Senator Eliot Shapleigh - El Paso, Texas

Texas legislators in 2003 passed insurance reform legislation that was supposed to lower rates for Texas homeowners. But Texas still has the nation's highest home insurance rates and now the Texas Department of Insurance said last week that Texas home insurers are having a banner year for profits. This is good news for insurance company shareholders, but it is likely to bring little solace to rate payers.

The country seemingly teeters on the brink of a recession, but Texas insurance companies are untouched. Reports released Wednesday say that 2007 was another year that the companies either beat or equaled the benchmark for reasonable profit. That benchmark is set by measuring premiums taken in the companies against claims paid out. In 2007, the industry paid out about 36 percent of its premiums in claims; reasonable profit, experts say, is about 58 percent, although the industry says that the figure doesn't reflect other expenses. Neither, it might be said, does the figure reflect other income that the companies take in.

No doubt, as Texas insurers say, the state seems to be hit with more than its fair share of bad weather which means that claims can be high. The point they make is that several years of good profits can be wiped out with one devastating hurricane. But that defense would likely make little headway with a homeowner in Nueces County, or any property owner in the first tier of coastal counties, where home insurance is tough to obtain as more private insurers depart.

The National Association of Insurance Commissioners said last year in its annual study of rates across the country that Texas remains the most expensive place in the country for home insurance. Lousiana and Florida were second and third. That wasn't what homeowners were promised in 2003 when legislators reacted to a crisis in home insurance availability after record claims for mold and water damage. The insurance companies were allowed more flexibility in the coverages they offered policy buyers, instead of the previous standard insurance form. Critics might say that the rewriting allowed companies to charge more for the same coverages that the old standard form used to include, but without the change, insurance availability had been rapidly decreasing.

The payoff for homeowners was supposed to be an eventual lowering of rates. Homeowners are still waiting. The state's largest home insurer, Allstate, in fact, has been fighting a rate rollback order from the state insurance department for years. Despite the rate rollback order, the company continues to charge its higher rate because of the file-and-use system that was part of the insurance rewriting. Under the previous system, insurance companies had to get the insurance commissioner to sign off on rate increases before they went into effect. Under the file-and-use system, the commissioner, appointed by the governor, reviews the rates after the companies put them into effect and then, if the new rate is found to be excessive, the commissioner can challenge it.

According to the state, 2007 was the fifth year that Texas home insurance companies did exceedingly well. That gives credibility to the calls for rate rollbacks. "Insurance companies are continuing to post exorbitant profits in large part because the Texas Department of Insurance refuses to get tough. Policy holders are sick and tired of lip service. They want action," Alex Winslow of Texas Watch, a consumer advocate told the Associated Press.

It's time for Public Insurance Council Rod Bordelon, who represents consumers in insurance rate cases, to move into high gear. Five years of fat profits for insurance companies means that it's time for some relief for Texas rate payers. It's time for those promises of rate relief to be delivered.