Farmers Increase Rates Again!

AUSTIN — Homeowners covered by Farmers Insurance will see their second premium increase this year, the company told state regulators Friday, planning to boost the cost of most policies in Texas by an average of 15 percent.

The higher rates would affect 520,000 Farmers customers who have either a Texas Family Home policy or a Next Generation Homeowners policy.

The rates will take effect for new policies and renewals starting Sept. 18.

Farmers customers’ rates were raised nearly 10 percent March 16. A consumer group called on state Insurance Commissioner Eleanor Kitzman to reject the latest proposed rates.

Luis Sahagun, a spokesman for the company, said the higher rates are being implemented “in response to the increasing costs of paying claims, including weather-related claims throughout Texas.”

Sahagun pointed to data from the National Weather Service that indicated 1,341 severe weather reports in Texas through July 4.

For all of 2011, there were 1,537 severe weather events. Further, Texas led the nation with an average of 150 tornadoes per year from 1981 through 2010, he noted.

In June, the Dallas area was hit by severe hailstorms that caused nearly $1.2 billion in damage.

Texas also had a record-breaking year for wildfires in 2011, with nearly 4 million acres burned, Sahagun said, citing figures from the Texas Forest Service.

“Claims costs associated with weather-related risks in the state, such as tornadoes, strong winds and hail, as well as claims resulting from water losses and fires, have continued to increase significantly over the past several years,” he said.

Jerry Hagins, a spokesman for the Texas Department of Insurance, said the rate filing will be reviewed to make sure it is justified and meets statutory requirements.

Alex Winslow of Texas Watch, a consumer group active in insurance issues, argued there is “no conceivable reason that an insurance company needs to raise rates this much this fast.”

“If the commissioner doesn’t reject this unwarranted and excessive rate increase out of hand, then she is simply not doing her job,” he said.

Winslow said that Kitzman is creating an environment that allows insurance companies to get away with “stealing” from their customers.

“She has already said she has no interest in helping consumers get immediate relief from high-cost, low-coverage insurance,” he said.

Under the state’s file-and-use system, auto and home insurers in Texas can raise rates once they have notified the Insurance Department, although the agency reviews all rate changes and can challenge any increase it considers excessive or unfairly discriminatory.

Kitzman did not object to the Farmers rate hike in March after an Insurance Department review of that proposal.

Under the new plan, condominium owners will also see premium increases of 15 percent, while property owners with fire policies will see an average 13 percent bump in rates.