The state of insurance in Texas

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Texans are no stranger to wild weather. As more people move to the lone star state, more disasters are sure to follow.

Photo: Texas Military Dept

"If something were to happen in an area where no one lives, then it's not a disaster," Bryan Wood, a meteorologist for Assurant Inc. says. "The fact it happens in an area where people live, that's what makes it a disaster. It's the event plus the people living in the area that makes it a disaster."

Let's recall a few weather events from the past few years: wildfires in 2011, massive flooding in Texas in 2015 and 2016, car insurance nightmares of hailstorms in both the DFW and San Antonio areas in the past year, and the most active hurricane season in almost a decade. Throw that all together and we have an incredibly large amount of insurance claims being filed in the state of Texas alone.

"If we look at the number of claims that are going to come out of the Houston area with flood damage alone, and then just wind and rain damage, insurance companies are now having to pay out a massive amount of money, and that affects the outlook going forward," says Nathan Harness, Director of Financial Planning at Texas A&M.

We're not just talking homes. You'd only need to make a short drive down Highway 6 in College Station to see the scope of car damage from Hurricane Harvey.

"That's where we think rates are going to increase: from the auto side of things," says Grant Graham, an account executive at Anco Insurance. He added that this would mainly be a change in comprehensive, not liability coverage. "In the event of a flood, that's where you're covered."

"Looking over the past 30 years, insurance losses [related to weather] have been increasing," Wood said. "There are a number of factors leading into that. We have homes, and we have more people buying homes in areas that may have been hit hard [by storms] before. You're essentially adding more targets to hit."

Wood noted another storm on the northern side of the DFW metroplex that had over 2 billion dollars in estimated insured loss. "Almost all of those homes were less than 30 or 40 years old, so were farily new to the landscape in the grand scheme of things."

In a changing insurance landscape with more targets and more of us insured, Wood says that insurance companies will need to continue to adapt.

"We're working to understand those risks better. Also, through reinsurance, insurers will pay a premium and then the reinsurance company will absorb losses." Wood said. "Those types of practices can help insurance companies better manage the financial risks and not have to pass off increasing losses to homeowners."

In the meantime, experts remind us the best thing we can do is be prepared.

"It starts by understanding what you actually need coverage for," Harness said. "Make sure the amount of coverage you have is adequate, but make sure you don't have too much coverage, because you'll end up paying extra in additional premiums."

"Unfortunately, we can't control the weather, but we can predict the weather," Graham said. "We can control the policies we put in place, to insure there are no gaps in coverage."