Insurance Companies Doing It Again – Raising Rates

Insureds in Weatherford, Aledo, Arlington, Azle, Grand Prairie, Dallas, Fort Worth, Mansfield, Bedford, Hurst, Euless, Grapevine, and any other place in Texas will be upset to find out that their insurance rates are going up again. And it is going up in spite of record profits the insurance companies are making. It’s not like they are losing money.
The Austin American Statesman published an article on Wednesday, December 15, 2010. The title of the article is, “Allstate Raising Homeowner Insurance Rates.” This article appears to be reprinted from the Associated Press.
The article informs the reader that Allstate Insurance has notified the Texas Department of Insurance that it will increase homeowner rates. Some of the increases will be up to 10 percent.
One of the Allstate companies is Allstate Texas Lloyds. There are about 450,000 homeowners covered by this company. They will see a rate increase of 5.4 percent, that goes into effect on January 20, 2010. Another Allstate company, Allstate Texas Fire and Casualty, will increase the rate for their estimated 175,000 homeowners 9.7 percent. This is according to the documents filed with the Texas Department of Insurance.
TDI will review the rate increases to make sure that they are justified and have the authority to order a reduction if the review indicates the rates are excessive.
Allstate is giving several reasons for justifying the rate increases. Chief among these reasons is the increased costs for construction and damage caused by destructive Texas weather. This destructive weather in the form of hail and wind storms have increased in severity in recent years causing an increase in claims. The increasing cost of roofing materials is also a big factor according to the article.
One interesting factor missing from the articles in the Austin paper and the Associated Press article is that there is not any blame for the rate increase being put on lawyers and lawsuits. Even though insurance companies often times try to place blame on lawyers and lawsuits for justification in rate increases the reality is those are not real reasons.
The increase being talked about now by Allstate will increase Allstate Texas Lloyds customers an average of $64 annually. Allstate Fire and Casualty customers will see an average increase of $115 per year.
Farmers Insurance plans a rate increase for its homeowners policy holders of 3.9 percent in March effecting nearly half its Texas policyholders.
These increases are causing a spokesman for the consumer group, Texas Watch, to say, “Here we go again. It seems like every time one of the major insurance carriers raises rates, they all raise rates.”
Allstate company spokeswoman, Kristen Beaman, told reporters, “We don’t take pricing lightly. We understand we have a responsibility to offer consumer products at a fair price, but it needs to be one that reflects risk as adequately as possible.”
A representative of consumers, The Office of Public Insurance Counsel, has sent a letter to TDI opposing the planned Allstate increases.
Other consumer groups are requesting the 2011 State Legislature to return to a system of prior state approval of all rate hikes for auto and homeowners insurance.