Citing the rising cost of homes and rising hurricane damage, State Farm Insurance had asked the state for a 21.8% increase in their homeowner's insurance rate. State Farm has about 30% of the Texas market. But Friday, the Texas Department of Insurance rejected the request.
Can you believe it? Our state government actually did something to help the citizens of Texas. It must be an election year!
Texas Insurance Commissioner, Mike Geeslin, said the company's costs did not justify the rate increase. Geeslin went on to say that the provision for expected expenses and the profit margin sought were both excessive. He said the hurricane risk cited by the company was improper because "non-hurricane losses represent the vast majority of expected company exposure and are less risky, resulting in an overstated rate of return."
Alex Winslow, from the consumer group Texas Watch, says State Farm paid out in claims last year only 50 cents of every dollar it received. The average payout of all Texas insurance companies last year was 56 cents of each dollar received. Winslow believes the regulators should force State Farm to roll back its rates and return money to policyholders, because of excessive fees in recent years.
I wouldn't hold my breath waiting for an insurance company to return any money, but I do applaud the action of the Texas Department of Insurance. I'm just hoping they don't flip-flop after the November election.
According to the article I saw, they have two choices: 1)make another rate increase request, or 2)go to court.
ReplyDeleteIn 2003, State Farm took the state to court [and won].