State Sen. Proposes Increased Regulations For Homeowner Insurance Rate Hikes
State Sen. Rodney Ellis, D-Houston, is asking Texas Insurance Commissioner Julie Rathgeber to oppose new rate increases for homeowner insurance -- and also wants to change the process for how insurance companies are able to increase rates without prior approval.
Allstate, Farmers and State Farm Insurance companies notified the Texas Department of Insurance that they were raising their homeowner rates by an average of 6.5 percent to 15 percent at the beginning of 2014. That sparked Ellis to call on Rathgeber to postpone the increased rates and hold a hearing to scrutinize the reasoning behind rate increases that affect more than two million Texas homeowners.
"Under the current law, even if the commissioner decides to hold a hearing they still get to do whatever it is they want to do, I think we ought to change that," Ellis said.
Ellis said under the current rules, companies need to only file their new rates and then can begin collecting on them immediately. He said he would like to see a change in the law that calls for prior approval.
"Prior approval system would simply require any property and casualty policy rates and changes to be approved by the insurance commissioner before they can implement them," Ellis said.
Ellis pointed to a study in 2013 that shows two-thirds of Texas homeowners support requiring companies to submit and justify rates increase before they go into effect. He said the TDI has an obligation to ensure that it isn’t allowing insurers to charge excessive amounts without justification.
The insurance commissioner can reject any rate hikes that are deemed excessive. Homeowner’s insurance rates in Texas on average are $500 more than rates in California.