Richard Johnson - Insurance Council of Texas Joins Houston's Morning News

Episode Transcript

Speaker 1 (00:00):
Maybe. Yeah, I probably should up my life insurance policy
to cover mean for the next heart attack I'm likely
to have when I'm paying my premiums on our beach
house in Freeport. Anyway, seven twenty two is our time.
You're on Houston's Morning News. Richard Johnson is with US
Insurance Council of Texas. I know there's a bill, a
Texas Centive bill, that would require home insurance to get

(00:23):
approval to jack up their rates. I don't know how
much they're talking about, as far as how much the
rate would have to increase before they get approval and
who would give the approval.

Speaker 2 (00:31):
Richard, Yeah, thanks for having me. This is a great,
great discussion. I think there's probably some things that we
can probably clear up a little bit. Right now, when
an insurance company asks for a rate increase, it still
has to go through TDI, the Texas Department of Insurance,
and that's what this bill would also do. So it's

(00:52):
kind of duplicative of what they're trying to do is
put a cap on how much you could raise and
then it would go into hearings and things like that.
So we would look a lot. It would be a
system a lot like California as right now, and they've
actually faced a lot of challenges when that happens, companies
aren't aren't allowed to ask for the amount of rate
that they're looking for in order to cover the losses

(01:13):
that they've had to cover because of like everything we
have in here, flooding, hurricanes, hailstorms, wind rain to be
able to cover those those costs. And so therefore companies
started pulling out of out of California and it became
less competitive. So there rates right now are are approved
by TDI. Companies have to submit actuarial reviews and ensure

(01:37):
that they're meeting that they're meeting the obligations. And it's
so it's it's not an instant thing that that that
some people are saying out there.

Speaker 1 (01:47):
Well, here, here's the thing. Are the rates that they
these insurance companies are charging are they justified based on
replacement costs and and correct all the other things they
go into ensuring somebody for losses during a small.

Speaker 2 (02:01):
Correct That's exactly it. So you have to look at it.
They have to go through an actuarial analysis. It's not
just hey, we want to make money in Texas. You know,
insurance companies they actually look for. It's a pretty low
profit margins. It's not you know, one and a half
to two and a half percent. So when you look
at it in totality like that any other businesses, is
you know, as much higher than that they're looking for,

(02:23):
but it is it's based on the risk that they have.
So again, here in Texas, we have hail, we have wind,
we have tornadoes, we have you know, kind of everything
that you ask for when it comes to weather. And
over the years that has gotten stronger and more more expensive,
you know. So in twenty twenty three, companies paid out
almost forty six billion dollars in insurance claims here in Texas.

(02:48):
So it's it's expensive to do to do business here
in Texas, especially with the economy, with inflation, with the
cost of roof repair, you know, roofing is really the
big expensive part, although other than when you lose a
whole entire home. Sure, so all those costs of just
you know, skyrocketed and then you know, we're all happy
about our property values increasing, but more expensive your home is,

(03:11):
the more insurance.

Speaker 1 (03:12):
That you need. How concerned are you though, then? And
this is this is where I'm concerned. I just got
This is just for the beach house in Freeport. Okay,
I've got three thousand dollars flood insurance policy. I've got
a twelve hundred dollars regular homeowners insurance policy to cover
for theft and fire and those types of things. And
I've got, you know, for basically a fourteen hundred square

(03:33):
foot house. And the biggest increase came from the Texas
Wind in Hail Association, where I now have to pay
over thirty six hundred dollars a year for wind and hail.
I mean, they're going there're gonna be a lot of
people with those types of prices, there are going to
be able forward to be insured.

Speaker 2 (03:50):
Yeah, we're seeing I mean, we're we're It has been
concerned just because you know, and this is a nationwide thing.
It's not it's not a Texas thing, although Texas is
unique because of the amount of weather and claims that
we've had here and the population increase that we've seen.
But it is a concern, you know, we we couple
that with inflation. People are seeing you know, essentially less

(04:10):
money in their in their paycheck and it's one of
those expenses that you know, people are starting to realize
has an impact on their wallets. So we're trying to
keep Texas as competitive as possible when it comes to insurance.
We want as many companies doing business here as possible
to keep that, you know, to keep that competitiveness. But

(04:32):
we're hoping that over you know, now that inflation has
kind of slowed, you know, labor costs have even doubt
that insurance rates will also even out, and hopefully we
won't see those double digit increases that we've seen over
the last four years.

Speaker 1 (04:47):
I hope you're right. Richard Johnson, Insurance Counsel of Texas.
Thank you, sir, seven twenty seven. Time to take a
look