This week, KERA, The Dallas Morning News and KXAS-TV (NBC 5) are producing a joint project called Five Days in October. Each day, we’re looking at where the leading candidates for governor stand on a specific issue. Today, it’s homeowners’ insurance costs in a state with the third highest rates in the nation.
How do Republican Greg Abbott and Democrat Wendy Davis view the situation and what changes would they make if elected?
Here’s what we know. Texas’ three largest home insurance companies have imposed rate increases that the state’s consumer advocate calls “excessive.” In the case of State Farm, the biggest provider, a 10 percent increase this year follows a 20 percent hike last year.
For Kimberly O’Neil of Plano, home insurance rates could make the difference in her ability to buy a house. The associate college professor tweeted her concerns during KERA’s Sept. 30 debate between Abbott and Davis.
“Every dollar makes a difference for me,” O’Neil says. “And paying an astronomical rate for homeowner’s insurance clearly would impact my decision on whether or not I need to even continue looking in that direction.”
During the debate, journalists asked Abbott and Davis whether they believe home insurance rates are too high and if so, what changes they would make.
“There’s probably not a homeowner at home who doesn’t think their rates are too high,” Abbott said. “We need to find ways to reduce homeowner insurance rates. It seems like they’re going through the roof, no pun intended.”
Abbott said he didn’t know enough about actuarial insurance tables to know if rates were out of line. He needed more information.
Not Davis. She accused insurance companies of gouging Texas homeowners. She singled out the insurance commissioner, who is appointed by the governor.
“And they’re being gouged in our state because we have an insurance commissioner who is failing to do her job and responsibly review these rate increases and decline them,” Davis said.
If elected governor, Davis said she would replace the current insurance commissioner. She would also work with the legislature to change a law that now lets insurance companies impose rate hikes without prior review or approval.
Alex Winslow, who heads the non-profit consumer group Texas Watch, wants the same thing. He says the commissioner needs that tool to help control rates. He also blames growing insurance costs on industry lobby efforts that have reduced coverage.
“Under the old standard home insurance plan, policy holders had coverage for things like water damage," Winslow said. "That’s no longer the case. Sewer backups? Which is exactly what it sounds like - if you have sewage backing up into your home - that used to be covered and it’s not anymore.”
Insurance industry spokesman Mark Hanna defends the insurance rates, which are the third highest in the nation. He says the reason is bad weather.
“You get hit by tornadoes. You get hit by hail storms,” Hanna said. “You just recently had a catastrophic wind storm. You get hit by ice storms. Texas has the most violent weather in the United States, and we pay for it.”
In the past two years, the state’s top insurance companies all made money. And 2013 was better than 2012, according to The Dallas Morning News. For State Farm, last year was its best in recent years.
O’Neil is not sure she can afford it. She still wants the American dream of owning a home, but says she needs better insurance options.