Despite arguments to the contrary, it’s hard to imagine a setting more amenable for insurance companies than the Lone Star State. Texans pay the third-highest home insurance premiums in the country, averaging around $1,745 per year. In 2015 alone, those premiums skyrocketed by an average of 7 to 8 percent, at the same time insurance companies like State Farm and Allstate were reporting strong profits amid lower-than-average claim pay-outs.
So it’s more than a little puzzling when the Southeast Texas Record takes an editorial stance suggesting Texas insurance companies are somehow scorned and exploited by the consumers who pay more and more each year only to have to jump through more hoops to get what’s owed to them. The article reads: “Do you ever get the impression that you aren’t welcome somewhere, that your presence is not appreciated? Insurance companies in Texas are starting to get the message, too – that they’re not welcome here. They provide a useful service, but the number of Texans who appreciate it seems to be dwindling and the number of Texans seeking to abuse it seems to be growing.”
Most Texans would probably disagree. But before examining the argument, it’s worth taking a look at the SE Texas Record itself, which an NPR report suggests to be little more than a front group for a business lobby group, funded by insurance companies, mandated to serve not the interests of consumers, but those of corporations.
“This newspaper — I hate to even call it a newspaper; it’s a propaganda sheet,” Beaumont lawyer Brent Coon told NPR. “Why would they create a newspaper [and] give it away for free? They do it because they know they send this message out: ‘Lawsuits are bad; there are frivolous lawsuits; the jury system has run amok and has to be fixed.’ When you hear their rhetoric over and over again, the more they say it and the more different ways they communicate that message, the more the public is likely to believe it.”
For argument’s sake, let’s assume for a moment the Southeast Texas Record is a credible news source. Does their argument that insurance companies are somehow unwelcome in Texas hold water? If they’re unappreciated, unwelcome and being systematically abused by Texans, as the Record argues, then they can’t be making much money, can they?
As it turns out, they’re making quite a lot, and have been for some time.
“Here we are with insurance companies posting extremely healthy profits for three straight years and four of the last five years,” Alex Winslow of Texas Watch, a consumer group, told the Dallas Morning News. “Insurance companies already hold all of the cards, and now they want to stack the deck against policyholders with valid claims.”
That hardly sounds like an industry besieged by its own customers. And the healthy profits generated year over year by Texas insurance companies paint a rosy picture too. The truth is, Texas insurance companies enjoy a robust market, record profit margins and a relatively lax regulatory environment. In fact, when they’re caught overcharging their consumers, the governor grants them a sweetheart deal.
And these are just some of the reasons why Texas is a great state to be an insurance company.