Three Texas insurance companies, State Farm, Farmers, and Allstate all announced last week that they will be raising their premiums for the new year.
The three companies notified the Texas Department of Insurance of the increasing rates for homeowners last week, despite that Texas homeowners pay some of the highest insurance premiums in the country (second only to Louisiana and Florida).
The Texas Department of Insurance reviews the rate hikes and has the authority to reject them and stop the the insurance company from implementing the increases if they are found to be excessive or imprudent.
Click below the jump to read more about the increase in homeowner's insurance rates.This claim for needing to raise rates by the insurance companies comes off of a “very profitable” 2012 (the numbers for 2013 have not been released yet). According to the numbers released by the Dallas Morning News:
“Overall, insurers paid out an average 54.4 percent of their premiums to cover property losses. That was a significant improvement over previous years.
A “loss ratio” of 60 percent is considered a good target for profitability in the industry.
State Farm showed a loss ratio of 47.5 percent. That was one of the company's most profitable years in recent history. Allstate recorded a 50.8 percent loss ratio. Farmers was at 66.3 percent.”
Farmers is the company that is asking for the largest increase amount, 14.9 percent from last year. State Farm is increasing its premiums by 9.8 percent and Allstate is increasing theirs by 6.5 percent, which also affect Allstate's two largest subsidiaries.
The Office of Public Insurance Counsel, the state's watchdog group is opposed to all three rate hikes but its biggest objections are to the Farmers and State Farm proposals.
Yet despite this boom in business and increase in premiums, Texas insurance companies are still reluctant to pay out damages caused by natural disasters, as seen in the Texas Windstorm Insurance Association cases. Just recently, a Republican lawmaker asked for more information concerning the issue of racism within this state agency. Emails with racists comments were uncovered during a lawsuit where Brownsville ISD is suing TWIA for $26 million dollars in damages after receiving no money from the destruction caused by Hurricane Dolly.
From the Dallas Morning News:
Recent average rate increases by the state's largest home insurers:
2013: 20 percent
2014: 9.8 percent
2013: 15 percent
2014: 14.9 percent
2013: 5.7 percent*
2014: 6.5 percent
SOURCE: Texas Department of Insurance