Report: Texas (Again) Has Nation’s Highest Homeowners Premiums

Report: Texas (Again) Has Nation’s Highest Homeowners Premiums
February 17, 2012

Matthew Glans

Matthew Glans (mglans@heartland.org) joined the staff of The Heartland Institute in November 2007... (read full bio)

Texans may like things big, but they probably don’t like knowing their homeowners insurance premiums are bigger than those in any other state.

The news comes from the National Association of Insurance Commissioners’ 2009 Homeowners Insurance Report, released in January.

For many Texans, though, the report may be old news.

“For as long as anyone can remember, Texas has had among the highest insurance rates in the nation,” said Alex Winslow of Texas Watch, a consumer group active in insurance issues.

The report includes countrywide, state-specific premium and exposure information for homeowners’ insurance package policies and for noncommercial-dwelling fire insurance.

Impact of Catastrophe Risks

Consumer groups are using the report results to push for rate restrictions but insurance industry representatives in Texas attribute much of the reason for high rates there to the risk of severe storms, including hurricanes along the Gulf Coast. Three major hurricanes have hit the Texas coast in recent years. Tornadoes, hailstorms, and other forms of severe weather also take a heavy toll. Texas also faces wildfire risks.

Shortly after the report’s release, the Texas Insurance Department decided to allow homeowners insurance rate increases filed by Farmer Insurance Companies. Beginning in March, nearly 350,000 Texas policyholders insured by Farmers will see their homeowners insurance premiums climb an average of 10 percent.

State Farm Insurance Cos., Allstate Insurance Cos., and USAA earlier received approval from the Texas Insurance Department for homeowners insurance rate increases.

“So far, [Texas Insurance Commissioner] Eleanor Kitzman hasn’t met a rate hike she didn’t like,” said Texas Watch’s Winslow in a press statement. He said the state’s homeowners insurance buyers are receiving less coverage for more money as insurers restrict what losses they will cover.

The average annual cost of the most commonly sold homeowners insurance policy in Texas was $1,511, far above the national average of $880 and about $50 more than in the state with the second-highest rates, Florida. Eight states had average premiums above $1,000 a year, and some of those have experienced big increases in recent years.

Moderating Increases

There is some good news for homeowners insurance buyers in Texas. Premium increases there have been moderating.

The NAIC noted homeowners insurance rates in Texas rose approximately 3.5 percent from the previous year. That compares to a national average increase of 11 percent.

Matthew Glans

Matthew Glans (mglans@heartland.org) joined the staff of The Heartland Institute in November 2007... (read full bio)