One should expect softball size hail to do more than merely peel the petals off of the petunias, but these storms should support the marketing message of the property insurance industry. The promise of the PC insurers is to have sufficent reserves/liquidity to pay claims, sufficient claim handling personnel and assets in place to promptly service the losses and actuaries who fully understand that big hail losses do occur and perhaps they should consider a catastrophe load factor in their rates. The fact that the Gecko, Good Neighbor folks and Good Hands people are competing to see who can have the largest advertising media budgets in these storm prone states would indicate that PC must remain a very profitable line of business. A collateral benefit is that these storm losses help their adjusters keep their skills honed for the large hurricane losses that are predicted for later this season.
The comment is accurate until the last sentence. Just look at the recent past “predictions” regarding how bad the hurricane season will be. Those that predict the weather, more than 3 days in advance, are fooling themselves.
Actually, a few half truths by first poster: Auto insurance is generally profitable in Texas. However, home insurance is not a cash cow. If you read the stats, home insurers in Texas have only turned maybe 2 profit years in the past 15. And so what if Gecko advertises a lot, it does not indicate property insurance is profitable, and it certainly does not indicate Gecko is turning a profit on auto. If you read any publications on Gecko, they ran about a 123% loss ration in 2014, and the last number I saw for 2015 was projecting a loss ration of 117%. So do not confuse a big ad spend budget with profitability.
If Homeowners insurance has been unprofitable in Texas for 13 of the past 15 years, then why would the carriers remain in the market? I would think that even a gecko would have sufficient brain voltage to learn the word ADIOS.
If rate adequacy can not be sustained in the state, then the proper mechanism to insure the Homeowners risks would be an assessment mutual facility.
Geico doesn’t write home insurance in Texas, so their advertising is strictly for auto insurance. The other carriers stay in Texas because there is an opportunity for a nice profit, IF the weather cooperates. It has not for most of the past decade. The numbers don’t lie.
boone, perhaps if you do some research first, before commenting on an article with an opinion, you might just answer some of your own questions before you post.
Research? Opinion? OK, I didn’t consider that losses generated by a 123% or 117% operating ratio could be overcome by the additional volume of NEW business. Admittedly, I don’t understand the enterprise merits of enduring underwriting losses for 13 of the past 15 years in personal lines, just to boast that an insurance carrier remains in Texas. I still profess the old school concept that business endeavors should be profit focused.
There have been several occasions over the past several decades of carriers leaving the homeowners line in Texas. But, TDI pretty much allows whatever rate increases are ask, because they are aware of the losses. That allows companies to stay – the ability to attempt to stay ahead of the losses.
One should expect softball size hail to do more than merely peel the petals off of the petunias, but these storms should support the marketing message of the property insurance industry. The promise of the PC insurers is to have sufficent reserves/liquidity to pay claims, sufficient claim handling personnel and assets in place to promptly service the losses and actuaries who fully understand that big hail losses do occur and perhaps they should consider a catastrophe load factor in their rates. The fact that the Gecko, Good Neighbor folks and Good Hands people are competing to see who can have the largest advertising media budgets in these storm prone states would indicate that PC must remain a very profitable line of business. A collateral benefit is that these storm losses help their adjusters keep their skills honed for the large hurricane losses that are predicted for later this season.
The comment is accurate until the last sentence. Just look at the recent past “predictions” regarding how bad the hurricane season will be. Those that predict the weather, more than 3 days in advance, are fooling themselves.
Actually, a few half truths by first poster: Auto insurance is generally profitable in Texas. However, home insurance is not a cash cow. If you read the stats, home insurers in Texas have only turned maybe 2 profit years in the past 15. And so what if Gecko advertises a lot, it does not indicate property insurance is profitable, and it certainly does not indicate Gecko is turning a profit on auto. If you read any publications on Gecko, they ran about a 123% loss ration in 2014, and the last number I saw for 2015 was projecting a loss ration of 117%. So do not confuse a big ad spend budget with profitability.
If Homeowners insurance has been unprofitable in Texas for 13 of the past 15 years, then why would the carriers remain in the market? I would think that even a gecko would have sufficient brain voltage to learn the word ADIOS.
If rate adequacy can not be sustained in the state, then the proper mechanism to insure the Homeowners risks would be an assessment mutual facility.
Geico doesn’t write home insurance in Texas, so their advertising is strictly for auto insurance. The other carriers stay in Texas because there is an opportunity for a nice profit, IF the weather cooperates. It has not for most of the past decade. The numbers don’t lie.
boone, perhaps if you do some research first, before commenting on an article with an opinion, you might just answer some of your own questions before you post.
Research? Opinion? OK, I didn’t consider that losses generated by a 123% or 117% operating ratio could be overcome by the additional volume of NEW business. Admittedly, I don’t understand the enterprise merits of enduring underwriting losses for 13 of the past 15 years in personal lines, just to boast that an insurance carrier remains in Texas. I still profess the old school concept that business endeavors should be profit focused.
There have been several occasions over the past several decades of carriers leaving the homeowners line in Texas. But, TDI pretty much allows whatever rate increases are ask, because they are aware of the losses. That allows companies to stay – the ability to attempt to stay ahead of the losses.