We’ve heard from several outlets that the 2024 Atlantic hurricane season is projected to be explosive. In May, for example, the National Oceanographic and Atmospheric Administration (NOAA) projected an 85% chance of an “above-normal” season with multiple major hurricane possibilities.
While that means Houston area and other Gulf Coast residents should prepare for an active season, it also means home insurance premiums are likely to soar again, contributing to what’s becoming a crisis of sorts across the region. In a new report by Newsweek, insurance experts said premiums should rise into 2025, and especially as climate change impacts—including more severe storms and hotter weather—increase.
“Texas homeowners should be aware of how climate risks might affect their insurance costs in the future,” Betsy Stella, vice president of Carrier Management & Operations at Insurify, told Newsweek. “They could face fewer insurance options in the marketplace, similar to Florida.”
Florida’s insurance premiums are the highest in America, according to Insurify, at $10,996 on average. To compare, the average premium in Texas is $4,456, far cheaper than in the Sunshine State but the fourth-highest figure in the U.S.
Insurance rates increased 22 percent in Texas in 2023, twice the national average, according to an S&P Global analysis of Texas Department of Insurance data. According to the Texas Farm Bureau, 2023 was the warmest year on record in state history, and 16 of 28 U.S. natural disasters hit Texas.
This year, Texas has already seen tremendous weather events including the May derecho that led to eight deaths and may cost the Houston area alone up to $8 billion in damage. Public media outlet Marketplace reported that hundreds of insurance claims were filed in the Houston area after the derecho.
With more storms and higher risk come higher rates. It may also be getting to a point where insurers simply get the heck out of the Houston area. Temple University Fox School of Business risk management and insurance professor Benjamin Collier told Newsweek that insurers can do a number of things when locations become too risky. Leaving a market entirely is one option.
“We have seen this before in insurance markets for terrorism, cyber and earthquake risks, and it is playing out in the home insurance market today,” Collier told Newsweek.
While Rich Johnson of the Insurance Council of Texas recently told KHOU that companies aren’t yet leaving Texas, some insurers are dropping their Houston clients. Even before the derecho, ABC13 reported that some Houston area residents were being denied renewal by their insurance providers.
“They are canceling our insurance after our policy expires, and they won’t renew it because we are in a hurricane zone,” ABC13 IT specialist Jeff Hooge told ABC13 in April. While ABC13 reported that this isn’t an uncommon practice, Stella told Newsweek that there’s always the chance that another insurer moves in and tries to find opportunity.
“It’s possible that the highest-risk areas will become uninsurable,” Stella told Newsweek. “However, where there’s demand, typically a supplier will appear. The question will be, at what cost?”