Where is our 310 Million, State Farm?
Because I haven't gotten a fucking check yet.
State Farm Owes $310M in Refunds, Texas Regulators Say
November 17, 2009
The Texas Department of Insurance has ordered State Farm Lloyd's (SFL) to refund a total of $310 million to policyholders after finding that the insurer had overcharged customers beginning in 2003.
It's a finding that the department had reached once before. State Farm was told in 2003 to cut its rates by 12 percent but the company sued the department and the case has been in limbo since then.
Texas Insurance Commissioner Mike Geeslin issued the current order on Nov. 16, the result of a re-hearing after the case was remanded to TDI by the Third Court of Appeals in 2008.
"I have issued an order that completes what the Legislature started in 2003," Geeslin said in a statement released by TDI. "As far as any commentary, anything more that I could say would be redundant to what is contained in these pages [of the order]. There is evidence, there is law, and between the two you come up with $310 million."
The refund amount ordered is significantly lower than the nearly $1 billion that the state's Office of Public Insurance Counsel had previously estimated the company owed to policyholders, according to Associated Press reports.
Geeslin, according to a summary of the order provided by TDI, "found SFL's rates were excessive and is ordering SFL to pay refunds amounting to 6.2 percent of premium for policyholders insured with SFL from September 2003 to August 2004."
SFL was also ordered to refund to policyholders an amount equal to 3.4 percent of premium for those insured by the company from September 2004 through July 2008, excluding new policies written from June 1, 2008, through July 31, 2008.
The amount paid to individual policyholders will vary. The total amount of the refund is approximately $257 million, and the interest owed is approximately $53 million, according to TDI.
The company can repay the amount to policyholders via renewal credits for existing policyholders, or by check. State Farm Lloyd's must begin "applying renewal credits, and pay refunds and interest with in 60 days" of the order date. However, the company also has the right to appeal, in which case the payments would be on hold until final resolution by the courts.
Kevin Davis, a spokesman for State Farm, said the company had not yet decided whether to appeal.
"We are deeply disappointed with this decision as we believe State Farm Lloyds rates are, and always have been, both fair and justified," Davis said. "With this decision, the Commissioner effectively created another Hurricane Ike for State Farm. The financial impact of this order is comparable to the financial strain caused by the third most destructive hurricane to ever make landfall in the U.S.
"This decision not only challenges State Farm financially, it creates an unstable environment for consumers and the insurance industry. It will impact Lloyds in a significant manner. We are examining the potential financial and business consequences."
Jerry Johns, president of Southwestern Insurance Information Service, an insurer trade group, believes the order sets a bad precedent. "This precedent tells the insurance industry that regulators in Texas are not interested in the financial strength of companies."
Johns commented that "insurers who are considering entering the market in Texas and offer choices for consumers will likely take a step back and reconsider that decision."
AUSTIN, TX -- State Farm Insurance has filed a lawsuit against the Texas Department of Insurance after the state agency took the unprecedented move of publicizing on its Web site recent rate hikes by the company.
Texas' largest insurer filed suit Tuesday, seeking to protect from disclosure certain information that State Farm said could benefit its rivals in the insurance industry.
Department spokesman Jerry Hagins says the agency's position is that all documents associated with a rate filing are public information.
Posted were two State Farm rate proposals filed over the last eight months that increase homeowner premiums an average of 13 percent.
Hagins tells The Dallas Morning News that the decision to post was partly the result of increases filed so close together.
(Copyright ©2010 by The Associated Press. All Rights Reserved.)