce insured losses and improve resilience. Premium discounts reward those proactive consumers, result in lower overall catastrophic exposure, and foster a more stable, more competitive insurance marketplace.
Under Insurance Code Chapter 2251, insurance companies may group risks by classification to set rates. Rating plans that differentiate between standard structures and resilient properties align with this consideration.
Actions companies can take to recognize consumers who have made loss mitigation investments include:
- Explicitly incorporating each loss mitigation item into rating plans and premium calculation frameworks.
- Informing policyholders of credits available for windstorm, wildfire, and other loss mitigation efforts.
- Minimizing administrative burdens on consumers such as forcing homeowners to submit separate, redundant loss mitigation surveys or inspection forms along with any certificates or official designations.
TDI reminds insurance companies that wish to introduce new discounts or expand existing loss mitigation credits to submit their filings through the System for Electronic Rates & Forms Filing (SERFF).
Texas law requires rates to be based on risk. When a homeowner spends money today to prevent tomorrow’s claim, insurers should recognize that investment with meaningful premium savings.