BY ELISABETH JIMENEZ & BEN THOMPSON
Insurers respond
A closer look
Insurance resources Friedlander and Wade both recommended all homeowners secure flood insurance, regardless of perceived risk. Wade also said residents should: Use insurance brokers to secure best pricing Contact insurers to negotiate lower premiums Seek free storm damage consultations before filing a claim Be aware of impacts of lower monthly premiums, rising deductibles Residents can confirm where their property sits in relation to local floodplains at: https://maps.austintexas.gov/floodpro More information on FEMA’s National Flood Insurance Program, including flood safety tips and insurance policy quotes, is available at: www.floodsmart.gov
Insurance companies can find it difficult to find the “sweet spot” of setting insurance rates due to the state’s range and frequency of weather disasters, said Beaman Floyd, legislative counsel for TCAIS. Insurers have to charge rates in which the com- pany will break even, though ideally at a rate which results in a profit, he said. By current numbers, insurers are meeting at or below the break-even point, taking on greater losses, he said. Insurance companies are seeing more violent and more frequent storms, leading to increased losses, he said. Floyd said that in response to increased risk, insurers are responding in the following ways: • Offering more affordable premiums for higher deductibles • Raising rates • Incentivizing loss reduction, such as having impact resistant roofs, for discounted rates Some insurers are leaving the state due to significant losses, he said.
Even before July’s deadly floods, experts urged homeowners to consider adding flood insurance to their standard policies. In a region known as “flash flood alley,” Wade said the extra protection can be key even in areas that don’t regularly flood—espe- cially in relation to other weather impacts, like the hailstorm leaving damage from melting ice that’s not covered without flood insurance. After the city recently improved its rating under a Federal Emergency Management Agency insurance program, local flood policies are now eligible for a 25% discount. A new city pilot program aimed at helping lower-income homeowners pay for insurance also launched earlier this year.
SOURCES: CITY OF AUSTIN, FEDERAL EMERGENCY MANAGEMENT AGENCY/ COMMUNITY IMPACT
Looking ahead
Friedlander said homeowners are seeing high costs for other reasons as well. One, he said, is attorneys increasingly advising against settlements, leading insurers to end up in court more often. He also noted more expensive construction materials and supply chain disruptions have led to roughly 20% annual jumps for insurance premiums in 2023 and 2024 that are unlikely to slow down. Floyd said building weather-resilient homes is a major key to ensuring both insurance affordability for customers and stable profitability for insurance companies.
“The patterns of loss that we’re seeing indicate that the loss will continue unless we build better structures. Resilience is really the direction that we need to go.” BEAMAN FLOYD, LEGISLATIVE COUNSEL FOR THE TEXAS COALITION FOR AFFORDABLE INSURANCE SOLUTIONS
Austin-area residents faced home damages after a hailstorm in late May.
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