By Rick Garcia
Texas is once again rated No. 1 in the nation in — drumroll please – home insurance rates!
Yes indeed, we can add to our list of “firsts” this dubious distinction that soaks every Texan for the maximum amount, courtesy of a state insurance commission that lives in the pocket of insurance companies.
Actually, Texas has held this honor for years. It was briefly knocked out of the top spot by Florida last year, which is why it’s even considered “news” today.
According to the Dallas Morning News, citing a report from the National Association of Insurance Commissioners, the average annual insurance premium in Texas is $1,460. Florida averages $1,390. And national average is $791.
Yes, Texans pay almost twice the national average. According to the NAIC, it’s because Texas is big and tends to have a lot of weather. Uh huh.
The Dallas Morning News, as part of an eye-opening series called State of Neglect looked at the insurance situation in Texas and did its own statistical analysis of weather patterns, finding that Texas’ premiums were 50% higher than that analysis would justify.
More likely it’s that Texas is considered a safe harbor for insurance company profiteering. According to the article, the Texas insurance industry received more than twice as much money in premiums than it paid in claims between 2003 – the year of Texas’ so-called “insurance reform”– and 2007. It noted Texas insurers took in about $23 billion in premiums while paying out about $9.6 billion in claims – a loss ratio of about 42% – much better than the national average of 59% for other companies.
In 2003, the Texas legislature gave all kinds of concessions to insurance companies on the promise that this would allow the companies to lower rates. Never happened. What did follow was that they could sell policies that offered far fewer protections, while increasing rates as they please. As it stands now, insurance companies can raise rates any time they want, for any reason. The Insurance Commission can only disallow rate increases retroactively (which rarely happens), but meanwhile the companies can sit pretty on our cash.
For more infuriating information about how homeowners are regularly abused by industry political interests go to Homeowners of Texas.
The legislature has a big opportunity during the next session, which begins in January, to lower these rates through insurance reform. The Texas Department of Insurance and all its regulations are up for review. Consumer groups like HOT and Texas Watch, and elected Democrats want greater restrictions on insurance companies and a rule requiring that the state gets to review and approve all requested rate increases for evidence that they are needed before they are allowed. What a concept.
But with fewer Democrat votes in the legislature, and the fact that insurance companies are huge campaign contributors to Republicans, including Gov. Rick Perry, it looks doubtful that homeowners will be getting any kind of break from the Capitol any time soon.
That doesn’t mean we shouldn’t all be shouting from our overly-insured rooftops. You can quickly and easily go here and find your local representative and email him or her that you want lower rates and insurance reform next session. I know I’m going to.