State Farm homeowners insurance rate hike approved

Customers with auto, house coverage to see drop in Dallas County

11:35 PM CDT on Wednesday, April 2, 2008

By TERRENCE STUTZ / The Dallas Morning News

AUSTIN – State Farm Insurance has been given approval to raise homeowner rates 2.8 percent statewide, but Dallas County policyholders with auto and home coverage will see premiums decrease an average 2.3 percent.

Policyholders in Dallas who have only their home insured by State Farm will see an average increase of 9.1 percent. That represents about one in five customers of State Farm.

The new rates were approved by state Insurance Commissioner Mike Geeslin this week after the company agreed to a lower increase than was previously proposed.

While Tarrant County rates for multiline customers also dropped – an average 2 percent – homeowners in Houston and along the Gulf Coast will see their insurance bills jump dramatically. In Harris County, State Farm rates will increase 8.9 percent to 10.3 percent for multiline customers and up to 23.2 percent for those with only homeowners coverage.

"The good news here is that this approval will result in lower rates for the majority of non-coastal Texas customers," said Mike Wey, senior vice president of State Farm.

Consumer representatives attacked the decision by Mr. Geeslin, saying that State Farm should not be allowed to increase rates while it is still in court battling a 2003 state order to reduce its rates 12 percent.

"This is a company that owes hundreds of millions of dollars to its customers. Instead of being allowed to increase rates, we should be making sure they reduce rates to a fair and reasonable level, and return every penny owed to their policyholders," said Alex Winslow of Texas Watch, a consumer group.

Public Insurance Counsel Rod Bordelon, who represents consumers in rate cases, called the new rate "excessive" and said it should not have been approved by the commissioner.

"Our numbers showed that their rates needed to decrease by 20 percent, and I stand by that number," Mr. Bordelon said.

State Farm officials said the new rates will go into effect on June 1 for new customers and on Aug. 1 for policy renewals. Rate increases are necessary because of the rising cost of reinsurance and other factors, the company said. Insurers buy reinsurance from separate companies to reduce their potential losses from a catastrophic event such as a hurricane.

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