Those good hands we’re supposed to be in? They’re squeezing the heck out of us.
To leading lawmakers and even some insurance industry experts, State Farm hasn’t exactly been like a good neighbor in recent dealings with state regulators.
The state’s largest property insurer shows no sign of compromising on its marathon legal battle over the state’s ruling that it overcharged homeowners hundreds of millions of dollars.
The insurer – which had an improved bottom line in 2009, according to figures released Monday by the state – has yet to pay a penny to policyholders.
After filing twice in eight months to increase rates, company officials gave a cold shoulder last month to state Insurance Commissioner Mike Geeslin, who suggested State Farm needed to give its customers a break.
And on Thursday, State Farm will take Geeslin and the Texas Department of Insurance to court in an effort to keep the agency from publicizing documents related to the rate spikes, which represent a statewide increase of 13 percent.
That was today, and State Farm won a temporary restraining order barring the TDI from posting the documents, though that could change depending on what Insurance Commissioner Geeslin does. The Chron’s Loren Steffy explains what State Farm is trying to get away with.
State Farm’s cry that disclosure will be anti-competitive is just another industry red herring.
Homeowners insurance is a market with fixed demand, meaning it isn’t really free to begin with. In a free market, after all, competition drives down prices.
Yet in Texas, the Big Three — State Farm, Farmers and Allstate — repeatedly push to raise rates and would hike them even higher if the state didn’t restrict the increases.
Because homeowners rarely change insurers, yet most are required to have it by their mortgage companies, the Big Three retain a stranglehold on the market even as they raise prices and reduce coverage.
State Farm has been battling the insurance department since 2004, demanding higher rates, rejecting the state’s finding that it’s overcharging and appealing the order that it refund hundreds of millions of dollars to customers.
Now it wants to hide the its rationale for yet another rate hike.
Insurance rates have been going up faster than property taxes for a lot of people, not that anyone in the state’s Republican leadership seems all that worked up about it. Democrats, however, are all over it.
Under the current file and use system, insurance companies can introduce drastic rate hikes without obtaining approval from the state insurance commissioner, the Legislature, or Texas consumers. The commissioner has few tools to keep the marketplace in balance.
“There is no backstop here. The solution could not be clearer, we must give our commissioner the tools to bring these companies in line,” said Representative Jessica Farrar. “We need a system of prior approval requiring insurance companies to justify rate increases before they pass them on to their customers and TDI Sunset provides that opportunity.”
It sure would be nice to have some accountability for the insurers, wouldn’t it? We’ll see how the lawsuit proceeds.