Farmers Insurance proposes rate hikes for Dallas-area homeowners

10:55 PM CDT on Monday, March 17, 2008

By TERRENCE STUTZ / The Dallas Morning News

AUSTIN – Farmers Insurance proposed a new round of rate hikes in homeowners coverage for many of its customers in North Texas on Monday, filing for increases of up to 3.5 percent in Dallas County and an average of 7.9 percent increase statewide.

Jerry Davies, a spokesman for Farmers, said that about 200,000 customers who have a "Texas Family Home Policy" with the company will see increases in their annual premiums beginning with policy renewals on May 16.

"The main reasons are loss trends and rising costs, such as in the price of building materials and supplies," he said.

Increases in Dallas County will range from 3.2 percent to 3.5 percent. Statewide, rate hikes will range from 3.2 percent to 13.5 percent, with larger increases imposed in coastal areas. In Harris County, the average rate increase will be 9.5 percent.

Mr. Davies noted that the number of claims filed in Texas has risen in the past year, mainly the result of several storms across the state. The company also has had to pay more for reinsurance, which it purchases to help pay claims after a catastrophic event such as a hurricane. He also said that the affected policyholders have not had a rate hike in two years.

Under state law, Farmers is allowed to raise rates once it has notified the insurance department, but the company is subject to a rate rollback – and possible refunds to customers – if the insurance commissioner determines the increases are not justified. An insurer also has to pay interest on any refunds that are due.

Last December, Farmers proposed a statewide 2.2 percent increase in home insurance for another group of its customers, but that plan included hefty rate hikes of 20 to 30 percent along the Texas coast. By contrast, many of those policyholders in Dallas and Tarrant counties saw their premiums drop by about 5 percent.

Those rates went into effect in February.

Last summer, the company withdrew a proposed 6.6 percent increase in homeowner rates after the insurance department signaled that it would reject the plan. After that, the company held informal talks with agency officials to come up with a proposal that might win state approval.

Insurance department officials had voiced reservations about the earlier Farmers proposal, particularly its large increases for homeowners along the Gulf Coast.

The latest Farmers proposal does not affect renters and condo owners.

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