The Houston Chronicle recently reported that State Farm is seeking a 20% rate increase for all of its Texas policyholders. State Farm insures about 1 out of every 6 homes in Texas, and its rate increase request follows Farmer’s Insurance’s request to increase its rates by 15%.
Singing the same old song, both companies complained of high loses due to severe weather in recent years. “No state has more severe weather events than Texas, and no part of our state is risk-free,” State Farm said in a news release. “Our policyholders are vulnerable to significant losses caused by high winds, hailstorms, hurricanes and wildfires. State Farm Lloyds must maintain its financial strength in order to keep our promises to our policyholders.”
If the Texas Department of Insurance approves State Farm’s 20% rate increase, it would be the second announced by State Farm in about a year. The Texas Department of Insurance approved a 9.6% rate increase that took effect in October. Added together, the two represent a 31.5% rate increase.
“However, a rate increase of this magnitude is troubling,” Deeia Beck of the Office of the Public Insurance Counsel said. “This is the largest single rate increase filing from a major carrier that we have seen in years.” State Farm insures about 1.25 million homes in Texas, and by premium volume, it writes about 27% of the homeowners’ policies in the state, Beck said.
If approved by the TDI, the rate increases will take effect November 1st for new customers and December 1st for existing customers.
The Houston Chronicle noted that State Farm’s 20% rate increase comes at an awkward time. The Travis County District Attorney’s Office confirmed that its Public Integrity Unit is looking into the possibility that State Farm violated criminal laws during the settling of thousands of claims for roof damage caused by Hurricane Ike’s high winds.