The Texas Department of Insurance (TDI) is reportedly taking steps to initiate new actions against State Farm Lloyds and Farmers Insurance Group in an effort to bring those insurers’ homeowners insurance rates into compliance with state law.
TDI contends that State Farm Lloyds, Farmers Insurance Exchange and Fire Insurance Exchange (both Farmers Insurance companies) have been charging their policyholders excessive rates totaling more than $243 million since June 11, 2003, the effective date of Senate Bill 14. TDI is preparing to initiate administrative actions to demonstrate that the rates charged by insurers are excessive and that refunds of the excessive premium should be issued directly to policyholders. TDI will seek a refund of the excessive premium plus 10 percent interest. The total amount will be calculated from June 11, 2003 to present.
These actions represent new rate actions, separate from the September 2003 reduction orders in which 30 insurers were ordered to reduce rates. State Farm and Farmers are the only companies that appealed the commissioner’s orders. At that time, State Farm was ordered to reduce rates by 12 percent, which equaled $155 million. The Farmers companies were ordered to reduce rates by 17.5 percent, or $88 million.
“This action is about ensuring consumers are paying fair rates at justifiable levels, as the Legislature intended under Senate Bill 14,” said Mike Geeslin, Deputy Commissioner for Policy. “The data collected by TDI over the past year has proven that TDI’s evaluation of rates was on target. We believe that rest of the industry has reduced their rates to a fair level and have taken positive steps toward a more stable market. It’s time for State Farm and Farmers to do the same.”
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