Homeowners face increasingly difficult insurance landscape From the cover
The big picture
Billion-dollar weather events in Texas
$25B
$20 billion
In 2023, Texas hit an all-time high for extreme weather events, according to the Texas Coalition for Affordable Insurance Solutions. There were 15 severe storms that year, amounting to between $20 billion and $50 billion in disaster costs. In the 1980s, there was an average of 82 days nationally between those events, according to the TCAIS. Nationally, from 2017 to 2021, there was an average of 18 days between billion-dollar weather events. In that five-year time frame, Texas experienced 44 severe weather events, totaling $200 billion to $300 billion in costs. Alexander noted the hike in his insurance rate came after an influx of people in his neighborhood got their roofs replaced, and he’s had a harder time getting claims approved. Extreme weather events often damage homes, and roofs often bear the brunt of the impact. “I’ve seen a lot more denials and people’s rates going up,” Chacon said, noting that the change in the insurance landscape seems to have followed the increased weather events. “You have to be a lot more thorough,” he said. “There’s been a shift.” Many industry professionals agree the insurance
$20B
$15B
$10B
$5B
$0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
SOURCE: NATIONAL OCEANIC AND ATMOSPHERIC ASSOCIATION/COMMUNITY IMPACT
Coverage plans are also becoming more strict, he said. People are seeing higher deductibles become normal due to the difficult nature of providing home insurance in Texas. “They can’t make a profit. Their business is to make a profit just like any other business,” Peckham said.
landscape for Texas homeowners is changing. They often mention the increasing frequency of weather events as a main factor in the shift. “The weather events are a lot larger now,” said Will Peckham, an insurance adviser with Watkins Insurance Group. He said the frequency of hail, wind and wildfire events in the state all contribute to how insurance carriers calculate premiums for customers.
Zooming in
While the roof on a house is important when securing insurance, shortened lifespans frequent weather events and Texas’ climate are making it more difficult to get them insured. “That’s within the last two to three years that insurance companies are really being staunch on the age of a roof versus condition,” said Mat- thew Werling, owner of Regenesis Roofing and Restoration in Cedar Park. Newer roofs can result in lower premiums, as they will protect a home longer and more effectively than older roofs, Peckham said. However, there are mounting difficulties for homeowners to consider when buying a new roof. The price roofers are paying for materials has roughly doubled in the last 10 years, Werling said. He also noted the climate in Texas makes it hard to put an accurate lifespan on a roof. Shin- gles that are expected to last 30 years typically last 15-24 years in Texas, and shingles that are rated for 25 years typically last about 12-17 years,
Combined losses for Texas insurers Combined loss ratio
he said. “Things are definitely changing in our area based off of weather patterns,” Werling said, noting that there are areas around Austin that are beginning to see hail every year. Along with severe weather, high repair and construction costs as well as legal complications from fraud and inflated claims have contrib- uted to a rise in home insurance, said Heather Grissom, owner of Grissom Insurance in Cedar Park. Grissom said her agency is starting to see home insurance rates stabilize due to insurance companies catching up with the rise in claims. Insurance companies will use combined loss ratios to determine how to reimburse homeown- ers. Combined loss ratios calculate losses paid out to claims with expenses for agent commis- sions, overhead, administrative costs and more for a fuller depiction of profitability in the state. A combined loss ratio of 100% is the break even point, and a ratio above 100% shows an overall loss.
Break even point (100%)
2015
90.4%
2016
124%
2017
117.5%
80.5%
2018
102%
2019
91.6%
2020
141.3%
2021
90.9%
2022
Overall loss
SOURCE: TEXAS COALITION FOR AFFORDABLE INSURANCE SOLUTIONS/ COMMUNITY IMPACT
30
COMMUNITYIMPACT.COM
Powered by FlippingBook