Sen. Ellis calls for TDI to oppose homeowners insurance rate increases


(Austin, TX) // Senator Rodney Ellis (D-Houston) sent a letter (click here for PDF or see below) to Insurance Commissioner Julia Rathgeber calling on her to oppose the recent homeowners insurance rate increases announced by the three largest insurers in the state.

“For far too long, Texans have coped with some of the highest homeowners insurance rates in the country.  This interim is the perfect time for the legislature to begin a serious conversation about whether the state’s current manner of regulating homeowners insurance is adequately protecting consumers.  The fact that, once again, consumers will be confronting double-digit increases in their rates indicates that it might be working for insurance companies, but it’s not working for Texas families,” said Senator Ellis.


Letter to Commissioner Rathgeber:

January 10, 2014

Ms. Julia Rathgeber
Texas Department of Insurance
333 Guadalupe
Austin, TX 78701

Dear Commissioner Rathgeber:

Texas’ three largest homeowners insurance companies, Allstate, Farmers, and State Farm, recently notified the Texas Department of Insurance (TDI) of their intention to raise premium rates by an average of 6.5 to 15 percent.  This continues the trend that has plagued Texas homeowners in recent years: incessant rate increases, subjecting Texas families to some of the highest insurance rates in the country.   According to the most recent data from the National Association of Insurance Commissioners, Texans pay the third highest homeowners insurance rates in the country.  Texas’ average annual premium is $1,578, compared to the national average of only $978.

Statewide, the announced increases will impact over two million homeowners.  The State Farm rate increase alone will result in the company’s 1.3 million policyholders getting charged an additional $159 million in excessive premiums each year, according to the Office of Public Insurance Counsel (OPIC).

As you know, OPIC objected to the proposed rate increases in letters sent to TDI late last year.  While each insurance company’s rate increase received an individualized set of objections, they do share a common thread: excessive overall profits that are created at the expense of Texas ratepayers.

While I am extremely disappointed in the rate hikes, I cannot say I am surprised.  Texas’ current system of insurance regulation fails to protect Texas families.  Under Texas’ file and use system of rate approval, state law simply requires insurers to file their rate changes — but insurers may implement the new rates immediately.  Even if you as the state’s chief insurance regulator take the position that the rate increases are excessive, insurers are able to delay any final determination through endless litigation — all the while continuing to charge the excessive rates.  In fact, a dispute along those lines passed the ten year mark this past summer.

For the past three sessions, I have filed legislation that would require all property and casualty policy rate changes to be approved by you, the insurance commissioner, prior to implementation.  Specifically, the bills would have allowed the insurance commissioner to deny approval of rates that are found to be excessive, inadequate, or unfairly discriminatory. Unfortunately, the common sense bills face fierce opposition from industry and have yet to make their way through the legislative process.

I ask you to join OPIC in opposing these rate increases.  With our current rate approval system, Texas families need regulators like yourself to look out for them rather than the profits of the state’s largest insurance companies.  After all, TDI has an obligation to ensure that it isn’t allowing insurers to take excessive amounts of money out of the pockets of Texas families without justification.


Rodney Ellis

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