The largest insurer of homes in the state of Texas has announced it will increase coverage rates starting as soon as Sept. 1.

According to a press release, State Farm Lloyds submitted a rate filing to the Texas Department of Insurance on Wednesday to increase its homeowner's insurance rates in Texas by a statewide average of 8.5 percent, and possibly higher along the Texas Gulf Coast.

The rate increase would go into effect for new customers on Sept. 1, while existing customers would not see any possible increase until Oct. 1. upon renewal.

However, not all State Farm customers will see an increase. In fact, some may actually see a decrease as a result of Wednesday's filing.

"Having the financial ability to keep our promises and pay claims is our priority," said Mike Wey, senior vice-president. "This rate increase is a step toward rate adequacy."

The press release stated roughly 350,000, or more than 25 percent of State Farm's approximately 1.2 million customers, will see no change or a decrease in their rates as a result of the filing.

According to State Farm, 2008 was the worst catastrophic loss year in Texas history, courtesy of Hurricanes Dolly and Ike, and many other spring storms across Texas, which resulted in approximately $1.4 billion in claims. In the spring of 2009, storm claim activity caused year-to-date losses exceeding those of 2008.


The current year is already not shaping up to be any better for State Farm. The insurance company has already paid $572.8 million in weather-related claims through May, which ranks behind 2008 as the most costly of the previous five claim years before hurricane season even starts.

Kevin Davis, State Farms public affairs, said the insurance agency needs an average increase of 13.5 percent, but agreed to an 8.5 percent hike because of the recent trend of elevated expenses.

Allstate and Farmers Insurance have already implemented rate hikes for 2009.

Allstate Texas Lloyds announced earlier this month it would increase rates by an average of 5.5 percent across the state, but increases would be higher for residents along the Texas Gulf Coast.

Farmers Insurance, another major home insurer for Texas residents, also announced an average rate increase of 9.5 percent in early July.

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Copyright (c) 2009, The Orange Leader, Texas

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