‘Outrageous’: Texans face insurance spikes amid natural disasters

AUSTIN (Nexstar) — 2024 has already been a test of resiliency for Texans in nearly every corner of the state. No matter the season or location, ice, fire, wind and water are proving to be near-constant threats to life, land and Texans’ homes — and the risks are becoming intolerable for the companies that insure them.

Greg Mauz of San Angelo noticed a concerning shift when he got his rate for homeowner’s insurance this year — a 26% spike from $2,700 to more than $3,400.

“It’s getting outrageous. Where does it end?” he said. “We lived in Hurricane Alley in Florida, and we never got raised this much in one year. Everything’s just going up and up and up.”

Financial analysis company Nerdwallet reports the average premium for a Texas home is nearly $4,400 a year as of May. That’s second only to Oklahoma, and $2,485 more than the national average.

Insurance experts say it’s a national trend fueled by both inflation and natural disasters.

“Texas has almost every kind of peril you can think of,” Richard Johnson with the Insurance Council of Texas said. “We’re ranked number one in hail and wind events, hurricanes, even wildfires… insurance companies are paying out more in claims than they’re actually taking in in premiums over the last couple of years. And then you compound that with the economy, insurance is completely linked to what’s going on.”

Insurance companies are feeling the burden, too. The Insurance Information Institute explained the rising rates are due to the higher risk of storm damage, the influx of people to Texas, and the inflated cost of raw materials like lumber.

“Last year, the industry paid out $1.11 for every dollar collected,” Mark Friedlander with the Insurance Information Institute said. “That was actually the worst underwriting result for the home insurance industry since 2011.”

This year, Lt. Gov. Dan Patrick directed lawmakers to look into the rising rates. He tasked the Senate Business and Commerce Committee with identifying “ways to increase consumer transparency” and “ensure a competitive and affordable insurance market.”

Currently, the state regulates the insurance industry through the Texas Department of Insurance. TDI is responsible for protecting consumer rights, ensuring fair competition and assessing complaints. S&P Global reports state regulators approved 36 double-digit rate increases in the third quarter of 2023 alone.

The department directs consumers interested in learning more about their homeowner’s insurance rates to the resources provided on this webpage.

Experts say while it’s unlikely rates will go down, the rate at which they are increasing will slow this year.

“We’ve seen the steady increase since 2021. We had all those supply chain issues in the economy and the inflation really skyrocketed. In 2024, I don’t think we’ll see the high double-digit percentage increases that we’ve seen over the last couple of years,” Johnson said. “We’re starting to see that flattening out where everything is starting to even out across the country. And as inflation slows, so is premium and rate increases for insurance.”

Ways to save:

Friedlander pointed Texans looking for lower rates to these strategies:

• Increase deductibles — you’ll pay more out-of-pocket if something happens, but you’ll pay less each month.
• Bundle coverage. Get your home insurance from the same insurer that provides your auto insurance, for example.
• Look for common discounts. Insurers often provide discounts for active-duty military and veterans, senior citizens, and homes that have monitored security or ‘smart’ systems.

The Insurance Council of Texas directs Texans looking for lower rates to use the state’s shopping tool at HelpInsure.com.