Texas insurance crisis gets bad news – “With insurers withdrawing from climate-risk-prone markets or not renewing policies, securing essential coverage is becoming increasingly challenging”
By Suzanne Blake
10 July 2024
(Newsweek) – Texans have been facing a home insurance crisis that is only likely to escalate in the days after Hurricane Beryl, experts told Newsweek.
Hurricane Beryl first entered Texas in Matagorda on Monday morning as a Category 1 hurricane after moving throughout the Caribbean. The hurricane persisted throughout Texas with strong winds and rain, and it has already been linked to the deaths of 11 people in the Caribbean and six people in Texas.
As the state faces more frequent extreme weather events, insurers have been hiking prices, and the recent damage from Beryl could mean affordable insurance is even more difficult to obtain in the Lone Star state.
“With Texas’ recent homeowners insurance renewals coming in hotter than overall inflation, storms like these will likely just make it all the more difficult to find a policy if they are even available outside the state insurer of last resort,” insuranceQuotes.com analyst Michael Giusti told Newsweek.
According to MoneyGeek, the average annual cost of home insurance in Texas will be $5,171 in 2024. That’s more than twice the national average of $2,423.
Between 2018 and 2022, Texas brought in $375 billion in damages from weather events, according to the National Climate Assessment, and S&P previously reported that insurance rates were up by more than 15 percent in 2024.
Insurers adjust their prices for homeowners based on the level of risk associated with their specific home and location, but in recent years, companies have pulled out of states and ended new home policies for areas deemed too risky.
This has already happened in Florida and California, and Texas could face the same backlash if Beryl made insurers nervous about the state’s weather conditions.
It’s still the beginning of the hurricane season, which began on June 1 and usually ends in December. Previously, meteorologists predicted a season of especially strong hurricanes due to uncharacteristically high sea surface temperatures as well as El Niño’s transition into La Niña.
Giusti said roofs are likely to be of increasing concern on the Texas home insurance front.
“It’s already hard to insure a home with a roof older than 15 years old, and I suspect that is going to get even harder following this windstorm and the derecho they experienced earlier this year,” Giusti said.
Still, some experts suggest it’s not time to panic yet.
“We’re waiting on claims reports from our carriers to understand the impact of Beryl, but initial reports indicate that we dodged a bullet, and it’s not nearly as bad as it could have been,” Lauren Menuey, the managing director at Goosehead Insurance, told Newsweek.
But Menuey said a hurricane hitting this early in the season after a second quarter of severe weather means carrier underwriting will remain tight.
“If this was a one-and-done, it may not have a significant impact on the state and the insurance market overall,” Menuey said. “However, a CAT 5 hurricane this early in the season is unprecedented. Even though the worst of Beryl missed Texas, NOAA is predicting an active hurricane season, so if this is a sign of what’s to come, it could very well be problematic for carriers and, by extension, consumers.”
Travis Hodges, the managing director of Chicago-based VIU by HUB, said many Texans face a difficult choice.
“Endure the financial burden of increased premiums or risk substantial financial loss in the event of property damage,” Hodges told Newsweek. “With insurers withdrawing from climate-risk-prone markets or not renewing policies, securing essential coverage is becoming increasingly challenging.”
