Homeowners Insurance an Issue in Texas Gubernatorial Campaign

Former Houston Mayor Bill White, a Democrat campaigning to replace Repub-lican Rick Perry as governor of Texas, says homeowners insurance rates in Texas are too high and should be more regulated.

White said Texans pay an average $626 more than homeowners in other states. Data from the National Association of Insurance Commissioners shows the average rate paid by Texas homeowners – $1,448 – is second only to that paid by Florida consumers.

White favors prior approval of homeowners insurance rates. Following insurance regulation reforms enacted in 2003, insurance companies have been allowed to file and use rates in the homeowners markets, meaning prior approval of rates is not required. Regulators can disapprove of rate filings after the fact if they find an insurer’s rates to be excessive or actuarially unfounded.

“Homeowners insurance rates are squeezing the savings of Texas families. As governor, I’d require homeowner’s insurance companies to prove why any rate increase is needed before I’d permit it,” White said in materials released by his campaign.

“This is a common sense approach that’s worked in states all over the country,” White said of prior approval. “Perry said he’d fix homeowners insurance costs in 2002. It’s been eight years, and he hasn’t.”

White’s stance is not supported by most in the insurance industry.

“A return to state-regulated rates would stifle competition and create little or no incentive for insurers to compete for the best price,” said Jerry Johns, president of the Southwestern Insurance Information Service.

“Insurers writing homeowners insurance in Texas have lost money for the better part of a decade,” Johns said. “Between 1999-2008 their return on investment in Texas was -0.8 percent compared to the 4.6 percent countrywide. Texas also led the nation in 2009 with $2.45 billion in catastrophe losses. That represents 23.3 percent of all catastrophe losses in the U.S. The total U.S. catastrophe losses in 2009 were $10.5 billion. Given these facts, it is a real stretch of the imagination for anyone to say homeowners insurance rates are out of control.”

The White campaign says homeowners insurance policy rates have gone up almost 50 percent since Perry has been in the governor’s office. As lieutenant governor, Perry rose to the top spot in 2001 when George W. Bush left the governor’s post to become president. While running for election in 2002, Perry acknowledged that homeowners insurance rates were too high but has done nothing about the situation, White supporters say.

“What happened to Perry’s campaign promises? Texas families are still picking up the tab because Perry collected $1 million in campaign contributions from the insurance industry and 10 of his staff members have made millions lobbying for insurance companies,” said Katy Bacon, White’s campaign spokesperson.

Perry campaign spokesman Mark Miner told the Associated Press that more regulations are not the answer, adding that the likely result of White’s proposal would be an increased cost for homeowners. “Anytime you add more regulations, companies pass that on to the consumer,” he said.

Topics Texas Legislation Homeowners