Two administrative law judges have rejected a consumer challenge to a recent 20-percent rate hike for Texas homeowners covered by State Farm Lloyd’s.
The judges decided on Aug. 19 that the premiums for 1.2 million homeowners are not excessive or unreasonable, the Dallas Morning News reported.
The decision now goes to Texas Insurance Commissioner Julia Rathgeber, who can accept the ruling or consider more arguments.
In a written ruling, the judges said they “conclude that State Farm Lloyds’ rates meet the requirements of (the state insurance code) and should remain in effect.”
Contrary to the arguments of the Office of Public Insurance Counsel, “State Farm Lloyds’ rates are not excessive, unreasonable or unfairly discriminatory within the meaning of the Texas Insurance Code,” according to the ruling.
Public Insurance Counsel Deeia Beck, who sought to have the rates rolled back, expressed disappointment at the decision.
“We accept the decision, but we respectfully disagree,” Beck said. “We still believe that State Farm’s rates are excessive.”
The increase, which allows State Farm to collect an additional $317 million annually in premiums across Texas, was necessary, a company spokeswoman said.
“We maintain our position that our rate filing is not only justified, but crucial to maintaining our financial strength so we can keep our promises to our customers when they need us the most,” Kelly said.
In a hearing in April, Beck argued that the state’s largest property insurer imposed a rate hike last December despite good profits and a drop in claims during 2012.
Company attorneys say an even larger rate hike could have been justified given the company’s weather-related losses in Texas in recent years.