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Two stories from the Insurance Journal highlight the increasing cost of property coverage in Texas.
Let's start with this projection of the increasing possibility of 100-year rain incidents in the Lone Star State:
Decades of additional weather data have led federal officials to reconsider rainfall totals in Texas that define 100-year weather events and caution that extreme rainstorms will strike the state more frequently.
The National Oceanic and Atmospheric Administration on Sept. 27 released a study finding that in the Houston area, for instance, 100-year estimates increased from 13 inches to 18 inches for a 24-hour period. Rainfall previously classified as 100-year events are now more frequent 25-year events.
Yet, despite the increased cost of property coverage due to higher rain possibility, Texas lawmakers are asking the Texas Department of Insurance to deny a 10% rate increase:
More than 20 state legislators have signed a letter addressed to Texas Insurance Commissioner Kent Sullivan requesting that a 10 percent rate increase filed by the state’s property insurer of last resort for wind and hail along the Texas coast not be approved.
The Texas Windstorm Insurance Association in August filed with the Texas Department of Insurance a 10 percent rate increase for residential and commercial properties that would go into effect next year.
This shouldn't be surprising; no one (including politicians) like rate increases.
This simply highlights that the underlying fundamentals of property coverage are changing, which usually means the increased implementation of risk financing facilities.