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Business

Texas Home Insurers See Big Profits In 2014 Despite Rising Lawsuits

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By nssl0001, National Severe Storms Laboratory (NSSL) Collection
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Wikimedia Commons

DALLAS — Texas home insurers saw a third straight year of healthy profits in 2014 due to higher rates and fewer severe storms across the state.

But The Dallas Morning News reports a rising tide of lawsuits filed by homeowners in recent years has companies worried that more could be on the way. The industry seeks legislation that would curb homeowners’ ability to sue insurers for unpaid claims or unfair practices.

State insurance department records show though that those lawsuits didn’t hurt companies’ bottom line last year, but Mark Hanna of the Insurance Council of Texas says the number of lawsuits against insurers has been “off the charts” in recent years and companies are worried that more are on the way.

Hanna says actual damage to roofs in McAllen caused by hail and wind was estimated to be $250 million, but the figure swelled to almost $600 million because of lawsuits filed by homeowners.

“Here we are with insurance companies posting extremely healthy profits for three straight years and four of the last five years,” said Alex Winslow of Texas Watch, a consumer group active in insurance issues. “Insurance companies already hold all of the cards, and now they want to stack the deck against policyholders with valid claims.”

Insurers paid out an average 46.4 percent of their premiums to cover property losses in 2014. Rates of 60 percent or lower are considered a good target for profitability, and most large companies hit that benchmark last year.