Texas homeowners insurance premiums stabilized some after legislative reforms in 2003, but two years later were still the highest in the United States, according to a new study released by the National Association of Insurance Commissioners.
The average annual premium in Texas for the most common homeowner policy was $1,372 in 2005, while the national average was $764, the NAIC study of homeowners insurance revealed.
Premiums in Texas have always been relatively expensive because of severe weather conditions such as hurricanes, hailstorms and tornadoes. Rates went up in the early part of the decade as insurers fielded a rash of mold claims. The Legislature responded in 2003 with reforms that promised to bring relief to homeowners.
As of 2005, Louisiana had the second-highest premiums at $1,144, and Florida was third at $1,083. The premiums in all other states were less than $1,000.
The study found that Texas premiums increased slower than the national average in the two years after the 2003 reform. The state saw increases of 0.7 percent in 2005 and 2.6 percent in 2004. Nationally, rates increased 4.8 percent in 2005 and 9.1 percent in 2004.
“Texas is number one and will continue to be number one as long as we have the type of weather we have now, which is very severe,” said Jerry Johns, president of Southwestern Insurance Information Service. “Companies have to have money to pay claims, which can run into billions of dollars annually.”
Alex Winslow, of the consumer group Texas Watch, said the study confirms that most homeowners have experienced rising insurance premiums despite the reforms.
“We have a couple of years of post-reform experience in Texas, and they show we’re heading in the wrong direction on insurance rates,” Winslow said.
“Our closest neighbor, Louisiana, doesn’t even come close to Texas premiums, particularly after a year in which Hurricane Katrina ravaged New Orleans. Florida is a riskier state for the insurance industry than Texas, but that is not reflected in this comparison.”
Mark Hanna, spokesman for the Insurance Council of Texas, said numbers from 2006 and 2007 will show that insurance rates have gone down for Texas homeowners, except for in Harris County and counties along the Gulf Coast.
“Our rates have been dropping since 2004,” Hanna said. “Texas Department of Insurance quarterly reports show that, and Texas insurance agents in the field will show you that.”
Winslow said the study provides more evidence that the insurance commissioner “needs to approve all rates before they go into effect.”
Johns said adding that restraint on insurers would be counterproductive.
“This is not yet a competitive state for homeowners insurance,” Johns said. “We’re not seeing a lot more companies coming into Texas, and the companies that currently are here are not enthusiastic about expanding their business.”
A spokeswoman for Gov. Rick Perry defended the 2003 reforms and noted that the study doesn’t include 2006 and 2007 figures.
“The governor believes that the reforms took great steps in making sure that homeowner rates are kept low and that homeowners have the ability to choose the type of coverage they desire,” spokeswoman Krista Piferrer said.
Information from: The Dallas Morning News, www.dallasnews.com
Topics Trends Texas Homeowners
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