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Homeowners Insurance an Issue in TX Gubernatorial Campaign

Sep 3, 2010

Homeowners Insurance an Issue in Texas Gubernatorial Campaign

Former Houston Mayor Bill White, a Democrat campaigning to replace Rick Perry as governor of Texas, says homeowners insurance rates in Texas are too high and should be subject to more regulation.

White says Texans pay an average $626 more than homeowners in other states. According to data from the National Association of Insurance Commissioners, the average rate paid by Texas homeowners - $1,448 - is second only to that paid by Florida consumers.

White favors prior approval of homeowners insurance rates. Following insurance regulation reforms enacted in 2003 insurance companies have been allowed to file and use rates in the homeowners markets, meaning prior approval of rates is not required. The insurance regulators can, however, disapprove of rate filings after the fact if they find an insurer's rates to be excessive or actuarially unfounded.

"Homeowner's insurance rates are squeezing the savings of Texas families. As governor, I'd require homeowner's insurance companies to prove why any rate increase is needed before I'd permit it," White said in materials released by his campaign. "Under Perry, if they want your money they can have it. I'd put a stop to that."

"This is a common sense approach that's worked in states all over the country," White said of prior approval. "Perry said he'd fix homeowner's insurance costs in 2002. It's been eight years, and he hasn't."

White's stance is not supported by most in the insurance industry.

"A return to state regulated rates would stifle competition and create little or no incentive for insurers to compete for the best price," said Jerry Johns, president of the Southwestern Insurance Information Service.

"Insurers writing homeowners insurance in Texas have lost money for the better part of a decade," Johns said. "Between 1999-2008 their return on investment in Texas was -0.8 percent compared the 4.6 percent countrywide. Texas also lead the nation in 2009 with $2.45 billion in catastrophe losses. That represents 23.3 percent of all catastrophe losses in the U.S. The total U.S. Catastrophe losses in 2009 were $10.5 billion. Given these facts it is a real stretch of the imagination for anyone to say homeowners insurance rates are out of control."