The Texas Dept. of Insurance on Aug. 8 ordered 24 of 32 previously unregulated insurance companies — which between them write 95% of Texas’ homeowner policies — to lower their rates. Under the new “file and use” scheme passed by the Legislature this spring, insurers are required to file their proposed rate changes, along with documentary evidence supporting those rates, with TDI for review and approval. According to an agency press release, TDI ordered rate reductions up to 31%, which they say will save Texas policyholders more than $510 million.
Each company has been notified of the ordered rate reductions, reads the release, and has 10 days to decide whether to appeal the agency’s decision by requesting a public hearing before TDI Commissioner Jose Montemayor; appeal hearings must be held within 30 days of the appeal request. Any decision issued after a public hearing can be appealed to state district court. If the companies accept the reductions, consumers could see a reduction in their premiums within a month, the press release reads, while any appeal would delay those savings indefinitely.
TDI ordered a 12% reduction for State Farm Lloyds, the state’s largest insurer; a 17.5% reduction for Farmers Insurance Exchange — on top of the 6.8% reduction that was part of the state’s negotiated settlement with the company earlier this year; and an 18.2% reduction for Allstate Texas Lloyds, the state’s third largest insurer. The largest reduction ordered was 31% for Hanover Lloyds Insurance Co., which writes $13 million in premiums per year and represents a very small portion of the state’s insurance market. In contrast, Farmers writes nearly $1.2 billion in premiums per year, said TDI spokesman Robert Black.
According to Black, Farmers has already “intimated” that it will appeal the ruling, although at press time, TDI had not yet received any written requests for review. For more information on the ordered reductions, see www.tdi.state.tx.us.
This article appears in August 15 • 2003.