Allstate Files for Homeowners Rate Increase in Texas

Allstate has filed to raise homeowners rates in Texas, effective Jan. 20, citing the frequency of severe weather and rising repair costs, especially for materials and labor for roof repairs.

Allstate Texas Lloyd's filed for a 5.4% increase, while Allstate Fire and Casualty Insurance Co. is seeking a 9.7% increase. The 450,000 policyholders of Allstate Texas Lloyd's will see an average increase of $64, while the 174,000 policyholders of Allstate Fire and Casualty will see an average increase of $115, Allstate spokeswoman Kristen Beaman said. Both companies write statewide.

Allstate Texas Lloyd's last raised rates by 5.5% in August 2009, while Allstate Fire and Casualty raised rates 9.8% in November 2009, Beaman said.

She said the rate increase was necessary because of the increasing severity of wind and hailstorms, and she said repair costs for labor and materials, especially roof-repair costs, have increased significantly.

Allstate Fire and Casualty customers who purchase both homeowners and auto coverage with Allstate could receive a discount of 22%, up from the current 15%, Beaman said.

Texas has among the highest homeowners’ rates in the country, because of its severe weather (BestWire, Dec. 7, 2010). Most recently, the Texas Insurance Council estimated that insured losses from Tropical Storm Hermine, which pounded parts of Texas in early September, totaled $75 million (BestWire, Sept. 10, 2010).

In Mississippi, Insurance Commissioner Mike Chaney in September rejected Allstate's request for a 44% rate increase for homeowners insurance, saying he had concerns about Allstate's reported noncatastrophe-related losses. Allstate is appealing his decision (BestWire, Nov. 9, 2010).

The Allstate Insurance Group currently has a Best’s Financial Strength Rating of A+ (Superior).

In morning trading on Dec. 17, shares of Allstate (NYSE: ALL) were changing hands at $30.99, down .77% from the previous close.

The companies with the largest market share in the Texas homeowners multiperil market in 2009 were State Farm, with 28.82% market share, Farmers Insurance Group, with a 13.49% share; Allstate Insurance Group, with a 13% share; USAA Group, with a 7.95% share, and Travelers Group, with a 4.9% share, according to BestLink, which provides online access to A.M. Best’s database of insurance information.

(By Diana Rosenberg, senior associate editor, BestWeek)