Dallas insurance attorneys need to keep up with what is going on in the insurance industry. An Austin paper ran an article talking about rate hikes and the insurance company claim for the necessity of the rate hike. Here is what the article tells us.
State Farm Lloyds of Texas said Friday that it intends to raise homeowner policy rates in Texas by an average of 20 percent.
In a move that drew criticism, the state’s largest writer of homeowners insurance submitted a notice of the increase to the Texas Department of Insurance. The changes will be effective Nov. 1 for new customers and Dec. 1 for existing customers, if the change is not denied by the department.
Some of State Farm’s 1.25 million homeowner insurance customers could see boosts of less than 20 percent, while others could have rates increased more than 20 percent, the company said.
“No state has more severe weather events than Texas, and no part of our state is risk-free,” Phillip Hawkins, senior vice president of State Farm Lloyds, said in a news release. “Our policyholders are vulnerable to significant losses caused by high winds, hailstorms, hurricanes and wildfires.”
Patti Kelly, a State Farm spokeswoman, said there was not a specific weather event that prompted the rate increase.
State Farm said the changes are being sought because of the volume of claims and increasing costs per claim. Roofing prices alone have spiked almost 90 percent in the past five years, the firm said in the news release.
Homeowners covered by Farmers Insurance also saw a rate increase recently. The company increased rates in July by an average of 15 percent.
The state Insurance Department will begin reviewing State Farm’s filing immediately to make sure it is not excessive, is not “unfairly discriminatory” and will provide adequate coverage, said Jerry Hagins, a spokesman for the department. Under the state’s “file and use” regulatory system, insurers must notify the state about rate increases and can begin using them while the state reviews them.
Deeia Beck, the head of the Office of Public Insurance Counsel, said her state-run public advocacy office has not had an opportunity to review the rate filing in detail or make a recommendation to the state Department of Insurance.
But Beck described the increase as “troubling.” The rate hike, she noted, would result in a cumulative increase for policyholders of 31.5 percent since Oct. 15.
“This is the largest single rate increase filing from a major carrier that we have seen in years,” Beck said in a statement. She added that Friday’s filing was of particular concern because State Farm recently decided not to renew more than 11,000 Gulf Coast policies and because the company has continuing multiyear litigation concerning refunds for their policyholders.
Alex Winslow, executive director of the insurance consumer watchdog group Texas Watch, criticized the insurance industry and Eleanor Kitzman, the state’s insurance commissioner.
“The Texas insurance market has become the Wild West with insurance industry bandits like State Farm stealing from innocent families while the sheriff looks the other way,” Winslow said in an email. “State Farm and the other big insurance companies are picking the pockets of Texas homeowners because they know they can get away with it. Until and unless Commissioner Kitzman and lawmakers crack down on these out of control insurance companies, Texas homeowners will keep getting squeezed by skyrocketing rates on stripped-down policies.”
Hagins declined to comment on Winslow’s remarks about Kitzman. Kelly of State Farm also didn’t want to respond.
The rate increase announcement by State Farm, which insures 1 in 6 homes in Texas, came on the same day as an ABC News report that said the company is facing a criminal investigation and lawsuit related to hurricane claims in Texas.
Gregg Cox, head of the public integrity unit of the Travis County district attorney’s office, told the news outlet that his office is reviewing newly released documents from State Farm officials. At the center of the investigation is Jim Warner, a State Farm customer from Missouri City who said in a separate lawsuit that company documents indicate State Farm has a policy of intentionally denying claims for roof damage.
The lawyer who is representing Warner, said the denial of claims such as Warner’s could allow the company not to pay out almost $1 billion in claims.
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