The loss ratio is the percentage of losses insurers have paid or will pay versus what they have collected in premiums. Combined ratios provide another view of the state of the market by combining the loss ratio with an expense ratio. The combined ratio takes into account a company's expenses for agent commissions, loss adjustment expenses, overhead and administrative costs. When reviewing these types of metrics for homeowners insurance, it is also important to look at them over a longer period. In Texas, the presence of weather-related catastrophes can negate years of profits. Learn more.

The costs, risks and severity of a wide variety of elements that go into home and auto insurance pricing. Insurers need to charge enough premium to pay claims and keep insurance broadly available and as affordable as possible, with at least the chance of reasonable profit to encourage investment and competition. 

• Auto Insurance Pricing Factors
• Home Insurance Pricing Factors

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The Texas Windstorm Insurance Association (TWIA) need immediate financial reform that ensures every premium dollar paid to TWIA actually benefits those coastal customers. The ability to pay coastal claims and keep insurance affordable for coastal residents is both a personal and public policy concern.

For many years, TWIA’s fragile and insufficient funding mechanism has been financially hazardous to both TWIA customers and other insurance consumers across the state.

How? By law and statute, customer premiums should pay customer claims, TWIA operating expenses and contributions to a catastrophe fund. But the rates that generate those premiums have been seriously inadequate and actuarily unsound for decades, according to analyses by the Texas Department of Insurance and TWIA itself.

A major cause of TWIA’s rate inadequacy is debt expense created by TWIA’s bond-based financing system. Premium dollars that should be used to pay claims or saved for future storms are instead spent on interest on bond debt for past storms. For example, TWIA used all its bond money to pay for Hurricane Harvey in 2017, and then paid principal and interest on those bonds until mid-2022. Every dollar paid in interest was a dollar not available for paying claims. The expense of those bonds was a main driver of TWIA’s actuarial insufficiency.

TCAIS believes TWIA must operate at a high level of efficiency so that every premium dollar is maximized to benefit TWIA customers. TWIA funding policy should protect customers from the interest, issuing expense and uncertainty of a mandatory bond issue that must be made to pay claims after a storm.

The Texas Legislature should consider reforms that eliminate the purchase of bonds with a new method of funding. TCAIS and its member companies support replacing the bonding component of the funding mechanism with a clear, transparent, predictable layer funded by a conditional statewide market surcharge that would be collected only if TWIA’s catastrophe reserve fund falls below a certain level. Such a system would maximize the value of TWIA premiums and allow more to be transferred annually to the catastrophe fund, thus reducing the potential of a surcharge. 

The other current TWIA funding layers, including insurance company assessments and reinsurance, would remain in place but would be built on a more stable, predictable platform. The overall result would be a more predictable, more readily available, less costly funding structure that would benefit both coastal and inland insurance consumers in Texas.

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Many Texans may be paying more for auto and homeowners insurance, just as they are for groceries, gas and other essentials. Yet insurers are often operating at a loss, paying out more in claims than they are taking in from policyholder premiums. 

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Texas rooftops take a beating from Mother Nature.

Texans suffer tremendous roof-related losses because of the state’s severe weather, including hail, tornadoes and hurricanes.

But when it comes time to get that damage fixed, Texas consumers and roofers are extremely vulnerable to bad actors in the roofing business. Texas does not require roofers to be licensed, nor does it have laws to specifically address roofer abuses.

In recent years, roof-damaging weather in Texas has been rapidly followed by an influx of contractors, including roofers, from outside of the state.

Without required registration or licensure, roofers are not even required to have a legitimate address or other contact information. This makes it difficult for a consumer to seek recourse in the event of dishonest practices or shoddy work.

Some of these fly-by-night contractors have subjected consumers to damaging practices ranging from dishonest business dealings and strong-arm tactics to out-and-out fraud.

Problems with fraudulent roofers have included:

• Requiring consumers to pay for services up front, which then are not delivered.
• Deliberately causing damage to structures to attempt to gain authorization for service.
• Offering to pay or paying all or a portion of an insurance deductible. As the Texas Department of Insurance warns, the contractor could be submitting false information to your insurance company about the cost of the repairs, which is insurance fraud.
• Acting as claims adjusters without proper credentials.
• Padding bills or skimping on work.

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Texas has consistently trailed most coastal states when it comes to instituting and enforcing building codes, according to a 2018 analysis by the Insurance Institute for Business & Home Safety (IBHS). Texas scored 34 points (out of 100) in the survey, lower than all but two of the 18 states along the Gulf of Mexico and the Atlantic Coast.

Texas has a statewide building code – the 2006 International Residential Code – but law allows municipalities to adopt weaker standards than are set out in the code. That has led some, including IBHS, to argue that Texas effectively does not have a statewide building code.

In addition, the Texas Department of Insurance has adopted windstorm building standards that homes must meet to obtain windstorm and hail insurance from the Texas Windstorm Insurance Association (TWIA), which provides windstorm and hail insurance along the Texas seacoast.

TCAIS believes Texas’ code is unevenly applied and more outdated each year with the development of new research and technologies. Texas needs a stronger code that only allows municipalities to diverge if they adopt even more stringent local standards. In addition, TCAIS supports widespread and consistent enforcement and inspection to verify that construction adheres to code requirements.

A modest investment in better building codes now will lead to improved public safety, less wasteful destruction, and long term financial savings for Texas. 

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Auto insurance companies – including TCAIS member companies – are part of a broad spectrum of organizations warning of the dangers of distracted driving and taking steps to curb deadly behaviors while behind the wheel. 

Texas enacted a statewide ban on texting while driving on Sept. 1, 2017, after the Texas Legislature failed to pass the proposal for three previous sessions.

In addition, more than 90 Texas cities have adopted some type of local ordinance that governs cell phone use while behind the wheel, including some that outright ban the use of any mobile device while driving.

Statewide laws, ordinances and penalties are the fastest ways to change the culture to make texting while driving an unacceptable behavior. The public understands that distracted driving, especially using a mobile device, is dangerous: 96.8 percent of those surveyed by AAA called texting/emailing while driving a “serious threat.” Yet, despite knowing better, 44.9 percent of drivers admitted reading a text or email while driving in the past 30 days, while more than a third typed one.

Auto insurance companies, cell phone providers, car companies and safety advocates are conducting campaigns to educate consumers about the dangers of all forms of distracted driving. Some of our TCAIS member companies also have apps for download to help the public drive more safety. 

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