After the three largest insurance companies in Texas announced homeowners insurance rate hikes for 2014, some state lawmakers are calling for new regulations.
According to Texas Public Radio, Texas State Senator Rodney Ellis, a Democrat representing Houston, spoke out recently about the rate increases and suggested a new law that prevents increases without approval from the Texas Department of Insurance.
In January, State Farm Insurance Farmers Insurance, and Allstate Insurance all announced that they would increase their residential property insurance rates, from 6.8 to 14.9 percent. Under current regulations, they are required to notify the Insurance Department but can increase their premiums immediately and without prior approval.
Ellis stated, “[A] prior approval system would simply require any property and casualty policy rates and changes to be approved by the insurance commissioner before they can implement them.”
Ellis also said that a survey of Texas homeowners found that two out of three agreed that insurance companies should need to get state approval before changing their rates significantly. Ellis has asked Texas Insurance Commissioner Julie Rathgeber to postpone the increased rates approval and hold a hearing about a possible prior approval system.
Insurance companies argue that the increase in severe weather in Texas – including hurricanes, tornados, and hailstorms, has meant that companies are paying more out in claims than they are collecting in premiums. However, opponents of the insurance hikes say that these companies are posting large profits – and that most have also had significant rate hikes as recently as 2012.
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