– FAST FACT -

Texas is the ONLY state in the country that ranks 8 on a 1-to-8 low-to-high-risk scale.
“High risk”: The state could experience up to nine different natural events at disastrous levels.

Texas insurers continue to prepare for unpredictable weather losses. During “good weather” years with fewer claims, insurers reserve consumer premiums to prepare for future catastrophes. What some see as “profits” can be quickly wiped out, and the state’s entire insurance system destabilized.

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Weather

Texas has been subject to some of the largest weather catastrophes in recent years. Yet Texas disasters come from a wide variety of weather events that strike with intense frequency. A recent study observed that, unlike other high loss states, Texas losses over a 10-year period were largely due to common thunderstorms and tornados, major wildfires, one tropical storm, four hurricanes, seven winter storms, and 53 severe weather incidents.

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Regulation

High claims costs continue to be the primary driver of rates in Texas. In the face of constant risk related to natural hazards, Texas must continue to attract private insurance capital and foster competition by allowing companies to employ sound business models, offer customers options, and make necessary adjustments to both rates and books of business. In other words, Texas must not exacerbate its inevitable natural risk with undue regulatory risk.

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Risk

Because of the loss risk in Texas, it is critical to provide a regulatory structure that encourages companies to do business here. Whether through standards for buildings and service providers, or by allowing and enhancing risk mitigation incentives, some measure of loss mitigation is certainly possible. Over time, this will translate to a more stable marketplace with better rates than otherwise possible.

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