Texas insurance rates going up post-Beryl

SAN ANTONIO – The San Antonio Express-News reports destructive storms like Hurricane Beryl, which knocked out power to 3 million homes and businesses in Texas, are growing more frequent and intense — and insurers are jacking up rates in response. That could mean more big profits for property and casualty insurers like Allstate, State Farm and USAA in the coming year. Investors have bid up shares in the sector about 19% so far this year, outpacing the S&P 500’s 17% gain. It also means more struggle for homeowners who already are facing higher costs of housing. Rate increases have been a way for property insurers to offset the cost of catastrophic events.

In Texas, rates jumped an average 21.1% last year, by far the biggest increase in a decade. That was nearly twice the U.S. average, according to S&P Global. Progressive’s rates rose 10.4% in 2023, compared with just a 2.9% rise in 2022, and Allstate’s rates jumped 10.2%, up from 4.3% in 2022. Storm-driven rate increases at San Antonio-based USAA last year got credit for helping the company return to profitability. Across the U.S., hurricanes account for most insured catastrophe losses, according to investment research company CFRA. Hurricane Ian in 2022 is a reminder of the risks facing insurers. It was among the costliest storms in U.S. history at just over $118 billion, according to the National Oceanic and Atmospheric Administration. Hurricane Katrina in 2005 was the costliest at about $200 billion. The U.S. experienced 28 separate billion-dollar weather and climate disasters in 2023 — the most ever — according to NOAA. That surpassed 22 such events in 2020. The current hurricane season is already one for the record books. Hurricane Beryl, just the second named storm of the season, became the earliest storm to develop into a Category 5 hurricane in the Atlantic. NOAA is forecasting an above-normal season with as many as 25 named storms, up from 20 named storms and seven hurricanes in 2023. “If this grim forecast comes to fruition, it will likely buoy pricing for many lines of property-casualty insurance and reinsurance, providing certain underwriters’ shares with a catalyst,” according to a research report from CFRA. Global insurance giant Swiss RE expects the broader sector’s return on equity, a key measure of profit, to grow 9.5% in 2024, well above last year’s 3.4% growth.