TX - Climate change, costly disasters sent Texas homeowner insurance rates skyrocketing this year
Texas rates have increased 22% on average so far in 2023, twice the national rate. More billion-dollar disasters have occurred in Texas this year than any other year on record.
Insurance companies across Texas have dramatically increased home insurance rates this year, state filings show, as climate change spooks executives and inflation pushes up costs to rebuild after natural disasters.
Texas is prone to hurricanes and flooding, both of which are made more severe by climate change. Now insurance companies are becoming increasingly concerned about more powerful thunderstorms that are wrecking homes with flooding, hail and strong winds, analysts and experts said.
And as both the impacts of climate change and inflation have worsened over the last couple of years, insurers have “less of an appetite” for taking chances in catastrophe-prone states, said Tim Zawacki, an insurance industry principal research analyst for S&P Global.
The impacts are being felt on homeowner’s pocketbooks: Insurance rates in Texas have skyrocketed 22% since the beginning of this year according to an S&P Global analysis of Texas Department of Insurance data.
That’s twice the average national increase of 11% over the same time period.
“The insurance industry is the canary in the coal mine for the climate crisis we’re facing,” said Steven Rothstein, the managing director of the Ceres Accelerator for Sustainable Capital Markets, a nonprofit organization that advocates for sustainable investment practices in the finance industry.
Rothstein said he thinks the single biggest cause for increasing insurance costs in Texas is the impacts of climate change.
“The risks on [insurance companies’] balance sheets are very significant and growing,” Rothstein said. “This is happening across the country, and across Texas. It is not just coastal Texas.”
There have already been 16 disasters in Texas this year that cost $1 billion or more — a new state high for billion-dollar disasters in a single year, according to National Oceanic and Atmospheric Administration inflation-adjusted data. And that’s during a year when no hurricanes struck the Texas coast: Almost all of those weather disasters were severe storms.
Over the last two years, Zawacki said, property losses from convective storms, which includes thunderstorms, tornadoes, hail, and heavy rains, have dramatically increased. While climate change may be a political issue, Zawacki said, “I don’t think companies and their shareholders are willing to take the bet that it’s a transitory situation.”
Climate scientists have observed that thunderstorms with heavy rains are now more frequent in the U.S. and longer lasting than they used to be, and the storm conditions that produce large hail are more common, according to the Fifth National Climate Assessment.
Texas emits more greenhouse gas emissions than any other state, according to the Environmental Protection Agency. It accounts for 14% of the nation’s climate-warming emissions, and produces more than twice the total emissions of California, the next largest greenhouse gas emitter. Texas is also the nation’s largest oil and gas producing state, accounting for more than 40% of the nation’s oil production.
