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Texas Homeowners Insurance Fact Sheet

Texas homeowners insurance premiums are hundreds of dollars more thanpremiums paid in other states.

The National Association of Insurance Commissioners (NAIC) prepares an annual report thatcompares homeowners insurance data from all states. Their most recent report shows thatTexans paid higher premiums for the most common homeowners policy than homeowners in allother states except Florida.

1For the three previous years, Texans paid more than homeowners in

all other states.2

In 2007, the most recent year for which comparative data is available from NAIC, the averagepremium for the most common policy for Texans was $1,448, which is 76% higher than the USaverage premium of $822.

In the first nine years of Perrys governorship, the average premiums paid by Texans for allhomeowners insurance policies have increased by more than 48% from $911 to $1,347.3 Andrates continue to increase in 2010.4

Homeowner's Insurance Rates:

Texas Average vs. National Average

$1,448.00

$822.00

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

Texas Average National Average

Years ago, when he first ran for governor, Perry admitted that Texas lackedeffective regulation, and he promised reform.

In 2002, Perry said In too many cases, homeowner's insurance is getting more expensive..Threebig companies control 66% of the Texas homeowner's market.. It's time for the homeowner'sinsurance market to get a correction. A tougher option especially when a few companiescommand a large share of the market - is a prior approval rating system. Prior approval wouldrequire the Insurance Commissioner to approve or disapprove certain rate increases before

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customers are asked to pay increasing the Commissioners ability to get control of an unstablemarket and prevent rate shock for Texas consumers. the status quo is unacceptable.5

But eight years later, not much has changed.The same three companies dominate the market7, prior approval was never instituted, andinsurance premiums continue to climb. In the meantime, at least 10 Perry staff members havemade millions of dollars as insurance industry lobbyists. Perry has collected more than $1million in campaign contributions from the insurance industry. Perry even gave subsidiestotaling $3.6 million to Allstate and Nationwide, two companies with significant market share inTexas,8 using payroll taxes collected from all Texas employers, most of which are smallbusinesses. Homeowners insurance companies have retained more than $14 billion after payingout all claims in nine years since Perry has been governoralmost twice what they retainedduring the ten years in which Ann Richards and George W. Bush served.9

As governor, Bill White will require insurance companies to show why a rateincrease is needed before allowing it to go into effect.Today, insurance companies can raise their rates whenever they want, as much as they want,without getting the Texas Department of Insurances prior approval. If the agency believes therates are excessive, its only recourse is to initiate a legal process that can take years to resolve,while the consumers keep paying the excessive rates. Many other states require insurancecompanies to get approval before they raise their rates. Fourteen states require prior approval for

PERRY STAFFERS TURNED INSURANCE LOBBYISTS6

Staff Compensation Range

Low High

Mike Toomey $1,530,000 $2,860,000

Cliff Johnson $50,000 $100,000

Patricia Shipton $135,000 $300,000

Victor Alcorta $400,000 $800,000

William G. Phenix $125,000 $340,000Robert Howden $50,000 $100,000

Luis Saenz $50,000 $100,000

Bill Jones $300,000 $550,000

Victoria Ford $250,000 $500,000

Chris Cronn $400,000 $600,000

Total $3,290,000 $6,249,999

Insurance company clients include State Farm, Allstate & LibertyMutual

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all rate changes: California, Hawaii, Maryland, Mississippi, Nevada, New Jersey, New Mexico,North Carolina, North Dakota, Pennsylvania, South Carolina, Tennessee, Washington and WestVirginia. Nine states require prior approval under certain circumstances such as a highpercentage rate increase or rates charged in non-competitive markets: Alabama, Alaska,Kentucky, Louisiana, Arkansas, Kentucky, New Hampshire, Vermont, and Wyoming.10 We

should require insurance companies to obtain approval before they raise their rates, and TDIshould respond within a reasonable period of time.

1Dallas Morning News, 12/30/09 Texas homeowners insurance rates drop to No. 2 in new study, accessed at

http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/DN-insurance_30tex.ART.State.Edition1.4bde577.html ; National Association of Insurance Commissioners 12/29/09report available http://www.naic.org/2 See p. 9 of 12 at http://www.naic.org/documents/research_stats_homeowners_sample.pdf3 Source: OPIC data on average rates for homeowners policies, 2001-09.4 State Farm to raise rates for second time in less than one year, Ft. Worth Star-Telegram, 3/11/10 accessed athttp://www.star-telegram.com/2010/03/11/2034174/state-farm-plans-to-raise-texas.html.5 Speech by Rick Perry, 2/12/02 accessed at http://governor.state.tx.us/news/speech/10464/6 These numbers include all insurance company interests.7 The three companies that dominated the market are and were State Farm, Allstate and Farmers (Zurich). Seequarterly reports by TDI for 2001 (p.34) at http://www.tdi.state.tx.us/reports/pc/documents/pcqlr01q4.pdfand for2009 (p.22 ) at http://www.tdi.state.tx.us/reports/pc/documents/pcqlr09q4-2.pdf.8http://governor.state.tx.us/files/ecodev/TEF_Listing.pdf9http://action.billwhitefortexas.com/page/-/assets/OPIC%20data%20Premiums.Claims%201991-2009.xls10 NAICs Compendium, 2005.