What does it all mean?

This examination of the long-term losses suffered in Texas, the resulting loss ratios and the ongoing obligations of Texas insurers to their customers and the Insurance Code highlights certain key points that must be considered when addressing insurance public policy decisions. Neither insurers nor policymakers can reduce the severity of Texas weather and its assault on the property of our citizens. However, policymakers can support a variety of efforts to incrementally reduce the risk of loss and costs in the homeowners’ insurance market. Learn More

Key factors in the Texas insurance marketplace

Weather

Texas has been subject to some of the largest weather catastrophes in recent years. Yet Texas disasters come from a wide variety of weather events that strike with intense frequency. A recent study observed that, unlike other high loss states, Texas losses over a 10-year period were largely due to common thunderstorms and tornados, major wildfires, one tropical storm, four hurricanes, seven winter storms, and 53 severe weather incidents.

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Regulation

High claims costs continue to be the primary driver of rates in Texas. In the face of constant risk related to natural hazards, Texas must continue to attract private insurance capital and foster competition by allowing companies to employ sound business models, offer options to customers, and make necessary adjustments to both rates and their books of business. In other words, Texas must not exacerbate its inevitable natural risk with undue regulatory risk.

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Risk

Policymakers should examine those areas where risk in Texas can be incrementally improved in the public interest. Whether through standards for buildings and service providers, or by allowing and enhancing risk mitigation incentives, some measure of loss mitigation is certainly possible. Over time, this will translate to a more stable marketplace with better rates than otherwise possible.

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