More Texas homeowners see double-digit insurance rate hikes as disaster costs pile up

If it feels like homeowners’ insurance premiums have gone through the roof, and in some cases look more like mortgage payments, it's probably not your imagination. Data obtained by NBC 5 Investigates reveals just how dramatically rates are rising across Texas and what homeowners might be able to do to lower their premiums.

Destructive weather is part of living in North Texas. Melinda Clifton has seen hail damage her roof three times in two decades. After each storm, homeowners' insurance paid her claims to replace it. But not long after her most recent claim, she received a bill that hit like a hurricane. 

Last year, Clifton said her annual homeowner's policy cost $2,600. The following year, she said the cost more than tripled to $8,800.

"It's an unimaginable number," Clifton said. "I don't understand it." 

Clifton's policy is paid through her home escrow account, meaning the monthly insurance payments are added to her mortgage payment. Clifton said her payments went up by hundreds of dollars per month, and she questioned whether she could afford to stay in her home. 

"I've thought, 'Am I going to have to sell my home? The home I raised my children in,'" Clifton said. 

Clifton is not the only homeowner stunned by sky-high rate increases. NBC 5 Investigates analyzed data from the Texas Department of Insurance (TDI) and discovered that insurance companies asked the state to approve double-digit rate increases more than 150 times in 2023. So far this year, they've asked for 74 more double-digit increases, with one company asking for an increase of 73%. 

The data NBC 5 Investigates obtained also showed that the number of double-digit rate increases requested in Texas has increased by 560% since 2014. 

Ware Wendell is the executive director of Texas Watch, a nonpartisan citizen-based advocacy organization that works to lower rates and ensure that insurance companies and other businesses operating in the state are accountable to customers. 

Wendell said Texans can't continue to absorb double-digit increases in their premiums, and they're eventually going to hit the housing market. 

"If these rates keep skyrocketing like this, we're going to see a big impact all across the housing market," Wendell said. "We are in the midst of an insurance crisis in the state of Texas. And actually, all across the country, insurance companies are jacking up rates through the roof." 

Insurance companies insist the increases are necessary to survive in Texas, which has seen more billion-dollar weather disasters than any other state in recent decades. According to research from the National Oceanic and Atmospheric Administration, since 1980, there have been 179 climate-related disaster events in Texas, with losses totaling more than $1 billion.

Even an afternoon hailstorm can cause $1 billion in insurance losses. 

"It's reality. And it is the reality of the risk and loss," said Beaman Floyd, a lobbyist representing some of the state's biggest insurance companies and director of the Texas Coalition for Affordable Insurance Solutions (TCAIS), which advocates for state policy changes on behalf of a group of several large insurers.

Floyd said the recent increase in premiums is largely due largely to the massive losses companies have faced.

"It is recovering losses. When we look at it, it's not even recovering losses; it's catching up," Floyd said. 

He added that insurers face a triple-whammy in Texas: damaging storms, more homes being built in areas prone to wind and hailstorms, and inflation driving up the cost of replacement items like roof shingles. 

Over the last five years, a TCAIS analysis of Texas Department of Insurance data shows insurance companies have paid more in claims in Texas than they collected in premiums. 

"We are in a very tight market. The reason I would not characterize it as a crisis is because we have the regulatory elasticity to be able to respond to the math," said Floyd. 

What Floyd means by "elasticity" is that Texas is a "file and use state," which means insurers can request a rate increase and begin charging that new rate even before the State Department of Insurance formally reviews it. This allows insurance companies to change the rates more quickly when they see a need to respond to market conditions. 

Without that ability, Floyd said, Texas could end up like California or Florida, where some insurers are leaving the state. He said he does not see that happening with Texas insurance companies if the current regulatory system remains in place.

However, some fear homeowners will be the ones driven out of the state if the rate increases continue. Higher premiums might help keep companies operating in Texas, but at rates consumers can't afford. 

Wendell said they want insurance companies to make a profit, just not an excessive profit. He said Texas Watch wants the state to end the "file and use" system and switch to what’s known as "prior approval," which would require the insurance commission to approve rate increases before companies can begin charging those higher rates. 

"We have a very weak regulatory system right now. It's really oriented toward the insurance companies," Wendell said. 

Insurers point out that Texas operated under the "prior approval" method about two decades ago and that it drove companies out of the state. 

"At one time, we were down to a single-digit number of companies writing homeowners insurance. In the great state of Texas," said Floyd. 

Texas lawmakers are expected to hold hearings this fall about how to address the rising costs of homeowners insurance. In the meantime, NBC 5 Investigates sat down with David Bolduc, who Texas Gov. Greg Abbott appointed to the head of the Texas Office of Public Insurance Council, which advocates on behalf of insurance consumers.

Bolduc told NBC 5 Investigates that it's a rough environment for homeowners right now. However, his office has scrutinized recent double-digit rate increases and hasn't seen many that were excessive because the losses insurance companies have incurred have been so large. 

"As far as we can tell, they're justified by the expected losses," Bolduc said. 

Bolduc advises consumers to shop aggressively for the lowest rate when it's time to renew their policy.

That's what Melinda Clifton eventually did, and she found another company that could provide insurance for about $3,800. That new premium is still about a 45% increase over the previous year, but it's far less than the $8,800 bill she was facing with her old insurer. 

The Texas Insurance Commissioner, who heads the agency that can deny rate increases, turned down NBC 5 Investigates' request for an interview. An agency spokesperson said TDI rigorously scrutinizes all filings to ensure increases are justified. 

If an insurance company files a new rate, begins using it, and TDI later determines the rate doesn’t comply with state laws, refunds can be ordered for consumers, according to the agency. That doesn’t happen often, according to the TDI, because companies often select later effective dates for rate increases, giving the state agency more time to review the rate before it takes effect.

NBC 5 Investigates analyzed the numbers and found that, on average, Texas homeowners insurance premiums increased 44% in nine years, from an average of about $1,600 in 2013 to more than $2,300 in 2022. 

Lt. Gov. Dan Patrick, who leads the Texas Senate, and Texas House Speaker Dade Phelan have each directed committees to hold hearings about the rising costs before the next legislative session begins in January 2025. State lawmakers, meanwhile, continue to hear from constituents about how rising premiums could have huge implications for housing affordability in Texas.