The state’s volatile weather over the last few years and the havoc it has wreaked have taken a toll on Texas residents and their pocketbooks, and that trend is likely to continue in 2024, experts say.
Recovering from weather-related disasters is expensive, as any Texan can attest. From the unforgettable winter storm of 2021 to the historic high temperatures of the summer of 2023, not to mention the plethora of hurricanes, tornadoes, droughts, and resulting wildfires over the last few years, Texans have seen it all.
Texas is the most disaster-prone state in the nation, logging more than 360 natural disasters since 1953, according to an analysis by U.S. News & World Report. Another study by the National Centers for Environmental Information estimates that, from 1980-2023, weather and climate-related disasters have totaled between $300-400 billion in damages in the state.
According to the U.S. government’s Fifth National Climate Assessment, severe weather events across the nation and the globe will continue to become more frequent and severe. And the cost of recovering and rebuilding will likely continue to climb, as well.
Home insurance rates in Texas have increased 50.9% since 2022, making it the state with the second-highest increase, right behind Arizona, according to S&P Global. Some insurers have stopped offering policies in certain high-risk areas of the state because of the increased costs, The Dallas Morning News reported.
“Texas is one of the states that is very prone to severe weather, and home insurance rates there reflect that,” Leslie Kasperowicz, an insurance industry expert, told the DMN. “Rates are rising everywhere, and that’s expected to continue into 2024 as insurance companies seek to balance their loss ratios and make sure they can continue to pay claims into the future.”
On average, Texans pay $3,875 per year for home insurance, more than twice the national average of $1,820 per year, according to a study by Nerd Wallet. Homeowners in Dallas pay $4,255 per year on average for insurance, while Houston residents pay an average of $4,595.
Utility prices are going up as well, especially the cost of electricity. Oncor’s rate increase went into effect last May and will likely not be coming down any time soon.
“We do see that electricity prices are higher and they’ve been climbing,” Jacob McNeil, vice president of business development at the business advisory firm Embark, told the DMN. “Last year was pretty nasty overall. Prices still haven’t come down even though some of the inputs to those prices have come down. It speaks to a variety of variables and factors that are playing out.”
One such variable is the temperature. Last summer was the hottest on record, and although the winter has been fairly mild so far in North Texas, January and February 2024 are expected to be colder than usual, according to The Old Farmer’s Almanac. This will invariably mean higher electric bills as Texans crank up the heat to stay warm.
In addition, increasing demand for electricity due to residential and industrial growth has increased electricity costs. The volatility of the power grid, inflation, and the cost of repairing and winterizing the grid have all contributed to increased costs for the consumer, according to McNeil.
“We’re going to be at the mercy of the weather and whatever macroeconomic and geopolitical events occur as well. I think people are right to be anxious if those conditions swing in our favor. But we can really only hope,” McNeil said, per the DMN.