Lawmaker blasts State Farm insurance rate increase

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http://www.chron.com/cs/CDA/story.hts/metropolitan/1711309

Dec. 21, 2002, 10:15AM

Lawmaker blasts State Farm insurance rate increase

Move called a 'slap in the face' to policyholders, Legislature

By NATALIE GOTT

Associated Press

AUSTIN -- State Farm's decision to raise rates is a " direct slap in (the)

face " to its policyholders and to the Legislature's insurance reform

efforts, a lawmaker who heads a committee that handles insurance legislation

said Friday.

" For State Farm to announce another round of rate increases on the eve of

the 78th Legislature that begins Jan. 14, 2003, is nothing short of

unconscionable, " state Sen. Troy Fraser, R-Horseshoe Bay, wrote in a letter

to a State Farm executive.

State Farm spokesman Androff said the company disagrees with Fraser

and said the rate increases were necessary.

The company this week said it would raise its automobile rates by an average

of 9.2 percent statewide, while homeowners insurance rates will increase by

an average 5.2 percent. Androff said that even though mold and water claims

are starting to stabilize in the homeowners insurance market, construction,

replacement and repair costs are increasing.

The new rates will take effect Jan. 15, the day after the legislative

session starts. With some consumers seeing their rates increase as much as

200 percent, insurance is expected to be a top issue.

Texas has no control over most homeowners insurance rates because many

policies are written under companies that are exempt from rate regulation.

Several lawmakers have filed legislation to change the way insurance is

priced and regulated in Texas.

In his letter, Fraser also questioned whether the 5.2 percent increase was

accurate, saying the Texas Department of Insurance indicates the figure

could be closer to 15 percent after optional endorsements are added to the

policy.

State Farm sells a new policy that does not cover mold, slow water leaks or

foundation damage unless a customer pays extra. Androff said most people are

not purchasing the additional coverage.

Fraser also accused the company of rebuffing or ignoring his efforts to try

to find common ground on legislative remedies to insurance issues.

" Please rest assured that I remain committed to finding a reasonable

solution to address the homeowners crisis. However, I view State Farm's

latest proposed increase as a direct slap in (the) face to State Farm's

Texas policyholders and to the Legislature's efforts to seek meaningful

reform, " Fraser said.

Androff said State Farm lobbyists have met with Fraser and his staff members

regularly because they are interested in finding solutions. But, he said,

officials have to adjust rates when it makes sense for companies and

policyholders.

" We really can't wait for the Legislature to meet and work through

solutions " while policyholders have claims that the company has to pay, he

said.

Androff also noted that even though some parts of the state will see a rate

increase, rates will drop in other areas.

For example, rates in Collin, Denton and Rockwell counties will drop 2.9

percent, and in Midland and Odessa rates will drop 6.5 percent, Androff

said.