Texas Watch – State Farm Customers Slammed with 2nd Rate Hike in 9 Months

June 7th, 2010

AUSTIN – State Farm, the state’s largest homeowners insurance company, is currently implementing a second statewide rate hike in less than a year.  According to sample rates released by the Texas Department of Insurance,  State Farm customers in Texas will see increases of up to 39%.  Check out what State Farms double rate hike means for your community.

CITY Rate Before Increases Rate After Increases Percent Increase
Abilene $1,642 $1,847 12.5%
Alpine $1,549 $1,984 28.1%
Amarillo $1,657 $1,859 12.2%
Angleton $980 $1,305 33.2%
Angleton $2,254 $3,012 33.6%
Austin $1,188 $1,318 10.9%
Beaumont $2,254 $3,012 33.6%
Big Spring $1,565 $1,917 22.5%
Brownsville $2,053 $2,848 38.7%
Brownwood $1,548 $2,137 38.0%
Cleburne $1,548 $2,137 38.0%
College Station $1,214 $1,341 10.5%
Conroe $1,312 $1,368 4.3%
Corpus Christi $2,357 $2,979 26.4%
Corsicana $1,505 $1,786 18.7%
Dallas $1,506 $2,014 33.7%
Del Rio $1,068 $1,358 27.2%
Denton $1,625 $1,993 22.6%
Dumas $1,657 $1,859 12.2%
El Paso $787 $880 11.8%
Fort Stockton $1,485 $1,889 27.2%
Fort Worth $1,445 $2,012 39.2%
Freeport $2,376 $3,177 33.7%
Gainesville $1,782 $1,968 10.4%
Galveston $2,292 $3,196 39.4%
Greenville $1,841 $2,289 24.3%
Houston $2,422 $3,341 37.9%
Kerrville $1,068 $1,358 27.2%
Killeen $1,101 $1,216 10.4%
Laredo $1,068 $1,358 27.2%
Liberty $2,051 $2,313 12.8%
Longview $1,301 $1,543 18.6%
Lubbock $1,495 $1,981 32.5%
Lufkin $1,505 $1,786 18.7%
Midland $1,565 $1,917 22.5%
Mineral Wells $1,965 $2,170 10.4%
Mission $1,983 $2,366 19.3%
Nacogdoches $1,301 $1,543 18.6%
Odessa $1,489 $1,825 22.6%
Orange $2,051 $2,842 38.6%
Palestine $1,581 $1,875 18.6%
Paris $1,841 $2,289 24.3%
Pecos $1,485 $1,800 21.2%
Plainview $1,523 $1,886 23.8%
Plano $1,707 $2,093 22.6%
Port Lavaca $2,164 $3,001 38.7%
Round Rock $1,214 $1,341 10.5%
San Angelo $1,489 $1,825 22.6%
San Antonio $1,275 $1,426 11.8%
Sherman $1,841 $2,289 24.3%
Sweetwater $1,726 $2,115 22.5%
Texarkana $1,841 $2,289 24.3%
Tyler $1,239 $1,469 18.6%
Vernon $1,858 $2,258 21.5%
Victoria $1,983 $2,366 19.3%
Waco $1,532 $1,628 6.3%
Weatherford $1,617 $1,786 10.5%
Wichita Falls $1,604 $1,949 21.5%

Source: Texas Department of Insurance

In a letter to State Farm, Insurance Commissioner Mike Geeslin asked the company to withdraw this latest rate increase because it “may indicate a lack of ratemaking discipline and lead to market instability.”  The commissioner added that State Farm’s steep rate hikes could encourage “other companies [to] follow suit which would lead to further market instability.”  State Farm has refused to withdraw or amend its rate filing and is moving forward with the rate hike.

“State Farm is using its size to bully the insurance commissioner, the legislature, and its customers,” said Alex Winslow, executive director of Texas Watch, a statewide citizen advocacy group representing insurance consumers.  “Enough is enough.  Texans need and deserve comprehensive insurance reform that reins in the insurance industry’s bullying, requires insurance companies to justify their rate hikes, and holds them accountable to their customers.”

State Farm has been dragging state regulators into court since 2003 in a dispute over its rates.  All the while, the company’s customers have been forced to pay rates that state regulators believe are excessive.  According to the state Office of Public Insurance Counsel, State Farm owes its customers approximately $1 billion in overcharges and penalties.  Instead of complying with an insurance department order to refund a portion of those overcharges, State Farm is once again going to court.  Meanwhile, it has increased rates yet again.

Texas lawmakers have an opportunity to address insurance company abuses by enacting insurance reforms that include:

•Streamlined Prior Approval. Give the insurance commissioner an opportunity to review rates before – not after – they are imposed on Texas homeowners.  This improved consumer protection is the single most important step lawmakers can take toward improving our market for consumers.  It would guarantee that the insurance commissioner has the ability to protect Texas homeowners from rate hikes he believes are unfair or unwarranted.

•Ending Unfair Insurance Practices. Insurance companies should no longer be allowed to use credit scoring and data mining, which are fraught with errors, do not accurately reflect a person’s risk, and are riddled with the potential for abuse. Plus, the insurance industry’s deny-first mentality must be stopped.

•Simplifying Insurance Policies. Consumers have no way to effectively shop the Texas insurance market because it is too complex and confusing to allow true consumer choice. Give consumers more control over their insurance decisions by empowering them to effectively compare different options.

“For far too long, the insurance industry has been allowed to dictate the terms of the market,” said Winslow.  “No insurance company should be too big to regulate.  Texas insurance customers deserve a basic level of protection that allows them an opportunity to create real competition in the insurance market.”


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About Sharon Kramer

Hi, I'm an advocate for integrity in health marketing and in the courts.
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