An
Unprofitable Experience:
Texas Homeowners Insurance
On average,
homeowners 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 home
insurers on an average annual basis:
- lost
9.4 percent on underwriting income,
- had
a negative 3.2 percent profit on insurance transactions, and
- had
a return on net worth of negative 0.3 percent.
By comparison,
the average return on net worth for all other Fortune 500 companies
and industries from 1991-2000 was a positive 13.2 percent, according
to Fortune Magazine.
This data does
not include the unprecedented losses sustained in 2001, resulting
from Tropical Storm Allison and other flooding, as well as a surge
in mold claims. According to Insurance Information Institute estimates
based on Texas Department of Insurance data, there was a 1,306 percent
increase in mold claims in 2001 compared to 2000, leading to record
losses for insurance companies last year. The hallmark of the Texas
homeowners market is the volatility from year to year related to
weather and new crisis like mold.
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