Texas 2006 Homeowners Rates Drop 4.9%; Auto Drops 4.4%

By Tom Di Martini
BestWeek

The average statewide cost for a homeowners policy in Texas in 2006 dropped 4.9%, while liability and physical automobile premiums dropped 4.4%, according to a report from the Insurance Council of Texas.

The average cost for a homeowners policy was $1,038, and the cost of automobile premiums averaged $1,054, the council said.

Robert Hartwig, president of the Insurance Information Institute, said the drop is notable, because for many years, Texas had the highest rates in the United States. ?Historically, Texas has had extraordinary catastrophic exposure, not just from hurricanes, but they are the most vulnerable state in terms of tornadoes and hail--especially inland," he said.

Hartwig added that Texas' high costs abated in 2003 following the much-publicized mold crisis, with $2 billion in losses incurred from Hurricane Rita in 2005 weighing in as the state's lone catastrophic event.

The Texas homeowners market was thrown into turmoil in the early part of the decade because of skyrocketing mold claims. In 2000, 2001 and 2002, Texas insurers paid out a total of more than $4 billion in mold claims (BestWire, May 21, 2003).

Mark Hanna, a spokesman for the Insurance Council of Texas, said in a statement decreasing rates should increase competition among the state's insurers. "When you see premiums falling, it means insurance companies are fighting for your business," he said.

Homeowners rates have been a bone of contention in other catastrophe-prone states in recent months. Florida lawmakers reached a deal earlier this month on an insurance reform plan that would give policyholders a double-digit decrease in homeowners insurance rates by expanding the Florida Hurricane Catastrophe Fund. The deal, reached during a special Florida legislative session, will eventually give homeowners an estimated 10% to 35% reduction in rates (BestWire, Jan. 22, 2007).

In 2005, the top five Florida homeowners multiperil insurers, according to A.M. Best Co. state/line product information, were: State Farm Group, with 21.5%; Citizens Property Insurance Corp., with 9.4%; Allstate Insurance Group, with 9.1%; Tower Hill Group, with 5.2%; and Nationwide Group, with 5%.

In 2005, the top five Texas homeowners multiperil insurers, according to A.M. Best Co. state/line product information, were: State Farm Group, with 29%; Allstate Insurance Group, with 17.2%; Farmers Insurance Group, with 11.1%; USAA Group, with 7%; and St. Paul Travelers Group, with 5.4%.

Source: A.M. Best Company (www.ambest.com)

From: Insurance News Net (www.insurancenewsnet.com)