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Greg Abbott's Sweetheart Deal for Farmers Insurance

by: Texas Watch

Thu May 01, 2014 at 09:44 AM CDT

(Thanks to Texas Watch for keeping an eye on this key consumer issue. - promoted by Katherine Haenschen)

Lawyers for Greg Abbott's office and Farmers Insurance appeared in court this week to jointly argue in favor of a pennies-on-the-dollar deal that allows the insurance giant to avoid paying interest on millions of dollars in excessive premiums.

Texas district court Judge Scott Jenkins refused to allow the deal to move forward, raising concerns that the settlement was too favorable to Farmers, the state's second largest home insurance company, at the expense of its customers.

Back in 2002, when he was running for Attorney General, Greg Abbott said this about Farmers' nefarious practices: "Texas has become the wild west of insurance gouging and holdups. ... Texans will not tolerate deceptive acts by insurance companies or corporations of any type. As Attorney General, I will put an end to rate shock by holding accountable any company that bilks consumers out of their hard earned money."

That was then, this is now.

Read more about how Greg Abbott isn't keeping his promise to Texas policyholders.

Today, Greg Abbott and Farmers Insurance are linked arm-in-arm to push this bad deal through. Why isn't Greg Abbott keeping his promise to Texas policyholders? He should put Texas homeowners first by forcing Farmers to pay back every penny it owes plus interest.

In court this week, Judge Jenkins asked why the settlement did not require Farmers to pay any interest on the amount of overcharges. Additionally, he was concerned about potential conflicts amongst the parties and that a Farmers entity comprised of its own policyholders - rather than Farmers' corporate entity - would be responsible for payment of the settlement.

The current dispute stems from litigation that began over a decade ago over Farmers allegedly unfair home insurance practices.

Attorneys representing policyholders objected to the proposed settlement, raising questions about how the settlement was structured and how Farmers customers would be notified and repaid.

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