2008 Costly for Insurance Industry in Texas

The Texas insurance industry lost nearly $1.4 billion in 2008. According to figures released by the Texas Department of Insurance, for every dollar the state’s insurance industry took in it paid out $1.65.

“It was a tough year for the industry after several profitable years,” said Ben Gonzalez, a TDI spokesman. “These things balance out. There are good years and bad years.”

But 2008 proved to be particularly bad, as three major hurricanes made landfall: Dolly hit the Texas-Mexico border in July; Gustav slammed the Texas-Louisiana line on Labor Day; and Ike, the most destructive of the three, barreled ashore near Galveston on Sept. 13. Damages from last year’s hurricane season are estimated at more than $29 billion. Ike and Dolly resulted in nearly 1 million insurance claims alone, said Insurance Council of Texas spokesman Mark Hanna.

TDI data showed the industry earned nearly $5.2 billion in premiums and had losses of nearly $6.6 billion. The industry had a loss ratio of 127 percent and a combined loss and expense ratio of 165 percent. The last time those figures topped 100 percent in Texas was in 2002, when mold-damage claims soared.

Alex Winslow of Texas Watch called the data incomplete and misleading. “TDI fails to consider significant reinsurance recoveries, which will lower the industry’s losses; uses an inflated loss number that does not reflect actual claims paid after the insurance industry employs its well-documented deny, delay, and underpayment tactics; and focuses on the combined loss ratio, which includes industry expenses like bloated overhead expenses, CEO salaries, and fat agent commissions,” he said.

Hanna countered that the industry “did a tremendous job of handling these claims.” He said more than 90 percent of Ike claims have been paid and out of nearly 800,000 claims only 1,500 complaints were filed.