Triple-I: Texas risk profile worsens with combination of natural catastrophe threats

By Isha Marathe

July 14 - (The Insurer) - Severe convective storms, lightning and hail, wildfires and power grid vulnerability have led to Texas homeowners paying an average of 3.13% of median household income for homeowners insurance, making it the sixth least-affordable state nationally, the Insurance Information Institute (Triple-I) found.

Personal auto insurance in Texas is more affordable at 1.65% of median household income, ranking 14th nationally, the report said.

Triple-I's Texas Issues Brief comes after devastating flooding in central Texas over the July 4 weekend, which is expected to result in billions of dollars of economic losses.

Several aspects of the state’s risk profile are relevant to the rest of the country, Triple-I said.

Such flooding far from landfall has become more frequent and severe in recent years, while few homeowners have flood insurance in inland regions, Triple-I said.

“The catastrophic flooding in Central Texas exemplifies a troubling trend we have seen with events like hurricanes Harvey, Ida, Ian and Helene – devastating flood damage occurring far from storm landfall,” said Patrick Schmid, Triple-I’s chief insurance officer.

“In Kerr County, where the worst flooding occurred during the recent Hill Country disaster, only 2.5% of homeowners have flood insurance through the National Flood Insurance Program.”

The report found that Texas experiences over 100 tornadoes annually, the most of any state, with highest activity in the Panhandle and North Texas. The state also recorded 878 hail events involving stones one inch or larger in 2024, again leading the nation.

Texas recorded 4,369 homeowners' insurance lightning loss claims in 2024, second only to Florida, with an average cost per claim of $38,558, significantly higher than Florida's $23,686 average.

Texas ranks third nationally behind California and Colorado in wildfire risk and the February 2021 winter storm that caused catastrophic power grid failure across Texas and other states continues to influence the Lone Star State’s risk profile, with 80% of insured losses from that event occurring in Texas alone.

“All insurance pricing needs to reflect the risk inherent in the coverage provided,” Schmid said.

“For Texas homeowners, their poor affordability reflects the high levels of natural catastrophe risk – most notably, severe convective storms and hurricanes. Improving the resilience of homes, businesses and communities is essential to reduce the risk, improve affordability and save lives.”