Farmers rethinks homeowners rate hike in Texas

Texas regulators indicated they would turn down a proposal by Farmers Insurance for a 6.6 percent statewide increase in homeowners rates, so in late July 2007, the company said it will revise its plan. Ben Gonzales, a spokesman for the Texas De-partment of Insurance, said the agency was prepared to reject the plan because of concerns about rate variations across the state and indications that Farmers’ current rates are adequate.

“It was clear that we would disapprove the filing as it was written,” Gonzales said.

The state’s file-and-use law allows insurance companies to raise rates once they’ve notified the insurance department. However, the company must roll the rates back and issue refunds — with interest — if the commissioner of insurance determines the increases were not warranted.

Gonzales said it was “a lot simpler for them to withdraw the filing than to move forward” on a plan that was opposed by the state.

Farmers spokeswoman Mich-elle Levy said the company still wants to adjust its rates and is working on a new plan.

Gonzales said state actuaries were concerned about rate differences in Farmers’ proposal, from a 50 percent increase along the Texas coast to a 10 percent decrease for some North Texas customers.

“The increases are heavily weighted toward the coast, which may be appropriate because of the risks. But we need to see more documentation,” he said.

The department also found that the company’s loss ratios over the past year indicated healthy profits, Gonzales said.

The department is still reviewing a rate increase proposed by Allstate Insurance, the state’s second largest home insurer, which wants to raise the average cost of its policies by 6.9 percent.

“There is no indication yet of which way we will go,” Gonzales said of the Allstate proposal.

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