Homeowners in Texas are feeling the sting of skyrocketing insurance premiums, which in some cases resemble mortgage payments. Recent data obtained by NBC 5 Investigates highlights the dramatic rise in insurance rates across the state and explores possible ways for homeowners to reduce their costs.
Destructive weather events are a fact of life in North Texas. Melinda Clifton, who has experienced hail damage to her roof three times in the past 20 years, saw her insurance premiums soar after her latest claim. Last year, Clifton’s annual homeowners’ insurance cost $2,600, but it jumped to $8,800 this year.
“It’s an unimaginable number,” Clifton said. “I don’t understand it.”
Clifton’s policy, paid through her home escrow account, has led to significantly higher monthly payments, causing her to worry about affording her home. “I’ve thought, ‘Am I going to have to sell my home? The home I raised my children in,'” she added.
Clifton is not alone. NBC 5 Investigates found that insurance companies requested approval for double-digit rate hikes more than 150 times in 2023 alone, and have sought 74 more such increases this year. One company even proposed a 73% rate increase. The number of these requests has surged by 560% since 2014.
Ware Wendell, executive director of Texas Watch, a nonpartisan advocacy group, warns that these soaring rates could have significant effects on the housing market. “If these rates keep skyrocketing, we’re going to see a major impact across the housing market,” Wendell said. “We are in the midst of an insurance crisis in Texas.”
Insurance companies argue that these increases are necessary to cope with the massive losses they have incurred from frequent and severe weather events in Texas, which has experienced more billion-dollar disasters than any other state in recent decades. According to the National Oceanic and Atmospheric Administration, Texas has faced 179 climate-related disaster events since 1980, with each often causing billions in losses.
Beaman Floyd, a lobbyist representing major insurers and director of the Texas Coalition for Affordable Insurance Solutions (TCAIS), explains that the premium hikes are about covering these losses and keeping up with rising costs of replacement materials. Floyd notes that the insurance market in Texas is “tight” but manageable due to the state’s regulatory flexibility, allowing insurers to adjust rates promptly.
Despite the flexibility, some fear that continued high premiums could force homeowners out of their properties. Wendell advocates for moving from the current “file and use” system, where insurers can adjust rates before state review, to a “prior approval” system requiring state authorization before rate changes.
Floyd counters that Texas previously used “prior approval,” which led to a reduction in insurers and less competition.
Texas lawmakers are expected to address these issues in hearings this fall, with a focus on the rising costs of homeowners’ insurance. David Bolduc, head of the Texas Public Insurance Council, acknowledges the tough situation for homeowners but states that the recent rate increases are largely justified by the insurers’ expected losses. Bolduc advises consumers to shop around aggressively for the best rates.
Melinda Clifton managed to find a new policy for $3,800, a significant drop from the $8,800 bill she faced before. This new rate, though still a 45% increase from the previous year, is more manageable.
The Texas Department of Insurance (TDI) reviews rate filings to ensure they comply with state laws, and although it rarely mandates refunds, it can do so if a rate is later found non-compliant. The average Texas homeowners insurance premium increased by 44% over nine years, from about $1,600 in 2013 to more than $2,300 in 2022.
Lt. Gov. Dan Patrick and Texas House Speaker Dade Phelan have both called for hearings on this issue before the next legislative session starts in January 2025. Rising premiums are a growing concern for homeowners, potentially affecting housing affordability across Texas.
