Allstate to Begin Homeowners Rate Reductions, Refunds in Texas

As a result of an agreement reached by the Texas Department of Insurance, the Office of Public Insurance Counsel and Allstate Texas Lloyd’s, the company will soon begin reducing its homeowners rates and provide policyholders with refunds and/or credits for past overcharges.

The agreement, reached May 12, settles all outstanding litigation between Texas regulators and Allstate with respect to homeowners insurance issues that date back to December 2004.

TDI and the OPIC said under the agreement, Texas Allstate will provide policyholders with approximately $71,300,000 in refunds, credits and rate reductions under the following terms:

• Allstate will refunds policyholders $36,800,000 for new and renewal policies written between Dec. 1, 2004, and Apr. 23, 2006 — the period of time during which Allstate was charging a rate that TDI believes was excessive. These refunds will be mailed by Nov. 1, 2008.
• Allstate will credit or refund policyholders 3 percent of premium for new and renewal policies written between Aug. 20, 2007, and June 1, 2008 — the period of time during which Allstate’s August 2007 rate filing was in effect. Allstate estimates the value of these refunds and credits to be $14,800,000. These credits or refunds will be mailed by Nov. 1.
• Allstate will reduce its homeowners rates by 3 percent statewide for new and renewal policies written between June 2, 2008, and at least June 1, 2009. Allstate will apply rate reduction rates based on geographical areas to reflect expected costs in each area.

In addition, Allstate won’t raise homeowners insurance rates during the period between June 2, 2008, and June 1, 2009, barring extraordinary and unforeseen circumstances.

Eligible policyholders who no longer have insurance through Allstate will receive any refunds via checks. Current eligible policyholders will receive refunds through policy credits and, if necessary, company checks. All refunds and credits will be issued no later than Nov.1.

“This agreement takes Allstate and the Texas Department of Insurance out of the courthouse, ending burdensome, costly litigation in a positive way for our customers,” said Allstate’s Texas Field Vice President Rich Crist in a company release.

Neither the company nor regulators commented what would happen regarding commission payments agents received for the premiums TDI believes were excessive.