Group: Billboard lawyers, nuclear verdicts drive up premiums

From freezes to hurricanes, Texas has no shortage of natural disasters. And depending on which group you ask, it’s either inflation, strong storms and lawsuit abuse or a focus on profits driving up the cost of home insurance for Lone Star residents.

Late last year, Unlocking America’s Future released a report entitled, “Texas’s Insurance Crisis: How Homeowners Pay More For Less While Insurers Profit.”

The report claims premiums have skyrocketed by 55 percent since 2019 because of a law enacted two years earlier that “gutted homeowners’ ability to challenge wrongful claim denials.”

“Texas politicians and regulators have done little to help policyholders in the Lone Star State, instead focusing on insurance companies’ bottomlines and profits,” the report states. “Texas policies have created a system in which private insurers extract profits from the most desirable customers while socializing the risk of everyone else.”

UAF’s report prompted a response from the American Property Casualty Insurance Association, which was quick to point out that Texas has been “impacted more than any other state in the country by what are known as Billion Dollar Storms.”

The onslaught of lawyer advertising and lawsuits that followed in the wake of every major storm led Texas lawmakers to pass the “hailstorm” bill in 2017, limiting attorney’s fees and requiring policyholders to send a pre-suit notice to their insurance company 61 days before filing a lawsuit.

APCIA says insurance premiums in Texas are actually being driven by “inflation, increasingly strong storms, lawsuit abuse by billboard lawyers, and population growth in areas at high risk for wildfire, flood and wind damage.”

The group maintains that UAF’s report “betrays its bias by slinging mud rather than offering solutions” and relies on research from a questionable source – a group called Weiss Ratings that focus on non-renewals. When Weiss Ratings produced similar research in other states, such as Florida, a state agency rebutted the group’s findings, with one regulator calling them "questionable allegations" that create a "narrative intending to alarm policyholders."

APCIA says Texas insurers have been losing money in claims in recent years. From 2015 to 2024, insurers paid out $1.05 in claims for every $1 in premium they collected.

“Rate increases in 2022 and 2023 were necessary to keep companies solvent so they can pay out future claims for Texans,” the APCIA says. “Rate inflation has trended downward since then, and insurers continue to look for ways to accelerate that trend.

“Lawmakers can also do more to rein in the legal system abuse by trial lawyers that is burdening everyday Texans.”

Texas has seen nuclear verdicts, which are awards of $10 million or more, go up in recent years, with 130 of them over the past decade – the fourth-highest number of nuclear verdicts.

“These penalties are often excessive and are being driven by shadowy investors who treat our legal system like a casino, financing lawsuits and hoping for a big return on their investment,” APCIA says. “Texas families pay over $5,000 a year in higher costs that are due to tort lawsuits, according to the Perryman Group.

“These added legal burdens affect every business and drive up the costs of all goods and services, including insurance.”