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As Hurricane Rafael Approached, TWIA and TFPA Implemented a Moratorium on Policies
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As Hurricane Rafael approached, the Texas Windstorm Insurance Association (TWIA) and Texas FAIR Plan Association (TFPA) implemented moratoriums on new or increased insurance coverage in Texas coastal areas, which have since been lifted. Policyholders can now apply for new coverage, renew policies, and contact TWIA for assistance. TWIA and FAIR Plan resumed issuing policies and renewals on November 11, 2024, as Hurricane Rafael no longer poses a threat.
- TWIA enacted a moratorium on new or increased coverage due to Hurricane Rafael’s movement near Texas.
- The moratorium stayed in place until the General Manager confirmed no threat to Texas.
- TFPA also placed a moratorium on new policies for TWIA’s 14 coastal counties and Harris County.
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How will Trump's second term impact the insurance industry
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The re-election of Donald Trump as President in 2024 may have significant implications for the insurance industry, according to experts. While some anticipate that Trump's policies could reduce operational costs and encourage business growth, others express concerns about the impact of protectionist measures on global insurance markets. Industry professionals also expect regulatory relief for independent agencies and the potential for increased innovation and investment within the sector.
Key Points:
- Inflation Control and Operational Costs: Trump's economic policies could contribute to lower inflation, which might reduce costs related to claims and operations for insurance companies, helping to stabilize the industry.
- Potential Tax Cuts and Impact on Business Insurance: Tax reforms, including potential cuts for businesses, could stimulate demand for business insurance. This may foster a favorable environment for entrepreneurship and small businesses.
- Impact of Protectionist Policies on Global Insurance: Trump's "America First" policies could lead to reduced reliance on international supply chains and manufacturing. This might raise domestic production costs, which could, in turn, impact insurance premiums, particularly in industries dependent on imported materials.
- Regulatory Environment for Independent Agencies: A second Trump term may result in continued regulatory relief for independent insurance agencies, potentially reducing operational burdens and promoting business growth, particularly in sectors benefiting from tax policies like the 2017 Tax Cuts and Jobs Act.
- Encouraging Innovation and Investment in the Insurance Sector: Lower interest rates and a pro-business economic environment could foster innovation and investment in the insurance sector, which may lead to growth in insurtech and other new market developments.
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The State of the P&C Insurance Market in Texas
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Pinnacle Actuarial Resources, Inc.
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Texas is facing significant insurance market challenges due to rapid population growth, frequent severe weather events, rising costs, and economic shifts. While personal lines coverage, such as homeowners and auto insurance, is particularly impacted, the state also presents opportunities for insurers willing to adapt to these evolving conditions.
Key Points:
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Rapid Population Growth: Texas' booming population, fueled by people and businesses relocating from high-cost states, is driving increased demand for personal insurance, especially in metropolitan areas.
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Increased Weather Risk: Severe weather events, like hurricanes and storms, are more frequent and impactful in Texas, raising the risk exposure for insurers as more homes and vehicles are at risk.
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Economic Pressures: Inflation, rising home prices, and higher car costs are exacerbating affordability and pricing challenges for insurers, particularly in personal lines.
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Carrier Interest and Market Opportunity: Despite underwriting challenges, Texas remains an attractive market due to its population growth and business-friendly regulatory environment, drawing new insurance entrants.
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Geographical Exposure Management: Effective geographical exposure management and advanced risk classification are critical for insurers to navigate Texas’ unique risks, requiring sophisticated data analytics and predictive modeling.
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Texas lawmakers set to consider bill that would lower windstorm insurance costs
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Texas lawmakers are considering a new bill aimed at reducing the high costs of windstorm insurance for coastal residents. The proposal, led by Rep. Todd Hunter and a taskforce chaired by Charlie Zahn, suggests an alternative to the Texas Windstorm Insurance Association (TWIA), the state's insurer of last resort. The plan would involve a statewide assessment on all insurance policies to help fund windstorm coverage, with the potential to cut insurance costs for residents by as much as 50%. The bill passed in the House during the last legislative session but did not make it through the Senate.
Key Points:
- Rising Windstorm Insurance Costs: Coastal property owners in Texas are facing high indstorm insurance premiums, which are causing some potential buyers to abandon real estate deals. The issue is particularly problematic in areas like Port Aransas.
- Taskforce Proposal: A taskforce led by Rep. Todd Hunter, with input from Charlie Zahn, has been working on a bill to create an alternative to the Texas Windstorm Insurance Association (TWIA), aiming to reduce insurance costs for residents along the coast.
- Statewide Funding Model: The proposed plan would allow the TWIA to borrow funds from the state following a catastrophic windstorm event, with the money repaid over three years through a statewide assessment on all insurance policies, not just those in coastal areas.
- Potential Savings for Coastal Residents: If the plan is approved, it is expected to lower windstorm insurance premiums for coastal homeowners by as much as 50%, making it more affordable for property owners in hurricane-prone areas.
- Legislative Progress: The bill passed in the Texas House during the last legislative session but failed to make it through the Senate. Lawmakers are expected to revisit the issue in the upcoming legislative session.
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City of Austin responds to council resolution on flood insurance, education
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In response to a resolution passed by the Austin City Council, the city's Watershed Protection Department has outlined steps to make flood insurance more accessible and improve flood education for residents. The department is working on a pilot program to assist low-income homeowners with flood insurance costs and is continuing its efforts to raise awareness about flood risks. The city already has flood warning systems in place and conducts ongoing educational campaigns about flood safety. However, challenges remain, such as balancing insurance affordability with flood risk and ensuring that flood-prone residents don't remain in unsafe areas.
Key Points:
- Pilot Program for Flood Insurance Assistance: The city of Austin has allocated $100,000 to create a pilot program aimed at helping low-income homeowners afford flood insurance. The program may include subsidies or deductible-sharing options but faces challenges, including concerns that it could encourage people to stay in high-risk flood areas.
- Community Rating System (CRS) Discounts: Austin's Watershed Protection Department is working to improve the city's CRS rating, which currently allows residents to receive up to a 25% discount on flood insurance premiums. Austin's CRS rating of 5 is among the best in Texas, with only a few cities achieving higher ratings.
- Flood Early Warning Systems (FEWS): The city already has an established Flood Early Warning System (FEWS), which includes monitoring tools like rain gauges, cameras, and flashing beacons at low-water crossings. The system provides real-time flood alerts and enhances the city's flood response efforts.
- Public Education and Engagement: The Watershed Protection Department conducts year-round public education campaigns on flood safety and flood insurance. This includes advertising, emergency alerts, community events, and programs targeting historically underserved communities. They also host a flood safety awareness week each year.
- Challenges and Future Steps: While progress has been made, the city recognizes that more is needed to reach at-risk populations. Additionally, there's a concern that making flood insurance more affordable without addressing underlying flood risks could inadvertently encourage people to live in flood-prone areas.
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AI Thermostats Pitched for Texas Homes to Relieve Stressed Grid
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NRG Energy, Renew Home LLC, and Google Cloud are partnering to deploy 650,000 AI-enabled thermostats in Texas to help alleviate pressure on the state's electrical grid. This initiative aims to reduce peak electricity demand by up to 1 gigawatt, which is roughly 1% of Texas’ record summer electricity consumption. The project, which will begin in spring 2025, will offer consumers incentives to reduce their energy use during peak times. The initiative uses AI and machine learning from Google Cloud to optimize home heating and cooling patterns, and NRG plans to enroll enough homes to free up significant electricity demand over the next decade.
Key Points:
- Collaboration to Address Grid Stress: NRG Energy, Renew Home LLC, and Google Cloud are joining forces to help reduce peak electricity demand on Texas' power grid by deploying 650,000 AI-powered thermostats over the next decade.
- Targeted Demand Reduction: The project aims to cut electricity demand by nearly 1 gigawatt — the equivalent of powering 200,000 homes — which would ease pressure during times of peak consumption, such as the hottest days of the year.
- Consumer Incentives for Participation: The program will offer consumers the opportunity to receive free smart home devices, including Vivint doorbell cameras and Google Nest thermostats, in exchange for reducing their energy use. Enrollment begins in spring 2025.
- Long-Term Energy Savings: NRG expects the initiative to reduce 300 megawatts of demand within two years, growing to 650 megawatts by 2030, and reaching the 1-gigawatt target by 2035. The program is projected to cost $100 million, a fraction of the cost of building new natural gas power plants.
- Advanced AI for Energy Optimization: Google Cloud’s AI and machine learning technologies will be used to optimize home energy usage by determining the best times to adjust heating or cooling based on energy patterns and weather conditions. The platform may eventually expand to manage other home energy assets, including battery storage and electric vehicles.
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Renewable Energy Offers a Cost and Opportunity to Insurance Sector
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Policyholders in the renewable energy insurance market are facing premium hikes of 20%-40% due to rising claims linked to natural disasters. Extreme weather events, such as hailstorms damaging solar panels and lightning strikes on wind turbines, have caused insurers to significantly increase rates to recover from substantial losses. The increasing severity of these weather events, attributed to climate change, is putting additional pressure on insurers. Despite the higher costs, more insurers are entering the renewable energy insurance market, and the sector is seeing growth, driven by both the energy transition and the demand for better Environmental, Social, and Governance (ESG) credentials.
Key Points:
- Premium Increases for Renewable Energy Insurance: Policyholders in the renewable energy sector are experiencing 20%-40% higher premiums compared to last year due to the rising cost of claims caused by natural catastrophes like hailstorms and lightning strikes on renewable infrastructure.
- Impact of Extreme Weather Events: Unpredictable weather patterns, such as hailstones damaging solar panels and lightning strikes hitting wind turbines, have resulted in much higher-than-expected insurance claims. This has exposed weaknesses in risk pricing models.
- Climate Change and Risk Models: Climate scientists suggest that global warming is contributing to more extreme weather events, which increases the likelihood of damaging storms and catastrophic losses for insurers in the renewable energy sector. The upcoming COP29 talks aim to address these challenges.
- Market Growth Amidst Higher Costs: Despite the higher premiums, the renewable energy insurance market is growing, with new entrants like FM, Novagen, Volt Underwriting, and Beazley expanding their offerings. This growth is driven by the energy transition and insurers’ desire to improve their ESG credentials.
- Increased Risks from Larger Infrastructure: The growth of larger renewable energy infrastructure, such as taller offshore wind turbines, is increasing vulnerability to risks like lightning strikes. Additionally, quality issues from manufacturers competing on size and price could exacerbate losses, as seen in recent catastrophic events like hurricanes and hailstorms.
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Check out all things ICT!
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Kevin Matula added to ICT Board
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Kevin L. Matula, Government Relations Director for USAA, joins the Insurance Council of Texas Board of Directors effective November 12, 2024. Based in San Antonio, USAA has a century-long history of serving military families. In his role, Matula builds partnerships with elected officials and community leaders to advance USAA’s mission. His prior experience includes roles at Zachry Group and CPS Energy, and he brings extensive expertise in public affairs. Matula holds a B.A. in Political Science from St. Mary’s University and serves in leadership roles across San Antonio.
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ICT Education Foundation Awards $75,000 in Scholarships
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The Insurance Council of Texas Education Foundation (ICTEF) Board of Trustees proudly announces the recipients of the 2024 ICT Education Foundation Scholarships. This year, $75,000 has been awarded to 40 outstanding students from universities across Texas, all pursuing careers in the property and casualty insurance field. This initiative underscores ICT’s commitment to academic excellence and developing the next generation of industry professionals. The scholarship recipients represent a range of our partner institutions, including Baylor University, St. Mary's University, the University of Houston, and others.
Congratulations to these deserving students who are shaping the future of insurance!
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First Name
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Last Name
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College or University
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Rita
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Dicarlo
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Baylor University
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Armando
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Ramirez
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Baylor University
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Reagan
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Dutton
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Baylor University
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Daysha
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Watts
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Baylor University
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Aaron
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Flores
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St. Mary's University
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Ariette
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Aragon
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St. Mary's University
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Jose
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Gutierrez
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St. Mary's University
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Jimena
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Morillo Aliaga
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St. Mary's University
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Madalyn
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Trevino
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St. Mary's University
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Kendra
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Turner
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St. Mary's University
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Riley
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Gibson
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St. Mary's University
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Clement
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Haastrup
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St. Mary's University
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Alvaro
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Soler Santa Maria
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St. Mary's University
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John
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Thurbin
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St. Mary's University
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Abdullah Mohammad
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Mahi
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St. Mary's University
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Isabella
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Martinez
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St. Mary's University
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Aaron Ben
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Anton
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St. Mary's University
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Arturo
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Martinez Polanco
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St. Mary's University
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Katie
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Cerda
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St. Mary's University
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Skilee
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Soto
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St. Mary's University
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Jenna
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Lee
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St. Mary's University
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Shante
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Delgado
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University of Houston - Downtown Campus
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Karla
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Rodriguez
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University of Houston - Downtown Campus
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Jai
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Shet
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University of Houston - Main Campus
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Lesly
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Garcia
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University of Houston - Main Campus
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Thanh Ngan
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Hoang
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University of Houston - Main Campus
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Lily
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Westmoreland
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University of North Texas
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Brock
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Polydoroff
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University of North Texas
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Samuel
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Zimel
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University of North Texas
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Kaitlyn
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Adamson
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University of North Texas
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Harizah
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Kabiruddin
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University of North Texas
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Dung
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Nguyen
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University of Texas - Dallas
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Alexander
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Fontenarosa
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University of Texas - Dallas
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Jadon
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Grimes
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University of Texas - Dallas
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Aayan
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Momin
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University of Texas - Dallas
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Negin
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Khakpour
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University of Texas - Dallas
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Soha
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Arian
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University of Texas - Dallas
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Charles
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Ribordy
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University of Texas - Dallas
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Sachi
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Arora
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University of Texas - Dallas
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Adekunle
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Ajayi
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University of Texas - Rio Grande Valley (UTRGV)
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2023-2024 Texas Workers' Compensation Market Report Released
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ICT is pleased to announce the release of the 2023-2024 Texas Workers' Compensation Market Report. This report provides a comprehensive analysis of the thriving Texas workers' compensation market, highlighting key factors contributing to its success. Important findings include:
- Texas ranks as the 4th largest workers' compensation market in the U.S.
- The market demonstrates consistent growth and profitability, with workers' compensation being the only line consistently profitable in Texas.
- Positive outcomes for injured employees, bolstered by a strong healthcare network and competitive rates.
This report provides valuable insights for navigating the evolving market landscape. Whether you’re tracking growth, policy trends, or the overall health of the market, this report is an essential resource. Click here for the full report.
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