Texas Drivers to See Rate Increases in October
09/02/2008
Texas drivers who are insured through Allstate and State Farm will find their rates increasing this October. Citing increases in the number of claims being filed, both insurance companies have filed notices of impending rate changes with the Texas Department of Insurance.
State Farm is increasing rates for its two auto insurance subsidiaries, State Farm County Mutual, and State Farm Mutual by 7.3 percent and 2.4 percent, respectively. These increases represent the first in five years for State farm Mutual, while State Farm County Mutual had an increase less than a year ago, in December, according to company spokesperson Kevin Davis.
At Allstate the rate increases filed were on behalf of subsidiaries Allstate County Mutual (5.5%) and Allstate Indemnity (3.6%). An Allstate spokesperson, Bill Mellander, explained, "These increases will help us address those rising costs."
Mellander went on to say that each subsidiary had a rate increase of roughly one percent last December, adding, "We've had very stable pricing for quite a while." (The December rate increase went into effect late last month.)
Alex Winslow, a spokesperson for Texas Watch, a consumer group active in insurance issues within the Lone Star state, criticized the decision to increase the cost of insurance, saying, "It is unfortunate that State Farm and Allstate are choosing to raise rates on drivers at a time when Texans are struggling to keep up with rising costs of gasoline, food and housing. Drivers in Texas deserve rate relief, not additional burdensome rate increases from their insurance companies."
Jerry Johns, a representative of the Texas insurance industry countered Winslow's statement, insisting that auto insurance rates in Texas have remained at a "reasonable level" over the past few years, when compared with rates in other states. "The auto insurance market in Texas is highly competitive, with companies battling it out in the marketplace for the best price, innovative products and discounts," he said.
Texas's file-and-use law allows insurance companies to raise rates as soon as they have notified the insurance department, which will then review the new rates, objecting if the increases are deemed unjustified or excessive. The rate filings from both Allstate and State Farm are still under review at this time.
