Pure Loss Ratio vs. Combined Loss Ratio
Two metrics, two different stories. Knowing which one to use is essential to evaluating any claim about insurer performance — and to writing sound affordability policy.
Compares claims paid to premium collected. It ignores everything required to actually deliver insurance — adjusters, , fraud prevention, and more. Useful as one data point, misleading on its own.
Combined Loss Ratio
Combines claims with the real expenses of running an insurer. A combined ratio around 100% means roughly breaking even on underwriting. Above 100% means paying out more than is collected.
What expenses are included?
Real cost of deliveryThe Combined Ratio Calculator
Adjust claims and expenses for every $100 of premium collected. Watch how the combined ratio — and the policy takeaway — change.
Break-even underwriting result. This is not evidence of excessive pricing.
See Today's Weather Risk
Major weather events show up in Texas loss ratios over time. The Weather Tracker shows current hail, wind, flood, wildfire, freeze, and tropical activity across Texas — and connects those events to claims pressure and affordability.
Open Weather TrackerWhen the weather turns, the numbers follow
Weather catastrophes and market shocks can wipe out years of underwriting gains. Explore how major Texas events show up in homeowners and auto insurance loss ratios over time.
A combined ratio of 100% is the break-even point. Below 100% indicates an underwriting profit; above 100% indicates an underwriting loss. In Texas, major weather events and market shocks can push loss ratios above 100% and negate years of prior gains.
Homeowners — Loss Ratio Timeline
Event year — click bar or marker for details•Bars in deeper red/clay mark years tied to a major Texas event.
Source: Texas Department of Insurance data compiled by TCAIS. Incurred and combined loss ratio data provided by TDI. Event categorizations curated for staffer reference.
Texas loss ratios are volatile because Texas risk is volatile. In both homeowners and auto insurance, major weather events and market shocks can push combined ratios above 100%, meaning insurers paid more in claims and expenses than they collected in premium. That is why policymakers should evaluate insurance affordability over time, not by isolating one year or one metric.
Texas insurance loss ratios are volatile because Texas risk is volatile. A single hail season, hurricane, wildfire, winter storm, or inflation shock can erase years of underwriting gains. That is why policymakers should evaluate insurance affordability over time — not by isolating one year or one metric.
Actuarially sound rates are not about guaranteeing insurer profits. They are about making sure companies can pay claims after the next major Texas catastrophe — and remain willing to write coverage in the state.
The Texas homeowners market, in TDI's own numbers
Official Texas Department of Insurance data on the scale and competitiveness of the state's homeowners insurance market — useful context for reading loss ratios alongside real risk and cost pressures.
Texas has a competitive homeowners insurance marketplace, with 157 companies in 81 insurance groups writing homeowners policies in the state. The six largest groups in 2025: State Farm 19.10%, Allstate 16.79%, USAA 11.22%, Farmers 8.15%, Liberty Mutual 6.05%, Travelers 5.15%.
- Average annual rate change: +10.8% (2022), +21.1% (2023), +18.7% (2024), +4.3% (2025).
- Recent homeowners rate filings have shifted downward. TDI reports an average requested rate change of −6.6% for September 2026 and −4.3% for July–September 2026. These are requested changes in filing data — not a decrease every homeowner will see.
Official TDI data reinforces the central market picture: Texas has a large, competitive homeowners insurance market, but premiums and losses are shaped by real risk, rising coverage amounts, weather-related claims, and the cost of rebuilding. Average homeowners coverage increased from about $287,900 in 2019 to about $432,800 in 2025, meaning insurers are covering significantly more property value per policy.
What the loss ratios actually show
These are not the numbers of an industry extracting excessive profits. They are the numbers of a market paying out more — or nearly as much — as it collects, in one of the most weather-exposed states in the country.
Source: TCAIS loss ratio analysis based on Texas Department of Insurance data. Combined ratio includes claims and expenses as a share of premium.
Reading the combined ratio
In recent years, Texas homeowners insurers have averaged a combined loss ratio near 100% — meaning roughly every dollar of premium collected has gone back out to pay claims and the expenses of running the business. That is break-even on underwriting, not evidence of excessive pricing.
Source: TCAIS loss ratio analysis based on recent Texas homeowners market data. Combined ratio includes claims and expenses as a share of premium.
Modest underwriting margin. Helps support capital, claim-paying ability, and catastrophe readiness.
Roughly where Texas homeowners insurers have operated in recent years — about $100 paid out in claims and expenses for every $100 of premium collected. Break-even on underwriting, not excessive pricing.
Underwriting loss. Repeated losses can pressure availability and insurer participation.
Unsustainable over time. Companies may tighten underwriting, reduce exposure, or stop writing new business.
Pure loss ratio tells part of the story. Combined loss ratio gives policymakers a fuller picture of whether rates are adequate to pay claims, cover expenses, and keep companies participating in the Texas market.
Do not use arbitrary loss ratio targets as a shortcut for affordability policy. If targets ignore real expenses and catastrophe risk, they can push rates below actuarially sound levels and reduce coverage availability.