Texas FAIR Plan Association (TFPA) rates (the cost of insurance per unit of exposure) determine the amount of premium charged to each TFPA policyholder. Rates are proposed by the TFPA Governing Committee and are subject to review and approval by the Texas Department of Insurance (TDI) prior to use. Premiums are calculated based on standard industry rating factors, including amount of insurance, territory, fire protection, type of construction, deductible amount, and any optional additional coverages. TFPA does not use credit scoring in its rate determination.
Texas Insurance Code Chapter 2211 requires that TFPA rates be set in an amount sufficient to pay claims and to meet all expenses incurred in the writing and servicing of the business. Rates include factors for projected covered losses, operational expenses, agent commissions, and premium taxes. The Commissioner of Insurance must enter an order approving or disapproving a proposed rate change by the Association no later than 60 days after it is filed. The Commissioner may extend the period for entering an order by an additional 30 days.
Based on 2018 actuarial analysis and the overall statewide rate change, TFPA rates would need to increase on average by approximately 8.1% for Homeowners coverage, 4.1% for Dwelling Fire coverage, 9.5% for Dwelling Extended Coverage, 6.9% for Condominium coverage, and 6.7% for Tenant coverage to achieve rate adequacy.
Recent Rate Changes
On September 10, 2018 the Texas Department of Insurance approved rate changes for the TFPA’s Homeowners and Dwelling coverage forms. The rate changes applied to all new policies beginning October 1, 2018 and renewal policies beginning November 1, 2018. The amount of a rate change can vary by territory. Please review the chart below for the different percentages per territory.