Texas Lawmaker Cancels State Farm Policy Over Refund Issue

Texas State Rep. Joaquin Castro of San Antonio has announced he is terminating his policyholder relationship with State Farm Insurance Co. because of the company’s persistent refusal to pay back customers that have been overcharged on their premiums.

He has been a State Farm policyholder for than 10 years.

“Texans already pay some of the highest insurance rates in the entire country and State Farm still refuses to do what is right by their customers,” Castro said in an announcement released by the Texas House of Representatives.

In 2003, the Texas Legislature adopted Senate Bill 14, a measure intended to better regulate homeowner’s insurance rates in Texas by creating a “file-and-use” system. Prior to this measure, Texas homeowners insurance premiums had increased more than 45 percent over three years. As a result of the Legislature’s action, the Texas Commissioner of Insurance conducted a comprehensive review of homeowner’s insurance rates, and instructed more than 30 insurers to reduce their rates. State Farm is the only company that still refuses to comply.

On April 11, State District Judge Tim Sulak ruled in favor of the Texas Insurance Commissioner, requiring State Farm to refund nearly $350 million to Texas policyholders. State Farm has indicated they will appeal the case to the 3rd Court of Appeals. This is the latest action in a prolonged battle that has dragged on for years.

“It is estimated that this ruling could impact over 50,000 policies in Bexar County alone,” said Castro. He continued, “With the extra $200 that someone can save from paying less for insurance, they could pay for health insurance, part of their mortgage or groceries.”

Castro’s policy cancellation will take effect June 1, 2011.

Source: Texas House of Representatives