Letter from Austin: Senate chair wants to bring down rates

by Julie Drenner on January 18, 2012

With a sigh of relief, the Texas Windstorm Insurance Agency closes out the calendar year absent a major hurricane or other severe weather event. Only a hailstorm in January 2011 (which produced more than 8,800 claims) marked a relatively uneventful year for TWIA’s current policyholders.

What is noteworthy is the number of new lawsuits brought during the second half of the year relating to storms in 2007 and 2008. Just over 780 lawsuits claiming damages from Hurricane Ike, Dolly and Humberto were filed from June to December 2011.  To date, this ongoing litigation has cost $60 million, with no end in sight.  At the time of these storms, there was no law limiting the time a claim could be brought against TWIA, therefore policy holders may continue to bring suit even if they have already been compensated.


At the quarterly meeting of the Senate Business and Commerce Committee, the issue of high homeowners’ insurance rates was raised, as the Texas Department of Insurance has granted rate hikes to several companies. Insurance Commissioner Eleanor Kitzman explained that, due to its enormous size, Texas experiences all weather-related disasters and natural catastrophes, including sinkholes, and has had more FEMA declarations in the last six years than any other state.  All 254 counties have been declared in emergency situations at some time during that period.  Ironically, while the cost of property has decreased, the cost to rebuild has increased.  Loss costs in Texas average $743, just below the national premium average. However, Chairman John Carona, R-Dallas, was unsatisfied with that answer and shot a warning to the industry that if rates did not decrease, more regulation may be in store.


In listening to a recent debate between Art Laffer, the father of supply side economics, and Jared Bernstein, Vice President Joe Biden’s former chief economist, I found myself questioning the basic assumptions of the goal of the economic recovery in this country.  Since when is economic equality the goal in the United States? Why is it the government’s job to redistribute wealth and equalize income? Before we “do” something to a citizen’s income (e.g., raise their taxes), why don’t we undo something for them (e.g., lessen regulation on their income)? The Declaration of Independence guarantees a right to the equal pursuit of happiness, not happiness itself. I think bearing that in mind is crucial to the foundation of economic liberty.

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