Homeowners Insurance an Issue in Texas Gubernatorial Campaign

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

White says Texans pay an average $626 more than homeowners in other states. According to data from the National Association of Insurance Commissioners, 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. The insurance regulators can, however, disapprove of rate filings after the fact if they find an insurer’s rates to be excessive or actuarially unfounded.

“Homeowner’s 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. “Under Perry, if they want your money they can have it. I’d put a stop to that.”

“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 homeowner’s 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 the 4.6 percent countrywide. Texas also lead 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 that 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 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 he 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, campaign spokesperson.

Perry campaign spokesman Mark Miner told the Dallas Morning News, however, that state ordered rate decreases in 2003 resulted in a savings of hundreds of millions of dollars in homeowners insurance for Texas consumers.

The state’s largest homowners insurer, State Farm, has been in litigation with the insurance department over rates since that time, however.