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Allstate Pulls Homeowners Hike: State Agency Wouldn’t OK New Rate
Posted By beth On July 26, 2007 @ 1:39 PM In Consumer News and Advice,Financing a Home,Home Buying 101 | Comments Disabled
RISMEDIA, July 27, 2007—(MCT)—Allstate withdrew its proposed 6.9% statewide increase in homeowners rates on Wednesday after the Texas Department of Insurance signaled that it wouldn’t approve rates.
The increase would have gone into effect as policies came up for renewal.
“We had some concerns and they decided it would be better to withdraw and address those concerns,” Jerry Hagins, a department spokesman said.
He said it would be premature for the department to discuss the questions because regulators are still reviewing the rates with the company.
“We want to make sure the rates are fair and not excessive,” Hagins said. “That’s about all we can really say, is they chose to withdraw.”
Allstate spokesman Joe McCormick said the company withdrew the rates to give the department more time to review the proposal and discuss questions it had about the rates. Allstate will resubmit rates as soon as those questions are resolved, he said.
“We’re committed to having very accurate rates and rates that accurately reflect the risk involved,” he said. “I don’t have any particular details about the area where there are issues.”
McCormick said he wasn’t aware that the department deemed its rates as being too high.
“With any rate change, there are complexities to it and there are questions that come up,” he said.
Allstate, which has about 750,000 policyholders in the state, stopped writing new homeowners business in some Texas coastal areas in March 2006. Allstate said it needed the recently proposed rate increase because of rising construction costs and the cost of reinsurance, or insurance the company buys for itself to cover claims in the event of a catastrophe.
Earlier this year, a state district judge in Travis County ordered Allstate to refund $56 million in premiums to policyholders stemming from overcharges collected in 2004 and 2005.
Allstate has appealed that decision.
Allstate raised rates in 2006 a statewide average of 5.6% to pay for $75 million in reinsurance costs.
Last week, Farmers Insurance withdrew a statewide average rate increase of 6.6% in response to word that the state would likely reject the rate request.
Farmers has 630,000 homeowner policyholders in Texas.
Copyright © 2007, Houston Chronicle
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