A Risky Business:
Texas Auto Insurance
On average,
auto insurance in Texas has been unprofitable for the past 10 years.
According to a study by the National Association of Insurance Commissioners,
for the ten year period of 1991 - 2000, Texas auto insurers on an
average annual basis:
-
lost 4.0 percent on underwriting income,
-
had a 1.1 percent profit on insurance transactions, and
- had
a return on net worth of 6.7 percent.
By comparison,
the average return on net worth for all other Fortune 500 companies/industries
from 1991-2000 was a positive 13.2 percent, according to Fortune
Magazine, this is a return rate approximately one-half of American
companies in general.
Though losses in the auto insurance industry in
Texas are not as great as those in the homeowners market, the profit
on insurance transactions for auto insurers has sharply declined
since 1997, along with an insurer’s return on net worth.
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