Texas Insurance Firms Spike Premiums Again

Home insurance premiums in Texas are another natural disaster. We need to ask ourselves, “Why do Texans continue to pay the highest home insurance premiums in the nation?”

Five years ago with Gov. Rick Perry, then Texas Department of Insurance (TDI) Commissioner Jose Montemayor, and legislators “looking the other way,” lax insurance legislation permitted the industry to double the premiums paid by Texas homeowners. Bear in mind that Gov. Perry will have a tough battle for reelection in 2010 from fellow Republican, Sen. Kay Bailey Hutchison. Texans now have some “clout” to demand the governor do something before the election.

In 2004 and during the previous several years, the insurance industry had been experiencing a hard market and was losing revenue; we were told it was caused by excessive claims due to storms, winds, flooding, hail, and mold. The industry collectively had called upon the state informally to help with correcting the market, but few listened to its pleas.

As in many previous years of hard markets, the insurance industry elected to act independently on the problem without waiting any longer for government interaction on its behalf. Virtually overnight, it then over-corrected the market by doubling home insurance premiums. Texas homeowners are still paying those doubled premiums.

In some instances, the industry decreased the coverage and still increased the premiums significantly.

Initially, the reaction of homeowners was disbelief and then anger. Many contacted the offices of the governor, TDI, and various legislators. They were told publicly by Gov. Perry and his appointee Comm. Montemayor that by the next year, the insurance industry would refund up to 14 percent of the increased premiums. To date, that has never occurred. Homeowners must have forgotten the promises made by Perry, Montemayor and current TDI Commissioner Mike Geeslin.

So, now it