Whining of insurers is growing tedious

[Guest guest]

Dec. 21, 2007

Whining of insurers is growing tedious

Houston Chronicle, TX*

By LOREN STEFFY

http://www.chron.com/disp/story.mpl/business/steffy/5398757.html

We may remember 2007 as the Year of the Great Insurance Squeeze.

The three biggest homeowner insurers in Texas — Allstate, State Farm

and Farmers — all moved to jack up rates yet again. Allstate even

took the state insurance department to court for trying to block its

increase.

At each turn, the insurers engaged in their usual poor-mouthing,

saying that the weather in Texas forced them to raise rates.

It was a specious rationalization.

Last week, the National Association of Insurance Commissioners

released a study that showed Texas had the highest homeowner rates

in the country.

The average premium for the most common policy was $1,372 in 2005,

almost double the national average of $764.

Think about that. Texas' rates were higher than those of Florida, a

state surrounded by tidewater on three sides and the perennial

stomping ground of hurricanes.

It outranked Gulf Coast states like Louisiana and Mississippi,

ravaged two years ago by Hurricane Katrina. Louisiana, by the way,

ranked second.

Texas also outranked California, with its recurring wildfires,

earthquakes and mudslides.

The study comes a week after Farmers, the third-largest insurer in

the state, filed for a rate increase, which could be as much as 25

percent in some places in the Houston area.

There is, however, some good news. While Texas leads the nation in

insurance costs, its rates aren't rising as rapidly as some others,

including Florida.

That may be because reforms enacted after the 2003 mold crisis are

working. It may also be because the state's insurance commission is

finally starting to fight back against the repeated rate hikes.

Comparisons difficult

In fairness, the data in the survey is a little difficult to

compare. The insurance commissioners group cautions that Texas uses

a slightly different standard policy than most other states do.

The data for California and Florida exclude policies from the

states' insurer of last resort, which probably means their numbers

are too low, the commission said.

None of which changes the fact that the Texas numbers are

significantly above the national average.

The insurance industry has stuck to the same story on rates for

years. Texas weather leads to higher claims, and reinsurance costs

in the state have risen sharply, the companies argue.

Regulators strike back

As the legal battle with Allstate unfolded last fall, however, state

insurance regulators attacked those justifications.

The state claims Allstate inflates its profit targets and overstates

its reinsurance costs. As a result, it's overcharging Texas

customers by $166 million, they said.

Allstate maintains its rates, and its increase this year, are

justified.

State insurance regulators also have questioned how Allstate and

State Farm are using contingency provisions. Those are kitchen-sink

clauses that allow insurers to include anything that can't be

reasonably predicted — adverse regulatory or court decisions, for

example — into their rates.

The state maintains that such provisions were curtailed by the

reforms of 2003, but the insurers say they're standard legal

practice.

Fleeing the mold

Four years ago, lawmakers set out to bring Texas homeowners rates

under control. A rash of mold claims caused many companies to leave

the state, and those that stayed became increasingly reluctant to

pay any claims that involved the slightest trace of moisture,

whether it came from a leaking appliance or a tropical storm.

Premiums soared.

The reforms enacted in 2003 brought the mold issue under control,

but premiums never returned to their pre-mold-crisis levels.

Now, we find ourselves with the highest rates in the country, even

though our housing prices are modest by national standards.

Same story next year

As the Year of the Squeeze comes to a close, we'd like to think that

next year will be different, but somehow we know better.

We know that, probably in late summer as hurricane season winds

down, we'll once again feel the pinch of rate increases, backed by

the same tired rhetoric about weather and reinsurance.

We've had moderate weather the past two years — no major storms

since Rita in 2005. Yet our rates will go up in anticipation of the

next one, and therein lies the irony of the insurance squeeze.

We can't predict the weather, but we can predict that we'll pay for

it.

Loren Steffy is the Chronicle's business columnist. His commentary

appears Sundays, Wednesdays and Fridays. Contact him at

loren.steffy@.... His blog is at

http://blogs.chron.com/lorensteffy/.

[Guest guest]

Are the underwriters listed anywhere with their salaries and perks? I

think it's time for disclosure of who they are along with the profits

they derive. After all, our entire life's histories are in their CLUE

database.

Barth

t> Dec. 21, 2007

t> Whining of insurers is growing tedious

t> Houston Chronicle, TX*

t> By LOREN STEFFY

t> http://www.chron.com/disp/story.mpl/business/steffy/5398757.html

t> We may remember 2007 as the Year of the Great Insurance Squeeze.

t> The three biggest homeowner insurers in Texas — Allstate, State Farm

t> and Farmers — all moved to jack up rates yet again. Allstate even

t> took the state insurance department to court for trying to block its

t> increase.

t> At each turn, the insurers engaged in their usual poor-mouthing,

t> saying that the weather in Texas forced them to raise rates.

t> It was a specious rationalization.

t> Last week, the National Association of Insurance Commissioners

t> released a study that showed Texas had the highest homeowner rates

t> in the country.

t> The average premium for the most common policy was $1,372 in 2005,

t> almost double the national average of $764.

t> Think about that. Texas' rates were higher than those of Florida, a

t> state surrounded by tidewater on three sides and the perennial

t> stomping ground of hurricanes.

t> It outranked Gulf Coast states like Louisiana and Mississippi,

t> ravaged two years ago by Hurricane Katrina. Louisiana, by the way,

t> ranked second.

t> Texas also outranked California, with its recurring wildfires,

t> earthquakes and mudslides.

t> The study comes a week after Farmers, the third-largest insurer in

t> the state, filed for a rate increase, which could be as much as 25

t> percent in some places in the Houston area.

t> There is, however, some good news. While Texas leads the nation in

t> insurance costs, its rates aren't rising as rapidly as some others,

t> including Florida.

t> That may be because reforms enacted after the 2003 mold crisis are

t> working. It may also be because the state's insurance commission is

t> finally starting to fight back against the repeated rate hikes.

t> Comparisons difficult

t> In fairness, the data in the survey is a little difficult to

t> compare. The insurance commissioners group cautions that Texas uses

t> a slightly different standard policy than most other states do.

t> The data for California and Florida exclude policies from the

t> states' insurer of last resort, which probably means their numbers

t> are too low, the commission said.

t> None of which changes the fact that the Texas numbers are

t> significantly above the national average.

t> The insurance industry has stuck to the same story on rates for

t> years. Texas weather leads to higher claims, and reinsurance costs

t> in the state have risen sharply, the companies argue.

t> Regulators strike back

t> As the legal battle with Allstate unfolded last fall, however, state

t> insurance regulators attacked those justifications.

t> The state claims Allstate inflates its profit targets and overstates

t> its reinsurance costs. As a result, it's overcharging Texas

t> customers by $166 million, they said.

t> Allstate maintains its rates, and its increase this year, are

t> justified.

t> State insurance regulators also have questioned how Allstate and

t> State Farm are using contingency provisions. Those are kitchen-sink

t> clauses that allow insurers to include anything that can't be

t> reasonably predicted — adverse regulatory or court decisions, for

t> example — into their rates.

t> The state maintains that such provisions were curtailed by the

t> reforms of 2003, but the insurers say they're standard legal

t> practice.

t> Fleeing the mold

t> Four years ago, lawmakers set out to bring Texas homeowners rates

t> under control. A rash of mold claims caused many companies to leave

t> the state, and those that stayed became increasingly reluctant to

t> pay any claims that involved the slightest trace of moisture,

t> whether it came from a leaking appliance or a tropical storm.

t> Premiums soared.

t> The reforms enacted in 2003 brought the mold issue under control,

t> but premiums never returned to their pre-mold-crisis levels.

t> Now, we find ourselves with the highest rates in the country, even

t> though our housing prices are modest by national standards.

t> Same story next year

t> As the Year of the Squeeze comes to a close, we'd like to think that

t> next year will be different, but somehow we know better.

t> We know that, probably in late summer as hurricane season winds

t> down, we'll once again feel the pinch of rate increases, backed by

t> the same tired rhetoric about weather and reinsurance.

t> We've had moderate weather the past two years — no major storms

t> since Rita in 2005. Yet our rates will go up in anticipation of the

t> next one, and therein lies the irony of the insurance squeeze.

t> We can't predict the weather, but we can predict that we'll pay for

t> it.

t> Loren Steffy is the Chronicle's business columnist. His commentary

t> appears Sundays, Wednesdays and Fridays. Contact him at

t> loren.steffy@.... His blog is at

t> http://blogs.chron.com/lorensteffy/.

[Guest guest]

If the insurance company is publicly traded, you can get information about their

executives' salaries from the SEC filings, their Annual Report or their Proxy

Statement. Most of this should be included on the insurance company's website.

Re: [] Whining of insurers is growing tedious

Are the underwriters listed anywhere with their salaries and perks? I

think it's time for disclosure of who they are along with the profits

they derive. After all, our entire life's histories are in their CLUE

database.

Barth

t> Dec. 21, 2007

t> Whining of insurers is growing tedious

t> Houston Chronicle, TX*

t> By LOREN STEFFY

t> http://www.chron. com/disp/ story.mpl/ business/ steffy/5398757. html

t> We may remember 2007 as the Year of the Great Insurance Squeeze.

t> The three biggest homeowner insurers in Texas — Allstate, State Farm

t> and Farmers — all moved to jack up rates yet again. Allstate even

t> took the state insurance department to court for trying to block its

t> increase.

t> At each turn, the insurers engaged in their usual poor-mouthing,

t> saying that the weather in Texas forced them to raise rates.

t> It was a specious rationalization.

t> Last week, the National Association of Insurance Commissioners

t> released a study that showed Texas had the highest homeowner rates

t> in the country.

t> The average premium for the most common policy was $1,372 in 2005,

t> almost double the national average of $764.

t> Think about that. Texas' rates were higher than those of Florida, a

t> state surrounded by tidewater on three sides and the perennial

t> stomping ground of hurricanes.

t> It outranked Gulf Coast states like Louisiana and Mississippi,

t> ravaged two years ago by Hurricane Katrina.. Louisiana, by the way,

t> ranked second.

t> Texas also outranked California, with its recurring wildfires,

t> earthquakes and mudslides.

t> The study comes a week after Farmers, the third-largest insurer in

t> the state, filed for a rate increase, which could be as much as 25

t> percent in some places in the Houston area.

t> There is, however, some good news. While Texas leads the nation in

t> insurance costs, its rates aren't rising as rapidly as some others,

t> including Florida.

t> That may be because reforms enacted after the 2003 mold crisis are

t> working. It may also be because the state's insurance commission is

t> finally starting to fight back against the repeated rate hikes.

t> Comparisons difficult

t> In fairness, the data in the survey is a little difficult to

t> compare. The insurance commissioners group cautions that Texas uses

t> a slightly different standard policy than most other states do.

t> The data for California and Florida exclude policies from the

t> states' insurer of last resort, which probably means their numbers

t> are too low, the commission said.

t> None of which changes the fact that the Texas numbers are

t> significantly above the national average.

t> The insurance industry has stuck to the same story on rates for

t> years. Texas weather leads to higher claims, and reinsurance costs

t> in the state have risen sharply, the companies argue.

t> Regulators strike back

t> As the legal battle with Allstate unfolded last fall, however, state

t> insurance regulators attacked those justifications.

t> The state claims Allstate inflates its profit targets and overstates

t> its reinsurance costs. As a result, it's overcharging Texas

t> customers by $166 million, they said.

t> Allstate maintains its rates, and its increase this year, are

t> justified.

t> State insurance regulators also have questioned how Allstate and

t> State Farm are using contingency provisions. Those are kitchen-sink

t> clauses that allow insurers to include anything that can't be

t> reasonably predicted — adverse regulatory or court decisions, for

t> example — into their rates.

t> The state maintains that such provisions were curtailed by the

t> reforms of 2003, but the insurers say they're standard legal

t> practice.

t> Fleeing the mold

t> Four years ago, lawmakers set out to bring Texas homeowners rates

t> under control. A rash of mold claims caused many companies to leave

t> the state, and those that stayed became increasingly reluctant to

t> pay any claims that involved the slightest trace of moisture,

t> whether it came from a leaking appliance or a tropical storm.

t> Premiums soared.

t> The reforms enacted in 2003 brought the mold issue under control,

t> but premiums never returned to their pre-mold-crisis levels.

t> Now, we find ourselves with the highest rates in the country, even

t> though our housing prices are modest by national standards.

t> Same story next year

t> As the Year of the Squeeze comes to a close, we'd like to think that

t> next year will be different, but somehow we know better.

t> We know that, probably in late summer as hurricane season winds

t> down, we'll once again feel the pinch of rate increases, backed by

t> the same tired rhetoric about weather and reinsurance.

t> We've had moderate weather the past two years — no major storms

t> since Rita in 2005. Yet our rates will go up in anticipation of the

t> next one, and therein lies the irony of the insurance squeeze.

t> We can't predict the weather, but we can predict that we'll pay for

t> it.

t> Loren Steffy is the Chronicle's business columnist. His commentary

t> appears Sundays, Wednesdays and Fridays. Contact him at

t> loren.steffy@ chron.com. His blog is at

t> http://blogs. chron.com/ lorensteffy/ .

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