I have been writing about the Texas problem with homeowners insurance premiums since I started this blog in 2005. And the situation never seems to improve. Texas has ranked either first or second in the nation every year for highest homeowners insurance rates. Yet insurance companies are taking home huge profits. Now, as reported in the Dallas Morning News, rates are up 21% since 2009. We need a different, better system of oversight regarding rates, but we're not going to get that with our current state government.
The article blames the rise in premiums on other factors, but I remain convinced that poor regulation is at least partly to blame. We have a crazy rate system in Texas, in which a carrier raises rates without having to get permission, and then the Department of Insurance reviews the increase and gives their opinion. If the Department disagrees, the carrier will fight the opinion in court for years. By the time the issue is decided the carrier has collected a ton of extra money and made profits on the investment of that money. And on the odd chance the carrier is ordered to make refunds it is sometimes impossible to track down the policyholders, due to our mobile society. Here are excerpts from the article:
Homeowners insurance premiums in Texas — long among the most expensive in the nation — have jumped 21 percent since 2009 but are going up faster in several other states, a new report released Tuesday by the Texas Department of Insurance says.
The report cited a number of factors behind the increase in rates, including insurance industry models that project greater property losses in the state from hurricanes, hail storms, wildfires and other weather-related catastrophes.
But also contributing to the higher premiums are increased insurance company expenses — for overhead costs and agent commissions, for example — and recent declines in interest rates that have slashed investment returns for insurers.
The average premium on a homeowners policy in Texas last year was $1,412, according to the study.