A recently released report from the state’s insurance department shows more claims and higher average claim costs resulting from the severe and prolonged winter storm that enveloped Texas in mid-February than were previously reported.
In the report released Sept. 1, the Texas Department of Insurance detailed property/casualty claims data from Winter Storm Uri, which blanketed the state with sub-freezing temperatures, ice and snow from Feb. 11 through Feb. 19, 2021.
The report contains claims data submitted by insurers as of March 31, 2021, or 48 days after the beginning of the event and 40 days after the end of the event. Data was provided by Insurance Services Office Inc., TDI’s statistical agent.
Reporting insurers showed 456,531 insurance claims as of March 31 and indicated they expected an ultimate payout of $8.2 billion in insured Texas losses from Winter Storm Uri. The bulk of the claims are for damage to residential properties.
An earlier report released in April showed 341,679 claims had been filed by the end of March and that the average incurred residential property loss was $6,594. The most recent report shows the an average incurred loss of about $11,500 for residential property policies.
TDI noted in the report that claim numbers and losses could continue to rise.
“Paid losses can be expected to increase substantially in future reports. In addition, later data may show an increase in reported claims and incurred loss,” TDI said in its report, Insured Losses Resulting from the February 2021 Texas Winter Weather Event.
The winter storm kept most of Texas in below freezing temperatures, covered with ice, sleet and snow, and suffering from sustained power outages.
“The prolonged freezing temperatures and accompanying power outages resulted in property damage caused by freezing pipes; fallen tree limbs; the weight of ice, sleet, and snow; and other related causes,” TDI said.
Data in the Sept. 1 report covers property insurance, automobile insurance, and all other lines of insurance. It includes information from both licensed insurers and eligible surplus lines insurers that wrote more than $5 million in written premiums in Texas in 2019.
The majority of claims reported as of March 31 — 81.5% — resulted from residential property damage. Commercial property losses accounted for 8.6% of claims; 3.9% were for personal auto physical damage; and 5.8% were for all other types of insurance.
“Claims for commercial automobile and flood insurance were a very small percentage of the total claims (<0.2%). While the number of commercial property claims were small, it had a much higher percentage of paid losses (20.4%) and case-incurred losses (46.2%) because of its high average cost per claim,” the report said.
Insurers reporting the data used in the report represent approximately 94% of the Texas property insurance market, 95% of the Texas automobile insurance market, and 86% of the market for all other lines of insurance.
The $8.2 billion consists of $2.27 billion in payments made to policyholders, $3.19 billion in unpaid losses on individual claims (claim reserves), and $2.74 billion in actuarially determined reserves for incurred but not reported (IBNR) losses.
Insurers expect that about $2.67 billion of the $8.2 billion (33%) will be covered by reinsurance.
As of March 31, approximately 31% of the claims were open, 37% were closed with a payment to the policyholder, and 32% were closed without a payment to the policyholder. The percentage of claims open differs between residential property and commercial property.
The average incurred loss was about $11,500 for residential property policies, about $74,900 for commercial property policies, about $3,800 for automobile policies, and about $4,700 for all others. TDI anticipates the averages will change as the data matures and insurers further investigate and adjust claims.
TDI’s current report lacks data from three companies that account for 8% of the automobile insurance market, as well as “a small percentage of the property (<0.1%) and all other lines markets (0.1%).” There are other possible instances for misreporting, particularly from one mid-sized residential property insurer. TDI said the impact of any misreporting is expected to be small, and that any needed corrections will be submitted by the insurer.
The table below shows claims by type of insurance and by claim status. Data is as of March 31, 2021 (40 days after the end of the event).
|Line of Insurance||Reported Claims||Closed with Payment||Closed without Payment||Percent Open||Avg Days to Close||Total Paid Losses (in millions)||Total Case-Incurred Losses (in millions)|
|Residential property – RCV policies||324,523||38.0%||32.9%||29.1%||16.0||$1,568.8||$2,527.0|
|Residential property – ACV policies||47,603||27.0%||47.3%||25.7%||14.6||$162.7||$268.3|
|Commercial property (other than business interruption)||34,011||15.4%||15.3%||69.2%||0.0||$423.3||$2,212.4|
|Personal automobile physical damage||17,778||45.8%||25.1%||29.1%||0.0||$39.2||$48.4|
|Commercial automobile physical damage||643||30.3%||26.7%||42.9%||0.0||$2.3||$4.6|
|Flood Insurance||23||0.0%||87.0%||13.0%||0.0||$ –||$0.0|
|All other lines of insurance||26,502||65.0%||26.2%||8.8%||0.0||$34.7||$91.0|
|Grand Total||456,531||36.8%||32.1%||31.1%||15.9||$ 2,272.3||$5,461.2|
The following table compares the February 2021 Texas winter storm to Hurricane Harvey. The Harvey data used is as of Sept. 30, 2017 (28 days).
|Key Statistic||Texas Winter Weather Event as of 3/31/2021(40 Days)||Hurricane Harvey as of 9/30/2017(28 Days) 2|
|Estimated Ultimate Loss||$8.202 B||$15.683 B3|
|Estimated Ultimate Net Loss||$5.532 B||$7.253 B3|
|Paid Losses||$2.272 B||$4.487 B|
|Case-Incurred Losses||$5.461 B||$11.536 B|
|Percent Closed with Payment||36.8%||27.5%|
|Percent Closed without Payment||32.1%||28.2%|
|Average Incurred Claim—Residential Property||$11,507||$7,649|
|Average Incurred Claim—Commercial Property||$74,943||$94,061|
|Avg. Time to Close a Claim (Residential only)||15.9||16.8|
The report released in April 2021 showed insurers had by the end of March paid out $1,673.9 billion on 186,982 combined residential property, commercial property and auto insurance claims. The earlier report also showed the bulk of claims reported (341,679) and paid (169,434) by the end of March involved residential property. The average incurred residential property loss reported at the time was $6,594.
The April report showed 24,788 commercial property claims reported, of which 8,035 had been paid. The average incurred commercial property loss was $49,712. Reported auto insurance claims, both personal and commercial, totaled 19,641, of which 9,513 had been paid. There were 18,860 personal auto claims reported and 781 commercial auto claims reported, according to TDI’s report. The average incurred loss for personal auto was $2,942 and the average for commercial auto claims was $7,302.