Wednesday, November 19, 2008

Farmers Insurance to Raise Rates 9.9%

Thousands of Farmers home insurance policyholders will see their rates climb an average 9.9 percent in February.

Farmers needed the hike to cover rising labor and materials costs, said spokeswoman Michelle Levy.

The new rates don’t account for losses related to Ike, she said.

“This rate action has been in the works for months, long before hurricanes Dolly and Ike, as part of our annual review of rates,” she said.

Levy declined to disclose the number of Ike-related claims the company has received so far or how much Farmers expects to pay out on them.

The company, which sells home insurance through its Texas companies Farmers Insurance Exchange, Fire Insurance Exchange and Texas Farmers Insurance Co., notified state regulators of the bump in rates earlier this week.

“We are reviewing it right now,” said Jerry Hagins, a spokesman for the Texas Department of Insurance. “It doesn’t go into effect until February 16th, so that’s a good amount of time for us to review them.”

Farmers has 760,000 home policyholders in Texas. But only half — those under its “HOA” policies — will see a rate increase, Levy said.

Customers with Texas Farmers Insurance Co., which sells the “Texas Family Home Policy,” will not be affected by this increase.

Those customers saw their rates jump an average 7.9 percent in May.

In a move to compete in the condominium market, Farmers will cut rates an average 10 percent for condo policies, Levy said.

Farmers is the second company to raise rates in Texas following Hurricane Ike.

USAA told state regulators last month that it will raise Texas home insurance rates an average of 7.9 percent because of growing construction costs and the increase in the frequency of catastrophic weather. In Harris County, the average increase was 20.9 percent.

Source: chron.com

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