Lessons from the Texas Homeowners Insurance Crisis Bob Puelz ...

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Table 1 Texas Homeowners Premiums Written Proportion of Premiums Proportion of Premiums in in Regulated Insurers Non-Rate Regulated Insurers 1996 29.98% 70.02% 1997 21.83% 78.17% 1998 15.43% 84.57% 1999 11.34% 88.66% 2000 9.24% 90.76% 2001 5.42% 94.58% Source: Texas Department of Insurance. The data in Tables 1 and 2 were assembled from a 2006 request to the TDI for market information that reflected premiums written for insurer groups by entity type. Table 2 Proportion of Non-Rate Regulated Group Business 1996 1997 1998 1999 2000 2001 Insurer Group Non-Regulated Non-Regulated Non-Regulated Non-Regulated Non-Regulated Non-Regulated State Farm 73.56% 90.13% 99.29% 99.17% 99.19% 99.16% Farmers 85.95% 87.80% 90.03% 92.19% 94.44% 96.13% Allstate 72.97% 76.81% 81.09% 82.93% 85.62% 93.42% USAA 71.36% 69.38% 67.35% 65.59% 62.36% 74.38% Travelers 42.05% 44.62% 60.55% 94.54% 94.39% 96.35% Nationwide 84.50% 86.56% 88.57% 89.58% 94.92% 97.6% Safeco 69.84% 79.96% 81.65% 99.64% 24 100.00% 100.00% Chubb 100.00% 100.00% 99.96% 99.90% 99.86% 99.90% Texas Farm Bureau 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Consolidated 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Source: Texas Department of Insurance
$1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 California Overall Illinois overall performance Figure 1 Texas non rate-regulated performance Texas rate-regulated performance $0.00 1996 1997 1998 1999 2000 2001 Table 3 Homeowners Market Loss Ratio * Illinois Overall Texas Overall 25 California overall performance Texas Rate-Regulated Insurers Texas Non-Rate Regulated Insurers 1996 $0.51 $0.93 $0.60 $0.54 $0.62 1997 $0.48 $0.68 $0.46 $0.47 $0.45 1998 $0.52 $0.65 $0.46 $0.53 $0.44 1999 $0.48 $0.65 $0.51 $0.52 $0.51 2000 $0.52 $0.98 $0.84 $0.59 $0.84 2001 $0.64 $1.08 $1.17 $1.14 $1.18 Source: Texas Department of Insurance. Loss ratio reported excludes consideration of loss adjustment expenses incurred
Page 1 and 2: Lessons from the Texas Homeowners I
Page 3 and 4: I. Introduction Lessons from the Te
Page 5 and 6: Illinois with company-level data to
Page 7 and 8: [Table 1 about here] might have bee
Page 9 and 10: with the NAIC, and were sourced for
Page 11 and 12: To further explore the Texas settin
Page 13 and 14: amounts are summarized in Table 4.
Page 15 and 16: [Figure 4 about here] One glimpse i
Page 17 and 18: the average household size of an oc
Page 19 and 20: units that have been classified as
Page 21 and 22: as equations in levels. The Hansen
Page 23 and 24: while variations in perils help exp
Page 28 and 29: "Combined" Ratio $1.80 $1.60 $1.40
Page 30 and 31: Table 5 Texas Statewide Homeowners
Page 32 and 33: 35% 30% 25% 20% 15% 10% 5% 0% 60% 5
Page 34 and 35: Cumulative % of Texas Counties 100%
Page 36 and 37: Table 7 GMM Estimates of Empirical
Page 38: Harrington, Scott E. and Greg Nieha

Lessons from the Texas Homeowners Insurance Crisis Bob Puelz ...

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