LT. GOV. WANTS LOWER RATES FASTER:

Texas Lt. Governor David Dewhurst has reportedly taken State Farm and Farmers to task for not lowering their homeowners rates in the state at a faster pace and contesting the decreases in court. A report in the Houston Chronicle from the Associated Press noted that although 35 of Texas’ largest homeowner insurers had already lowered their rates, in Dewhurst’s opinion it wasn’t happening fast enough. “I hope we don’t find that this is simply a stalling measure, that the companies make more money by litigating than by agreeing to cutting premiums now,” he was quoted as saying. The state has experienced steady increases in homeowners’ rates, which the industry has attributed to the increasing burden of damage claims for mold. Both State Farm and Farmers have contested Texas Department of Insurance orders to cut rates by 12 percent and 17.5 percent, respectively. Their cases are pending in court, but, as they represent more than 40 percent of the homeowners insurance market, their reluctance to lower rates has meant that decreases for many policyholders have been delayed. Farmers spokeswoman Michelle Levy indicated that the company had already committed to a 6.8 percent rate decrease and does not think an additional rollback is warranted. She noted that the TDI has been using data that is not “directly applicable to Farmers and therefore we believe the rate rollback is unfounded.” Levy added that the company was simply questioning the decision, as the law specifically gives it the right to do. A State Farm spokeswoman reportedly took a similar position. Dewhurst said he would ask the legislature to examine whether penalties are severe enough to discourage insurers from using litigation to avoid reducing rates. Under Texas statute, if a company has appealed a rate order by TDI and the court finds TDI was correct, the company is required to refund policyholders the difference in the overcharged premiums plus interest, which is the prime rate plus 1 percent.

Topics Texas Homeowners