This major home insurance provider is scaling back renewing some policies in Texas

A major insurer is scaling back its presence in Texas as climate and natural disaster risks have sent home insurance premiums soaring across the state.

The Houston Chronicle received a copy of a letter sent by Foremost Insurance, a subsidiary of Farmers Insurance, to a Houston homeowner, explaining that it would not renew her policy. 

"We recently reviewed our exposure and risks relating to natural and catastrophic losses, and have determined that we will no longer offer this insurance program in your area," the letter said. "As a result, this policy will not be renewed at the end of your current policy term."

The letter did not specify the area in question. 

A spokesperson for Farmers Insurance said in an email that while Foremost is scaling back its presence in Texas, it is not pulling out of the state outright.

"In November of 2023, we began initiating targeted underwriting actions designed to mitigate our risk exposure in the state," said the spokesperson. "As a result, a portion of customers with dwelling fire, manufactured home, homeowners and condo insurance policies began receiving non-renewal notices."

"Importantly, more than 90% of our existing customers in Texas with Foremost property insurance policies are not affected by this action," the spokesman continued. "Also, Foremost Insurance does continue to offer new property insurance policies in the state, provided applicable underwriting eligibility guidelines are met." 

While Foremost did not clarify which customers will be affected, Ben Gonzalez, a spokesman for the Texas Department of Insurance, suggested that policyholders in the greater Houston area might want to check their coverage.

"Foremost Insurance informed TDI in September 2023 of plans to stop selling home policies that included coverage for wind and hail in some counties concentrated in coastal areas," Gonzalez said. 

Rich Johnson, a spokesperson for the Insurance Council of Texas, said Foremost's decision was not unusual and a number of companies were taking steps to reduce their exposure to large numbers of claims in those parts of Texas at greatest risk to violent storms.

But he added that no carriers were ending coverage in Texas altogether, as has been the case in California and Florida. There are about 160 companies offering homeowners insurance in Texas. Farmers is among the top 10 writers of Texas homeowners insurance, according to data from S&P Global Market Intelligence.

"We have more companies doing business in Texas than last year, so there's still a lot of options for consumers," he said. "But there definitely are changes because of the various risks, hail being the biggest, followed by wind and hurricanes."

The Texas Department of Insurance said that while insurers must notify the state if they plan to stop offering a particular line of insurance in Texas, the issue is not statewide. Policyholders in coastal Texas are at greater risk of having their insurance canceled or not renewed, Gonzalez said. 

"The coast has always been an area with a higher risk profile because of the exposure to the gulf and tropical weather systems," Gonzalez said. "And insurance companies have broad flexibility to choose where they want to offer coverage."