State Farm, the largest home insurer in Texas, must continue to get prior approval from the Texas Department of Insurance before making rate changes because the company is overcharging customers, the Associated Press reported.
The order issued by TDI to the company this week, is the latest move in an ongoing battle between State Farm and state regulators. The order means State Farm is the only insurance company in Texas that must get approval for what it charges on homeowners policies.
A State Farm spokeswoman did not immediately return a telephone message seeking comment. Last month, a State Farm official said rates haven’t changed since January 2003.
The prior approval requirement used to be mandated for all companies. But as of Dec. 1 companies have been allowed to charge new rates while they are under review by regulators.
The new system is considered a more efficient, market-based approach that allows insurers to get new products and prices to customers quicker.
But the system is not available to State Farm under the order, which directs the company to file with the agency all rates for approval by Jan. 14.
In 2003, state officials ordered State Farm to reduce its homeowners rates by 12 percent. The cuts came under a law passed earlier that year designed to stop skyrocketing insurance rates.
Twenty-nine other companies agreed to the ordered rate rollbacks, but State Farm and Farmers held out.
Last month, those two companies won a court ruling that said the procedures used to order the rollbacks denied them due process and were therefore unconstitutional. The ruling said by State District Judge Suzanne Covington in Travis County said the rollbacks were unenforceable.
Farmers reached a settlement with the state Monday, leaving State Farm to fend for itself.
Insurance department spokesman Jerry Hagins said the state continues to believe that State Farm has charged its customers too much.
“They need a heightened level of review,” Hagins said.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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