If the Texas Department of Insurance approves increases, about 2 million homeowners across the state will see a significant increase in their homeowners’ insurance premiums in 2014. Three of Texas’s biggest residential property insurance providers—State Farm, Farmers, and Allstate—have notified state officials that they will be increasing their rates in the new year, from six to fifteen percent.
The insurance companies claim that the rate increases are in response to their projected losses in 2013. They say that severe weather, paired with the increase cost of repairing fire and wind damage, means that they paid out too much in claims in the last year to keep their businesses operating. However, the state consumer advocate for insurance believes that the rate hikes are not needed and should be rejected by the Insurance Department.
The insurance premium increases, which take effect immediately, are as follows:
- Farmers Insurance would raise their rates by 14.9 percent.
- State Farm Insurance would raise their rates by 9.8 percent.
- Allstate Insurance would raise their rates by 6.8 percent.
The Office of Public Insurance Counsel opposes all three rate increases. They believe that premiums are going up while customers are receiving less coverage. Other opponents point out that, while insurance company profits for 2013 are not currently available, initial data reveals that the companies are not struggling to pay out claims to the extent that they report. In addition, many insurance companies also increased rates significantly in recent years. For example, State Farm increased homeowners’ insurance rates by 20 percent in 2012. If this year’s rate increase is not blocked, State Farm policyholders can expect to pay an average of $150 more per year to keep their current coverage.
The National Association of Insurance Commissioners released a report last month that found Texas had the third-highest homeowners insurance rates in the country.
Keep up with the latest Texas insurance news here.