Allstate receives state approval to raise home insurance rates

AUSTIN — State Insurance Commissioner Eleanor Kitzman has approved Allstate Insurance’s increased premiums for homeowners coverage, including a hike between 3.5 percent and 7 percent in the Dallas area.

All three of the state’s major home insurers — Allstate, Farmers and State Farm — have now won approval from Kitzman in recent months to increase their homeowners rates.

The higher Allstate rates took effect Jan. 26. Customers of Allstate Texas Lloyds are seeing their rates jump 3.5 percent in North Texas and 5.7 percent statewide.

Those insured by Allstate Fire and Casualty are facing increases of 7 percent in North Texas and 9.8 percent statewide. Together, the two Allstate homeowners subsidiaries provide coverage for about 585,000 homeowners in Texas.

Just over a year ago, the company boosted statewide rates for its two subsidiaries by almost identical amounts. That means that premiums charged by Allstate Fire and Casualty — the smaller of the two — will be up nearly 20 percent with the two increases.

Jerry Hagins, a spokesman for the Insurance Department, said that proposed rates can be rejected only when they are found to be excessive, unfairly discriminatory or inadequate for the risk to which they apply. The department “is taking no action at this time,” he said.

He added that consumers should compare premiums and coverage among the nearly 100 insurers selling homeowners policies in Texas.

Alex Winslow of Texas Watch, a consumer group active in insurance issues, criticized the recent rate decisions by Kitzman, who was appointed by Republican Gov. Rick Perry and took over as commissioner in August.

“More than half of all homeowners have seen their insurance rates go up recently — many by double-digit percentages. And, what are insurance customers getting for these higher prices? Junk policies that cost more but cover less,” Winslow said.

An Allstate spokesman said the rates reflect the fact that Texas remains the state most prone to weather catastrophes such as hurricanes, hailstorms, windstorms and wildfires. For example, total insurance losses from wildfires in the Bastrop area east of Austin last September were $325 million.

Statewide, policyholders of Allstate Texas Lloyds will see an average increase of $68 in their annual premiums, while customers of Allstate Fire and Casualty will pay about $125 more. Two-thirds of the company’s policyholders are covered by Allstate Texas Lloyds.

Under state law, an insurer can increase premiums once it has notified the Insurance Department — but a company is subject to refunds and penalty interest if it charges rates later found to be excessive.

A report from the Insurance Department last year showed that Allstate Texas Lloyds had a profitable year in 2010 after paying out just 46.5 percent of its premiums to cover losses. The loss ratio for Allstate Fire and Casualty was 49.5 percent. A loss ratio of 60 percent is considered a benchmark for profitability in Texas.