Texas has been hit hard by recent natural disasters. From the continuing drought that grips much of the southern and western parts of the state, to flooding from Louisiana hurricanes further to the east, the insurance industry has taken a major financial blow. With insurance reserves falling, many insurers in central Texas are beginning to consider raising rates in order to offset losses. Disasters may not be the only factor contributing to rate increases, however, as there has been an increase in thefts last year.
Insurers are beginning to feel the pressure of recent disasters as their reserve levels drop. Without adequate reserve capital, insurers cannot offer appropriate coverage. If the reserve were to drop enough, no one would have insurance because the company would no longer have the ability to write policies. In order to keep reserve intact, insurers have to raise rates on coverage. The poor economy has made rate increases very unpopular with consumers, who often attribute higher prices with corporate greed.
During the summer last year, a wave of thefts swept the state as it battled one of the hottest seasons on record. Air conditioners were popular targets for thieves trying to beat the heat. While this brand of theft may not seem associated with insurance, insurers still have to cover the cost of stolen property when taken from a business. These thefts generated claims and, as with all claims, the costs pass to consumers in the form of rate increases.
