Texas, Allstate Reach Agreement on Homeowners Reductions, Refunds

The Texas Department of Insurance (TDI), the Office of Public Insurance Counsel (OPIC) and Allstate Texas Lloyd’s (Allstate) have reached agreement to settle all outstanding litigation with respect to homeowners insurance issues that date back as far as Dec. 1, 2004.

TDI and the OPIC announced that 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. These dates reflect 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 a total of 3 percent of premium for new and renewal policies written between Aug.20, 2007, and June 1, 2008. These dates reflect 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 policyholders to be $14,800,000. These credits or refunds will be mailed by Nov. 1, 2008.

–Allstate will reduce its homeowners insurance rates by 3 percent statewide for new and renewal policies written between June 2, 2008, and at least June 1, 2009. Allstate estimates the value to policyholders of this rate reduction to be $19,700,000. Allstate will apply rate reduction rates based on geographical areas to more appropriately reflect expected costs in each area.

In addition, Allstate agreed to not increase its 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 owed through company checks. Current eligible policyholders will receive any refunds owed through policy credits and if necessary company checks. All refunds and credits will be issued no later than Nov.1, 2008.

“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. “It allows Allstate to focus even more directly on what’s important — providing quality, innovative insurance products and great service to our customers.”

Source: Texas Department of Insurance, www.tdi.state.tx.us/