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Texas has the most severe weather in the country.  This is why Texas home insurance can be the highest premiums in the nation.  In fact, Texas has exposure to nine different types of natural disasters – the most among any state in the country. Texas insurers continue to prepare for unpredictable weather losses. During “good weather” years with fewer claims, insurers reserve consumer premiums to prepare for future catastrophes. What some see as “profits” can be quickly wiped out, and the state’s entire insurance system destabilized.

Home insurance carriers have paid large amounts due to claims with a long string of disasters that have resulted in billions of dollars in paid insurance claims.  Unfortunately, Texas has been the location of a large number of these catastrophic events.

Texas has the issue of both severity and frequency of weather damage.  Texas disasters come from a wide variety of events with a sad frequency.  In a recent study conducted jointly by and Verisk Analytics, the authors observed that, unlike other high loss states such as Louisiana and Florida, Texas losses were largely “due to common thunderstorms and tornados, with the state enduring major wildfire loss, one tropical storm, four hurricanes, seven winter storms, and 53 severe weather incidents during the ten year study period.

Insurance costs are driven not only by weather, insured value and population concentration pays a part of pricing the risk of claims pay out.  Unfortunately, much of the severe weather risk in Texas is located over high population and construction concentrations. From the Panhandle to the Dallas-Fort Worth Metroplex, down the I-35 corridor or down! -45 to Houston, Galveston, and the coastal bend, Texas is built largely under severe weather risk.

The occurrence of frequent weather disasters over population centers creates a high level of both claims frequency and severity in our state.  To put the values into perspective, Illinois, the tenth state on Kiplinger’s top ten list of disaster loss states, had weather disaster losses of $4.9 billion over the past decade.  Texas suffered in excess of $1 billion of loss from a single afternoon hailstorm on June 13, 2012, more than 20% of Illinois’ ten-year total.  And this storm is only the latest in a series of major weather losses suffered from McAllen to our northern borders that had already cost hundreds of millions of dollars, with the major part of wildfire, hurricane, and winter storm season still ahead of us.

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