The Texas Department of Insurance (TDI) has cautioned insurers against improper underwriting activities in the wake of Hurricane Harvey.  Specifically, TDI issued Commissioner’s Bulletin # B-0032017 on September 21, 2017, which reminds insurers of certain underwriting laws and regulations applicable to personal automobile and residential property insurance that are particularly relevant in the aftermath of a major tropical weather system.  Among the laws and regulations noted in the Bulletin are:

  • Texas Insurance Code Section 544.303, which prohibits an insurer from making an underwriting decision for residential property insurance based on previous mold damage under certain circumstances.
  • Texas Insurance Code Section 544.353 and 28 Texas Administrative Code 21.1007, which place restrictions on underwriting guidelines for water damage for residential property insurance.
  • Texas Insurance Code Section 544.553, which prohibits an insurer from using an underwriting guideline based solely on a consumer inquiry.
  • Texas Insurance Code 38.002, which requires insurers to file updated underwriting guidelines for residential property and personal automobile insurance with TDI each time the guidelines change.

The Bulletin concludes with a warning that “[i]nsurers that do not comply with statutory requirements are subject to enforcement action”.  This TDI underwriting Bulletin is in addition TDI’s separate warning against unauthorized market withdrawals, which we reported here.