State Farm To Boost Homeowners Rates
|Source:||Houston Chronicle (TX)|
Mar. 12--The state's largest home insurer plans to raise rates 4.5 percent statewide.
State Farm, which has almost 30 percent of the homeowner insurance market in Texas, plans to launch the rates in May for new customers and starting June 1 for others as policies come up for renewal.
"As costs related to providing home insurance coverage continue to rise, prices must be adjusted to reflect that trend," said Kevin Davis, a State Farm spokesman.
The insurer's costs are rising across the board, from claim losses to business expenses, he said.
Separately, Travelers Insurance has told state regulators it plans to raise home insurance rates a statewide average 6.9 percent starting April 17.
A spokesman for that insurer could not immediately offer comment.
In documents filed with the Texas Department of Insurance, State Farm said it opted for a lower rate increase than the 26 percent hike its projections indicate it needs.
State Farm is also increasing the discounts it offers consumers who buy both home and auto policies from the company to 20 percent, up from 15 percent.
State Farm last raised Texas home insurance rates in October with an 8.8 percent rate hike.
The timing of the new filing has state insurance regulators concerned.
In a letter sent last week, Insurance Commissioner Mike Geeslin asked State Farm to withdraw the latest rate increase voluntarily.
"Multiple rate increases within such a short period of time may indicate a lack of rate-making discipline and lead to market instability," Geeslin wrote, adding that he worries that other insurers may follow State Farm's lead.
State Farm and the Insurance Department also continue to butt heads in court over a 2004 order from the state to cut rates.
After years of batting the case around in court, Geeslin ordered the insurer in November to refund $310 million plus interest to policyholders, and the company has appealed.
The Office of Public Insurance Counsel, which represents consumers at state rate hearings, called the latest increase "excessive" and "unreasonable."
As it has in the past, the consumer agency took issue with the projected profits the rates would provide and the insurer's purchase of reinsurance, or coverage used to help pay for claims after catastrophes.
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