Austin, TX – State officials and Farmers Insurance Group reached a settlement Saturday that will keep the state’s second-largest home insurer in the state homeowner’s insurance market.
The deal is worth $100 million for homeowners in restitution, refunds and rate reductions, according to the Texas Department of Insurance.
It also ends a lawsuit and administrative enforcement actions the state had taken against Farmers, which threatened to stop renewing policies after the state accused it of unfair pricing policies, state officials said. The company scheduled an afternoon news conference.
“This agreement is good news for consumers and will have a positive impact on the Texas homeowners market,” said Insurance Commissioner Jose Montemayor.
The company announced in September that it would stop renewing homeowner policies for its 700,000 Texas customers, saying it could no longer afford to do business in the state, where homeowner’s insurance rates are the highest in the nation.
Texas and Farmers had been at an impasse since the state Department of Insurance filed an emergency cease-and-desist order against Farmers in August for what it called unfair pricing policies.
Homeowners insurance rates have increased as much as 200 percent for some Texans. Farmers and other insurers deny wrongdoing and contend the increases are due in part to an upsurge in claims for mold and water damage.
Farmers has been operating under a 30-day “standstill agreement” since Nov. 11, two days before the deadline set by the state insurance department for the company to change its pricing policies.
That agreement retained coverage for what one state lawmaker estimated to be 60,000 customers whose policies expired between Nov. 11 and Dec. 10. Farmers agreed to cut its rates 6.8 percent for those customers.