SB 14 Could Create Additional Unintended Consequences

SB 14 prohibits the use of rating territories smaller than a county, which hinders insurers’ ability to price policies accordingly. Some Texas consumers would pay higher premiums in order to subsidize those consumers who have a higher risk of future losses.

Solution:

Companies need the ability to price their products based on differences in expected claim costs by territory, as long as the experience in these territories is sufficiently large to be statistically sound. In large metropolitan areas, it makes more sense to use territories that are smaller than the entire county.