Storm Insurance Companies Analyzing Texas Operations

Texas Insider Report AUSTIN -- Policy analysts at the Center for Finance Insurance & Real Estate a project of The Heartland Institute today sharply criticized a Dallas Morning News report about insurance company profitability. The article Most Texas home insurers profitable again" focuses on insurance companies average loss ratios" -- the percentage of premiums paid out in claims.   But the more appropriate measure of profitability which Heartland experts say nearly all industry analysts and insurance firms alos accept is combined loss ratios" which take into account the cost of selling insurance. While the Morning News accurately reported that the insurance industry as a whole spent 67.3 cents on claims for each dollar of premium collected it didnt report the combined ratio of 102.4 that incorporates all costs. Julie Drenner director of the Heartland Institutes Texas office described the situation on the ground as being much different from what the Morning News suggested. While the loss incurred in 2009 decreased dramatically due to the absence of a major storm in Texas the average insurance company paid out 2.4 more cents than it took in last year" said Drenner. If the industry is losing money in years without a major storm landfall how can they protect their customers when hurricanes hit?" Drenner asked. Texans will not be able to buy private insurance if the companies are driven out of the state due to continual losses. Consumers are best served when solvent companies are unshackled in the market to provide the best coverage at the best prices" said Drenner. Eli Lehrer national director of the center says understanding profits and losses is key to a reasoned debate about insurance. Personally I couldnt care less whether any given company makes or loses money. In a truly competitive insurance market one would expect companies combined ratios to approach 100" he said. But if losses continue at the current level for a significant amount of time its going to mean fewer choices for Texas consumers."