Farmers Insurance

Farmers Insurance, state agree to cut ‘excessive’ rate hike

(DALLAS NEWS) - Farmers Insurance agreed Monday to scale back a double-digit rate hike for homeowners coverage in Texas. But the company will get to keep millions of dollars it has collected the past six months, even though the state declared those premiums excessive.

Farmers, one of the largest insurers in Texas, had proposed a statewide increase of 10 percent, with an 11 percent hike for the Dallas area, in June. The company said the rates were necessary because of increased property losses and a jump in the cost of reinsurance – which insurers buy to help pay claims after a catastrophic event such as a hurricane.

State Insurance Commissioner Mike Geeslin, who called the initial rate plan “excessive and unfairly discriminatory,” signed a consent order Monday agreeing to a 4.5 percent increase for the 300,000 customers of Farmers’ largest home insurance subsidiary.

But the order does not require the company to lower its rates until March 16, nor will it have to issue refunds for the higher premiums it has charged policyholders since last summer. The insurance department couldn’t say how many Farmers customers paid too much, but the majority of the company’s policyholders have been affected because their policies would have been renewed in that time.

Under the provisions of the order, the state’s third-largest home insurer will leave its new rates in effect until at least March 16, 2011.

Read full story