By Maxine Shapiro, KERA 90.1 Business Commentator
Dallas, TX – Ah, the continuing saga of the homeowners insurance. An order has finally been given to the insurance companies, by the state of Texas - roll back those insurance rates. I'm Maxine Shapiro with KERA Marketplace Midday.
The state has finally figured out consumers have spent a total of $510 million too much for homeowners insurance. Some 32 companies that handle 95% of the homeowner insurance business have been ordered to cut their rates, most by double digits. Allstate has to lower their rates by 18.2%, cry-baby Farmers by 17.5 %, and State Farm by 12 %. They're the three largest carriers in the state.
Now each company has ten days to decide whether it wants to appeal. Farmer's, of course, was the first to declare they will appeal. And again, the same old song and dance: "We'll be forced to leave the state, blah, blah blah." They've been threatening this each step along the way. Now I want to know, once and for all, can and will these insurance companies pull out of Texas? No one at the Texas Department of Insurance has gotten back to me, so I called Rob Schneider at Consumers Union, affiliate of Consumers Report. "Sure, they can pull out, but it would have to be done, by law, in a very orderly fashion with plenty of notice." But see, Rob had a really good point. Why would they want to run out of Texas? It's the largest market for homeowners insurance and the fourth largest for auto. Consumers pay four billion dollars a year for homeowners insurance and $10 billion for auto insurance. And according to the latest data from the National Association of Insurance Commissioners, the U.S. average homeowner policy cost $487. Double that for Texas. And here's a footnote. That was for 1999. In 2002, the average countrywide rate rose eight percent. It rose an average of 35% in Texas.
No one's going anywhere, and I'm sure after all the appeals, the rollbacks will be far less than ordered.
For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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