At the same time insurance companies are asking for changes to the law protecting their customers, they are making record profits. While neglecting to pay out to their policyholders, insurance companies have been fortunate enough to take in at least double the 10-year average percent of underwriting profit of direct premiums earned since 2012. According to the NAIC, the 10-year average for 2005-2014 is 4.2 percent underwriting profit. In 2012 – the start of the “crisis” – they managed to bring in 9.2 percent; 2013, 19 percent; and in 2014, 18 percent. This adds up to $3.2 billion in underwriting profit to property insurers, just through premiums from 2012-2014.
Insurance Companies Jacking Up Premiums in South Texas and Panhandle
As a result of insurance companies want for profits, premiums in certain areas of the state have increased. Specifically in the Panhandle and South Texas, rates have increased at an average of 6 percent each year since 2012. In some cases, policies in those areas are now written excluding hailstorm damage or roofing from being covered by a homeowner’s policy, according to presenters at an Oct. 5, 2016, Texas Senate Business and Commerce Committee hearing. Why has TDI allowed the rate increases?
Gulf Coast Getting Jacked Up Too
Though there hasn’t been a storm to severely damage the Gulf Coast since Hurricane Ike, Houston, Southeast Texas and other parts of the Seacoast are not exempt from adding to insurance companies coffers. In 2015, the average Texas homeowner saw in increase in their premium by about 7 percent. That increase went unchallenged by the Texas insurance commissioner, paving the way for future drastic premium increases.
Along with higher premiums, windstorm deductibles have increased about 11 percent each year since 2000. In 2008, average windstorm deductibles in the Houston area were just over $3,000. By 2010, they were almost $4,000, and in 2015, that number topped $5,000, according to information from TDI that was presented at the subcommittee hearing. All while Texas insurance companies have enjoyed a healthy level of reserves and profits.
Since 2004, Texas has been a gold mine for insurance companies – with a lone exception of 2008 because of Hurricane Ike. The biggest threat a homeowner faces when a storm comes bearing down on them shouldn’t be the insurance company they pay to protect their home. Policyholders should be given their just due in a timely manner, rather than have to fight to rebuild their homes and lives after tragedy strikes. And, while Texas has solid consumer protection laws to encourage timely payment of claims, even those laws are ignored routinely by insurance companies. Now, the same insurance companies that are making huge profits want to remove the same laws that protect their customers.