Officials Must Testify in Farmers Settlement Case

January 7, 2003

State District Judge Scott Jenkins placed Texas’ $100 million settlement with Farmers Insurance Group of Companies in limbo by ruling that top state officials and Farmers executives must testify in a policyholder lawsuit protesting the negotiated agreement.

According to the Houston Chronicle and the Austin American Statesman, several lawsuits filed by lawyers for the policyholders are attempting to block the settlement on the grounds that the state didn’t adequately represent consumers when working out the agreement with Farmers.

The settlement called for Farmers to cut rates by an average of 6.8 percent for its 700,000 customers statewide and offer some $65 million in rebates or credits. The state originally sought from the company $25,000 for each individual hurt by alleged unfair pricing practices plus $150 million in restitution for Farmers customers.

Lawyers for the policyholders say the agreement could jeopardize Farmers customers’ ability to sue the company in the future and could put the state in the position of defending the company against lawsuits.

Officials who may be questioned as a result of Jenkins’ ruling include Insurance Commissioner Jose Montemayor and John Hageman, Farmer’s Texas executive director, as well as certain staff members at TDI and the attorney general’s office.

Jenkins has to approve the settlement before it can go into effect and a hearing at which the officials will testify is not yet scheduled.

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