Saturday, February 14, 2009

Farmers Insurance rate hike to hit many Texas homeowners

By TERRENCE STUTZ / The Dallas Morning News

AUSTIN – Hundreds of thousands of homeowners in North Texas and across the state will see their insurance rates increase by double digits beginning Monday after state regulators decided not to object to the rate hikes by Farmers Insurance.

The higher rates affect policyholders for two of the company's largest subsidiaries – Farmers Insurance Exchange and Fire Insurance Exchange – which will boost their premiums nearly 10 percent and 12.6 percent respectively, starting with policies renewed on Monday.

Farmers is the third-largest home insurer in Texas.

"We are not planning to take any action on it, so the effective date stands," Jerry Hagins of the Texas Department of Insurance said Friday. The agency reviewed the proposal after it was filed late last year and could have objected if officials had found the increase unjustified.

A spokeswoman for Farmers said the increase for customers of the two subsidiaries is across the board with no variations by region of the state.

Michelle Levy of Farmers, who cited higher costs for labor and materials as one reason for the increases, noted that the rate proposals were being developed even before Hurricanes Ike and Dolly struck the Texas coast last year.

"It was part of our annual review of rates in 2008," she said.

Rates for Farmers' other home insurance subsidiary in the state – Texas Farmers Insurance – went up 7.9 percent last year, an increase that was reflected in annual premium notices beginning in May. Farmers provides coverage for about 714,000 Texas homeowners.

Consumer groups on Friday criticized the insurance department for allowing the increases to go through.

"These kinds of double-digit rate hikes should provide the Legislature with the evidence they need to move forward with real insurance reforms this year,"
said Alex Winslow of Texas Watch.

"Enough is enough. How many of these rates hikes do we have to have before lawmakers and the insurance commissioner recognize that insurance companies are taking advantage of the system?"
he asked.

Regarding the massive losses that companies suffered in 2008 because of the hurricanes, Winslow said, "Certainly we want rates to be sufficient, but given the overcharges that Farmers and other companies have imposed on customers for years, I have no doubt the insurance industry in our state has ample resources to protect themselves against weather-related losses."


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