A rural Kerr County homeowner had his insurance canceled because his property was in an area considered a wildfire risk.
A Kerrville family lost their homeowner insurance coverage after claiming damages following a punishing hailstorm.
These and other extreme weather events are having adverse effects on Texas homeowners as insurance companies are increasingly canceling or not renewing policies.
Just last week, Progressive announced it will no longer write new homeowner policies in Texas.
And it’s not just Progressive that has stopped writing new homeowner policies.
Hochheim Prairie has also stopped writing new policies in Texas.
And State Farm announced it would not renew about 11,000 regular homeowner policies along the Texas Gulf Coast after May 1. This followed the company’s March announcement of more than 72,000 non-renewals in California.
State Farm, the largest homeowner insurer in Texas, is trying to “strike a balance between our exposure and our ability to pay claims,” spokesman Ken Davis said.
Still, Texas is not as bad off as high-risk states like California and Florida. The Texas Department of Insurance said the number of companies offering policies in Texas has been steady since 2022.
Stephen Schmerbeck, of Garrett Insurance, was cautious but optimistic in his assessment of current conditions.
“The past 5-7 years have been the most challenging financially for the insurance industry that veterans of 40 years, be it company personnel or agents, have ever witnessed or experienced,” he said. “But some industry publications are forecasting better days ahead beginning in 2025 for the insurance buying public and the companies that protect them.”
Insurers in Texas are required to notify the state insurance department if they stop offering a particular line of insurance anywhere in the state.
After Progressive notified Texas officials, company spokesman Jeff Sibel said the company is temporarily restricting new homeowner business for certain agents in several states, including Texas.
“These actions will not impact any other lines of business in the affected states,” Sibel said in an email Friday.
Progressive will continue to offer all other types of insurance in Texas, he said.
Kerrville State Farm agent Amber Thomason said coastal Texas has been hit the hardest in what she described as a turbulent insurance rate environment.
“Unfortunately, Texas has had a bad few years of claims frequency and severity,” she said. “Paired with rising labor and material costs, these factors are driving up rates and are tightening underwriting guidelines. It is more important than ever to be aware of all the things that we can do as consumers to get the best rate and to make sure that our policies are eligible for renewal.”
Other local insurance brokers were mixed in their views on Progressive’s announcement last week.
“Insurance companies, like all other businesses, are in business to make a profit, not lose money,” Schmerbeck said.
Mark Justice at First Insurance of the Hill Country echoed Schmerbeck’s remarks.
“The whole insurance economy is upside down because of mounting claims from hurricanes, wildfires and hailstorms,” he said. “In just one 30-day period in Texas this spring, we had two storms that produced pineapple-sized hail. That’s unheard of.”
Claims are more frequent and more expensive, he said, noting that in Kerr County roof replacement on an average-sized home has jumped from about $6,000 to $18,000 to $20,000.
Insurance companies just can’t make money, he said.
Schmerbeck said the rapid escalation in building costs to repair or replace improvements have dramatically impacted claim settlements to return the insured to where they were prior to the loss.
So, as insurance claims climb, so do premiums.
“Every day, we get customers calling about homeowner rates,” Justice said. “One home premium increased from $4,000 a year to $20,000. How can I explain that?”
Justice said Progressive is primarily known for its low-cost auto insurance.
It is the largest auto insurer in Texas by market share, according to state records.
“What’s interesting,” Justice said, “is that Progressive’s auto insurance is about a third lower than other companies.”
Justice said another insurance provider wants him to sell their homeowner insurance, but only if it’s bundled with their auto insurance.
Many insurance companies will accept new home policies only if the customer also buys car insurance, but many customers may not want to cancel their auto insurance in the middle of their term to move to a new carrier for home insurance, he said.
Justice said shopping for rates with different companies might save money, but they’re all hiking rates.
“And it’s not just in Texas, it’s nationwide because of the global economic crunch,” he said.
According to an S&P Global analysis, insurance premiums in Texas jumped 23% last year, the highest increase in the country and more than double the national rate increase of 11%.
Insurance rates are the cost of insurance per exposure unit, while the premium is what you pay for the policy. For example, $1,000 of home coverage or one year of auto coverage.
The National Oceanic and Atmospheric Administration said between 1980 and 2023 Texas experienced an average of four natural disasters per year with damages of more than $1 billion caused by droughts, floods, storms, tornadoes, wildfires and winter storms.
In just the last seven years, Texas suffered an average of $11 billion events each year, with 16 in 2023 alone.
Schmerbeck said the intensity and frequency of weather-related claims has now led to multiple carriers withdrawing from some parts of both the East and West Coast.
“They simply can no longer afford to lose millions of dollars every year,” he said.
