The Texas Department of Insurance has recently released the Commissioners Order regarding State Farm Homeowners rate reduction and refund fight.
This order is the result of a re-hearing . The original reduction order was first issued in 2003, but was remanded by the Third Court of Appeals in Texas in 2008 to the Texas Department of Insurance for further proceedings due to their finding that a portion of the underlying law enacted in 2003 was unconstitutional.
The total amount of the refund, including interest, is estimated to be about $310 million. Individual amounts will vary among policyholders, with differences based, in large part, on the length of time with the company and the amount of premium paid to State Farm. Further information regarding refunds or premium credits to policyholders, both current and former, will be made available pending any appeal of the order.
The actual heating phase took place on separate days beginning on March 30, 2009, and not ending until May 2, 2009.
The evidence, testimony, transcripts and exhibits numbered in the thousands of pages. In the succeeding months, time was taken to review the record and all admissible evidence, as well as drafting the order.
In the 2009 rate hearing, the Texas Department of Insurance staff withdrew their -12% reduction due in part to State Farm Lloyd’s premium calculation error that became known after the original september 2003 rate hearing. There was insufficient evidence in the record to sustain the -12% rate reduction originally recommended by the Texas Departmant of Insurance in 2003.
The Insurance Commissioner found State Farm’s rates were excessive and is ordering State Farm to pay refunds amounting to 6.2% of premium for policyholders insured with State Farm Lloyd’s from September 2003 thru August 2004. The estimate of the total refund ordered is estimated to be $257 million.
There are various interest calculations in accordance with applicable statutes. And State Farm is suppose to be paid within 60 days unless an appeal is filed.
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