Texas Homeowners Insurance Rates Up 8 Percent

A recent report showed that North Texas homeowners insurance rates rose by an average of eight percent in the last twelve months. The increase in Texas homeowners insurance rates far exceeds the inflation rate of less than two percent over each of the last two years. The report also showed that the number of claims filed by homeowners this year has been below the average of recent years. These factors have led to higher profits for insurers, while homeowners pay more for the same or less protection.

Hailstorms Spur Texas Homeowners Insurance Rates Increase

A major reason behind the increase in Texas homeowners insurance rates lies in the series of hailstorms that struck North Texas in 2012. The Dallas-Fort Worth Metroplex endured two of the most expensive hail storms in the state’s history that year. Thousands of homes sustained damages to their roofs, siding and windows, totaling more than $1.6 billion in damages. The storms prompted many major insurance carriers to raise their Texas homeowners insurance rates statewide, but especially in those areas targeted by the storms.

State Farm Has Highest Texas Homeowners Insurance Rates

The study also found that State Farm had either the highest or second-highest Texas homeowners insurance rates across the board. The report examined the rates for a home valued at $150,000 with no claims over the previous five years. The report found that the average Texas homeowners insurance rates of the 33 companies that serve the North Texas area stood at $1,713 per year. The rates for State Farm stood at over $2,800, more than $1,000 per year over the average.

High Texas Homeowners Insurance Rates Lead To Higher Profits

Despite a lower number of claims in the years since the hail storms. Texas homeowners insurance rates continue to rise. These higher rates have also contributed to record profits for the insurance industry statewide. The “loss ratio” determines how much the insurers pay out in claims compared to how much they collect in premiums, with 60 percent considered as a benchmark for profitability. Nearly every insurer was at or below 50 percent. State Farm, despite having the highest Texas homeowners insurance rates, had a loss ratio of less than 37 percent, allowing the company to reap record profits in 2014.

Consumer Groups Criticize Higher Texas Homeowners Insurance Rates

The high profits and higher Texas homeowners insurance rates have prompted criticism from consumer advocacy groups. Alex Winslow, a spokesman for the consumer group Texas Watch, told reporters that “Texans are crying ‘uncle’ over their insurance costs.” Mr. Winslow also said that policy holders “need relief” from high Texas homeowners insurance rates. The news of higher rates comes soon after State Farm a court ruling that showed the company overcharged its customers for years.

Source: Dallas Morning News

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