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Texas residents feeling the sting of high insurance rates

September 22, 2014

While a few of the biggest cities in Texas offer residents some of the most affordable housing options in the nation—Houston, for example, has an average home price of less than $183,000, according to real estate information firm Redfin—homeowners in The Lone Star State are paying more for home insurance.

Home insurance rates continue to climb in Texas.

Texas finished with the third-highest home insurance premiums in the nation in 2011, the last year for which data is available, according to a recent survey from the National Association of Insurance Commissioners. Florida was in the top spot, while Louisiana checked in at No. 2.

“Texas is a catastrophe-prone state, and no part of our state is risk-free,” Patti Kelly, a spokeswoman for one of the nation's biggest insurers, told the Houston Chronicle.

Kelly said policyholders in the state are “vulnerable to significant losses caused by high winds, hailstorms, hurricanes and wildfires.” She added the number of claims and cost per claim continues to rise throughout the state.

Beaman Floyd, executive director of the Texas Coalition for Affordable Insurance Solutions, which is based in Austin, told the Chronicle rates must be linked to a trio of factors:  cost, expense and risk.

“Indications are there are significant risks in the Texas marketplace, and these rate filings are in line with that risk,” Floyd said.

Hikes continue regardless of objections

Despite statewide protests, Julia Rathgeber, the Texas insurance commissioner, has enabled the state's three largest home insurers to levy substantial insurance premium hikes for approximately 67 percent of Texas policyholders, according to The Dallas Morning News. Rathgeber has the power to reject any new rates that are deemed exorbitant. She also has the ability to order refunds.

The insurance companies said the higher rates are warranted because of harmful weather patterns throughout the state, including hurricanes in the Gulf Coast and hailstorms in North Texas. Rathgeber's office told The Dallas Morning News the surge in rates is under review. Still, higher rates have already started showing up on renewal notices since the start of the year.

Insurance rate hikes aren't stopping for Texas residents

Alex Winslow, executive director of Texas Watch, a consumer protection and citizen advocacy firm, told The Dallas Morning News that Texas residents should not hold their breath regarding insurance premiums going down anytime soon.

“I expect to see more rate increases coming down the pike later this year or early next year,” Winslow said. “It's become an annual event where the companies file for higher rates and then implement them without objection.”

Winslow said he's noticed a “pattern with the major insurance companies of continuously raising rates.” He added that he hasn't seen any valid grounds for the severe price spikes.

Homeowners in The Lone Star State who are unhappy with their current insurance premiums or policies should contact SelectQuote Auto & Home Insurance. SelectQuote provides users with comparison shopping, allowing them to choose from a dozen of the nation's blue-chip insurers to find the best policy for their individual needs.

Texas insurers continue to make big gains

The Dallas Morning News reported the three largest insurance providers in Texas—Allstate, Farmers and State Farm—all reported vastly improved bottom lines from 2012 to 2013 as they ratcheted up profits.

To cover property losses, Texas insurers doled out 44.8 percent of their premiums in 2013. In the year prior, insurance companies used 54.5 percent of premiums to pay for their losses, which is why profits went up. A loss ratio of 60 percent or lower is considered a prime goal for insurance companies, according to the Morning News.