Most insurers fare well

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March 23, 2006, 10:30AM

Most insurers fare well

http://www.chron.com/disp/story.mpl/business/3741968.html

By JANET ELLIOTT

Copyright 2006 Houston Chronicle Austin Bureau

AUSTIN - Last year was profitable for most Texas home insurers,

prompting state regulators to look at whether some companies should

be ordered to lower their rates.

Although a few companies took hits because of Hurricane Rita, the

industry had a 57.1 percent loss ratio, meaning that 57 cents of

every dollar collected in premiums was paid out in claims.

Generally, any loss ratio below 60 percent is considered beneficial

for the industry.

" If we hadn't had the hurricane, it would have been a really good

year for the companies, " said Jim Hurley, a Texas Department of

Insurance spokesman.

State Farm, the state's largest insurer, beat the statewide average

with a loss ratio of 50.4 percent. But the No. 2 company, Allstate,

had an 89.6 percent loss ratio. And the Texas Farm Bureau, the ninth-

largest insurer, paid out more in claims than it charged in

premiums, with a loss ratio of 121.6.

Hurley said those two companies had extensive exposure in East

Texas, where Rita hit.

This month, Allstate began cutting the number of homeowners

insurance policies it sells in Texas to reduce its exposure to

hurricane-related losses.

The 2005 profits followed a record 2004, when the statewide loss

ratio was 27.8 percent.

The loss ratio does not include personnel and overhead costs, which

Hurley said average 35 to 40 percent.

Hurley said state regulators will be analyzing the data and might

give extra scrutiny to some companies that had particularly good

years and ask them to justify their rates.

Nationwide, which had one of the lowest loss ratios at 28 percent,

cut rates in January an average 10.75 percent. Another company with

a low loss ratio was USAA, the fourth-largest insurer, at 39.6

percent.

One consumer advocate said the numbers show that insurers are

overcharging homeowners. Texas has the highest insurance rates in

the country.

" In a year in which a major hurricane devastated parts of the Texas

coast, the insurance industry was still able to post exorbitant

profits on the backs of Texas homeowners, " said Winslow, Texas

Watch's executive director.

Mark Hanna, a spokesman for the Insurance Council of Texas, said

insurers are worried about projections for another record hurricane

season.

" I'm sure Texans want a solvent insurance company when it comes time

for paying claims, " he said.

Sophie Harbert, a spokeswoman for State Farm, said the company is

still recovering from the mold crisis of five years ago.

janet.elliott@...