By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – What a weekend, huh? Lots of food, lots of shopping, record day on Friday for the number one retailer in the world, AND the State of Texas Settles with Farmers Insurance. I'm Maxine Shapiro with KERA Marketplace Midday.
While contributing to Wal-Mart's record sales on Friday and enjoying of the rest of holiday weekend, Grinch, disguised as The Texas Department of Insurance, called for a quiet little press conference on Saturday at 3 p.m. in the afternoon. Not just a weekend, but a holiday weekend. They had reached a settlement with Farmers Insurance Group regarding overcharges for homeowners. According to my source in Austin, the actual press conference didn't start until about 4 p.m. So any members of the press that could make it sat around for a long time and then left. This way it was assured that no opposition or challenging questions would be raised.
The state was originally seeking $150 million, plus penalties of up to $25,000 for each policyholder that was overcharged. Here's the settlement: Farmers stays in Texas, no penalties, and only $65 million will be paid back. According to the Dallas Morning News, that only translates to under $100 per customer overcharged.
When I spoke with D.J. Powers, president of the non-profit group Center of Economic Justice, I not only heard the disappointment and anger in his words, but in his voice. He clarified that the 6.8% rate reduction that Farmers also agreed to was chicken feed. In documents that the state released in mid-November, it showed Farmers had increased homeowners insurance by almost 190%. 6.8 is nothing. Powers, who is the former general counsel for the TDI, explained the state is now back-peddling and changing its earlier figures. They're now saying Farmers only raised its rates by 50%. Either way, it's still high, and the homeowner will be paying more for less coverage - no mold. It's now pretty clear - the insurance lobby is more powerful than the Texas consumer. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.