Holiday Gift from Insurance Companies to Texas Residents? Higher Insurance Rates!

As is their custom, several major insurance companies have recently announced that they will be raising Texas insurance rates across the board. Last month, the Houston Chronicle reported that Farmers Insurance plans a 3.9 percent statewide hike that will affect about 324,000 Texas customers. Farmers stated that the increase was “in response to increasing costs of paying claims, especially weather related claims.” Farmers Insurance customers will see the increase take effect starting March 16, 2011.

On December 14, 2010, The Dallas Morning News reported that “Allstate Insurance has notified the Texas Department of Insurance that it will increase homeowner’s rates statewide by 5.4 percent to 9.7 percent next month.” The new rates are effective January 20, 2011 and will affect about 625,000 homeowners. A spokesperson for Allstate attempted to justify the increase:

It’s a reflection of the weather in Texas. Hail and wind storms have been increasing in severity over the last several years . . . The increased cost of roofing materials is also a big factor.

The article notes that Allstate last raised rates in November 2009.

These rate increases were announced just a few weeks after the National Association of Insurance Commissioners (NAIC) concluded that Texas residents are paying the highest insurance rates nationwide.

In the Dallas Morning News article referenced above, Alex Winslow of Texas Watch – a consumer watchdog group that monitors insurance issues – stated that these actions are typical:

Here we go again … It seems like every time one of the major insurance carriers raises rates, they all raise rates.

Winslow sees a pattern amongst the big insurance companies: they regularly raise their rates without justification, regardless of their impact on policyholders.

Unfortunately for Texas policyholders, these rate increases are all too common. And to make matters worse, this problem is not going away anytime soon. As long as insurance companies continue to be for-profit corporations they will continue to find ways to maximize their bottom line, be it through denying claims, underpaying claims, or by raising insurance rates.