TDI SEES IMPROVED LOSS RATIOS:

The Texas Department of Insurance reported that second quarter 2004 financial results submitted to TDI indicate a number of Texas homeowners insurance providers are improving their loss ratios—a result of efforts to increase underwriting efficiency and accuracy, and a quiet storm season during the early part of the year. The average loss ratio for homeowners insurance companies for the first two quarters of 2004 is 38 percent. TDI said the second quarter reports show improving conditions, but are only part of the picture and can not be used to set or determine rates. The reports do not include additional expenses, such as agent commissions and companies’ operating expenses, or the provisions for the inevitable catastrophe and natural disasters such as tornadoes, hail storms and hurricanes. These additional expenses typically add about 45 to 50 percent to an insurer’s cost of doing business. TDI said the improved market conditions in Texas this year represent a dramatic change from the experience of insurers in recent years when many faced huge losses from severe weather and water-claims resulting from a perceived mold crisis. While these second quarter financial reports do not tell the complete story, they do indicate that TDI’s efforts to set rates according to fair rating standards were reasonable and accurate.

Topics Texas Profit Loss