Property and Casualty Insurance: Where Does Your State Rank?

Published June 7, 2010

Consumers in four U.S. states enjoy more attractive homeowners insurance coverage at better prices than citizens in most other states, according to a new report card released by
The Heartland Institute.

Homeowners in Utah, Idaho, Arizona and Vermont enjoy lower premiums for broader and more predictable coverage, earning “A” grades on the third annual Heartland report card.

But consumers in Florida and New York – whose states earned “F” grades – pay more for homeowners coverage that is inferior to that offered in states with positive insurance climates.

“Three years into this project,” writes Eli Lehrer, the report’s author, “we’re seeing a very slow move towards better regulation that more effectively unleashed the power of the market to give consumers the coverage they want. But the progress is very slow.”

The Property & Casualty Insurance Report focuses on homeowner’s and automobile insurance, the two types of insurance Americans typically are required to purchase. State laws in 46 states mandate the purchase of auto insurance, and nearly all mortgage lenders require their clients to secure homeowners coverage.

Lehrer, senior fellow of The Heartland Institute and national director of the Center on Finance, Insurance and Real Estate, examined 11 key variables in grading P&C insurance markets. Among the most important are the size of the state’s residual markets, level of political oversight, loss ratio stability, rate regulation, and the negative impact of territorial rating.

The business climate in 10 states stood out, Lehrer said: 

* “Utah landed on top of our survey. It’s a good place to buy – and sell – insurance.”

* “Florida’s insurance environment is America’s worst by any rational measure. The way the state manages the insurance market encourages unwise development, cheats inland residents, destroys the environment, and threatens to bankrupt the state. It’s awful.”

* “New York wins the prize for burdensome, overbearing regulation. The state does a bad job regulating insurance, and as a result, consumers pay more than they should.”

* “North Carolina has showed marked improvement over the three years we’ve calculated this report card. Some of the changes are due to the ways that we’ve changed how we score variables, but there have been real changes thanks, in large part, to insurance commissioner Wayne Goodwin.”

* “Because of the consequences of Katrina, we didn’t grade Louisiana. But, under commissioner Jim Donelon’s leadership, the state is doing a good job recovering from the storm and restoring the private insurance market. The state should keep a good thing going.”

* “Maryland – with a grade of D-minus – is an awful place to buy insurance. Consumers pay far too much for coverage and get far too little in return.”

“Texas ends up near the bottom of our report card where it belongs with a grade of D. I would not be at all surprised if Texas got an F next year. The state’s insurance environment has serious problems. The Texas Department of Insurance has shown a disregard for the legislature’s intent in regulating insurance, and that explains a fair part of the state’s grade.”

* “Washington state is not a great place to buy or sell insurance. Although the regulations on the books seem pretty good, the way they are administered leaves a lot to be desired.”

* “Mississippi didn’t get a grade in our report card because of the effects of Katrina. There’s little doubt that, under commissioner Mike Cheney and Gov. Haley Barbour, the state has moved in the right direction. It’s still a long way from a perfectly free market but, on balance, things are getting better.”

* “Thanks to Gov. Deval Patrick and former insurance commissioner Nonnie Burns, Massachusetts has made real strides in improving its insurance regulatory climate in recent years. But with a grade of C-minus, it’s still not an ideal place for consumers or business. The Bay State should be careful not to slide backwards.”

Property & Casualty Insurance Report is available online at:

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Editors: Report author Eli Lehrer is available for comment on this study. To communicate with him, contact Dan Miller or Tammy Nash at The Heartland Institute at 312/377-4000 or by email at [email protected] and [email protected].

The Heartland Institute is a 26-year-old national nonprofit organization based in Chicago, Illinois, and is tax-exempt under Section 501(c)3 of the Internal Revenue Code. Nothing in this news release or the report it describes is intended to influence the passage of pending legislation.