AUSTIN – Texans pay nearly twice the national average for homeowner insurance, although premium increases slowed after lawmakers enacted a massive insurance overhaul in 2003, according to a new national study.
 
The National Association of Insurance Commissioners, a group of state officials, said in a report issued last week that the average premium for the most common policy sold in Texas was $1,328 in 2003, the most recent year for which national data is available. That was by far the highest average of any state. The national average was $668.
 
The Texas figure was up 7.3 percent from the previous year, one of the lowest percentage increases among the 50 states in the group's annual Homeowners Insurance Report. But it came on the heels of whopping increases that averaged more than 39 percent from 2001 through 2003.
Consumer groups said the new data call into question state leaders' claims that home insurance rates decreased after passage of the 2003 reform law. State regulators and industry officials insisted that premiums have stabilized and that future studies will show rates coming down for many Texans.
 
So far, though, little evidence suggests that premiums have changed significantly since the fall of 2003. Rate comparisons compiled by the Texas Department of Insurance last year showed that average prices of policies were very similar to what was charged by large and midsize companies in December 2003.
 
Jim Hurley, a spokesman for the department, said Thursday that he expects next year's national report to reflect an average reduction in Texas. Mr. Hurley said companies were not ordered to lower rates until the second half of 2003, which affected the overall average.
 
"I would expect to see a lower average in Texas, but we will still be at the top of the list," he said, referring to the state's distinction of having the highest rates in the county because of its severe weather.
 
Consumer groups were skeptical about that prediction.
 
"Even though Texas rates have been among the highest in the county, most homeowners will be surprised to see they are paying twice the national average," said Alex Winslow of Texas Watch.
Mr. Winslow, whose group represents consumers in insurance matters, said that while rates may have leveled off the last two years, the lower premiums that were pledged have not materialized for most homeowners.
 
"The rates shot up, stayed there and have never come down," he said. "Texas homeowners were promised real insurance reform that would lower their premiums and bring fairness back to the marketplace. Clearly that hasn't happened."
 
The study did not address how much insurers have had to pay in claims in various states. But in Texas, insurers had a banner year in 2004; profits surged to record levels. Overall, the industry paid out 27.6 percent of premiums to cover their property losses.
 
That figure, known as the companies' loss ratio, was less than half the 58.5 percent of 2003, considered a good year for the industry. By contrast, companies operated in the red in 2001 and 2002, with loss ratios of 118.0 percent and 108.6 percent. Complete figures for 2005 are not yet available.
 
Jerry Johns of Southwestern Insurance Information Service, an industry group, said the insurance commissioners' study indicates that the home insurance market in Texas has stabilized after a tumultuous period from 2001 to 2003.
 
"We are now seeing the benefits of lower rates, more companies are coming into the marketplace and enormous price competition among insurers," Mr. Johns said. "If these trends continue, homeowners rates will remain stable, if not decrease, in the future."
 
As he runs for re-election this year, Gov. Rick Perry is touting the insurance reform law he signed in 2003. In campaign stops this week, he said premiums were coming down throughout the state.
Kathy Walt, the governor's press secretary, said home insurance premiums are trending in the right direction under the new law, though she pointed out that the state's largest insurer, State Farm, has been fighting an order to cut rates since 2003.
 
"State Farm has refused to provide rate reductions to its policyholders that were ordered by the insurance commissioner under the reform law," she said, suggesting that the rate situation in Texas would be improved if the company would agree to lower its charges.
 
State Farm has insisted that its rates are fair and competitive with other companies'.
After a series of mold and water losses across the state, rates skyrocketed, and many homeowners couldn't find affordable coverage. Lawmakers responded by revamping state regulation of insurance companies in 2003.
 
Legislative leaders promised that premiums would come down, and the state insurance commissioner – using provisions in the new law – ordered several companies to scale back their increases and trim rates.
 
Mark Hanna of the Insurance Council of Texas noted that other Gulf Coast states – including Louisiana, Florida and Mississippi – also had among the highest insurance rates in the commissioners' study, along with states that have a high incidence of tornadoes, such as Oklahoma and Kansas.
 
"But no other state gets hit by the severe weather conditions that Texas does," he said.

 

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