Skip to comments.Allstate raising home insurance rates
Posted on 08/21/2007 5:46:20 AM PDT by laotzu
Allstate Texas Lloyds is raising home insurance rates 5.9 percent statewide, the company said Monday.
Coastal residents in counties once and twice removed from the Gulf of Mexico, such as Harris and Montgomery counties, will also see an additional average 2 percent rate increase.
That's to help cover the cost of reinsurance, or insurance the company buys for itself to help pay for claims in the event of a catastrophe, the company said.
Residents of Galveston County and a sliver of Harris County will not be hit with the average 2 percent increase because the company dropped windstorm coverage in counties that touch coastal waters last year.
The rates will change on policies as they come up for renewal, Allstate said. Rising construction costs also contributed to the rate increase, the company said.
About 700,000 of Allstate's 917,000 Texas policyholders are insured by Allstate Texas Lloyds.
Earlier this year, Allstate withdrew a proposed 6.9 percent statewide increase in homeowners rates after the Texas Department of Insurance signaled that it wouldn't approve rates.
"Updated information indicated a slightly reduced rate change," said Bill Mellander, a spokesman for Allstate. The range of rates coastal residents will pay was not available, he said.
Insurance companies in Texas are allowed to implement their rate increases upon filing them with regulators without prior approval.
However, regulators can disapprove the rates after they've been implemented and order refunds.
Rod Bordelon, of the Texas Office of Public Insurance Counsel, which represents consumers, said he anticipates the office will oppose the rates.
"I see no basis for any such increase," said Bordelon, the public counsel. "We're still looking at it."
Jerry Hagins, the spokesman for the Texas Department of Insurance, said Monday his office is reviewing the actuarial information to see if the hike is justified. He said that if Bordelon opposes the increase "that opinion has a great deal of weight to it."
Allstate stopped selling new homeowners policies in counties once removed from the coast such as Harris, Fort Bend and Liberty in March 2006 and dropped windstorm insurance for policyholders in September 2006 in counties that front the Gulf of Mexico.
Farmers, which also withdrew proposed rate increases last month in anticipation of opposition from the state, has yet to file a new proposal, a spokeswoman said.
Every word, coverage, exclusion, condition, form, font size, comma, and rate charged is dictated by the state.
Something to remember the next time some government puke preaches about how evil insurance companies are.
Insurance companies are like Casinos. The house always wins.
That's why you never hear of one going bankrupt. Oh wait....
5.9% sounds pretty attractive to me. In Florida, we managed to stay insured under State Farm (I don’t think Allstate writes in this state), but they got a 75% increase approval. We’re in a no evac zone, and have never filed a claim in 20 years...thanks a lot State Farm (like a good neighbor...NOT.) At least we weren’t one of the thousands they cancelled.
If Allstate is going to have to cover flood damage even if they are not selling flood insurance, I guess their rates would have to go up.
There is no such thing as a free lunch. If you live in a flood zone and are buying flood insurance in addition to your homeowners insurance, you are paying for Trent Lott’s beachfront house as a surcharge on your homeowners, because Allstate has to assume they’ll get screwed again.
It is very common for insurance companies to pay out more in claims than they are allowed to take in as premium. Nevertheless; they are demonized by those who set the rates, and derided by those ignorant of the difference between gambling and pure risk.
Allstate has to assume...has to know theyll get screwed again.
Kinda hard to believe that theory when Allstate is #61 on the fortune 500.
Not theory; it is fact.
Insurance companies do not make their profits by taking in more premium dollars than they pay out as claims. If, by chance, they do; the state immediatly reduces their rates.
Yeah, yeah, down is up, left is right, etc...
Texas has been paying on avaergae 2 to 3x times the rates Florida had been paying in the past.
A modicum of curiosity on your part would confirm these facts.
They invest those premium dollars. The dividends earned in the short time before they have to pay those dollars out as claims are their profits.
We have Allstate and are going through catastrophic floods/damage from over 11 inches of rain in 2 days (weekend) and continued light rain since, with more forecast this week and next.
We had sewage back up and a cellar flood when power went out to a sump pump before we could get the generator on. Part was our fault because we didn’t notice that the 220 circuit on the generator was tripped and it therefore wasn’t operating the septic tank pump. Our costs will be about $1500. Since we are planning on redoing that bathroom, anyway, and since we have recovered from the damage and because the hot water heater in the cellar was over 10 years old, doesn’t owe us anything at this point and is the major part of our costs, we will not be filing a claim. Our homeowners is reasonable, as is our car insurance and we like our Allstate adjusters. We can handle the costs and we don’t need our insurance premiums raised. There are a lot of other people with far more damage who really need the insurance to pay.
Seven years ago, we had catastrophic wind storms and we had $6k in damages, The company we were with (Auto Owners) paid with no problem, but afterward, excluded some structures from separate coverage and denied us full value on buildings/structures separate from the house, so we went with Allstate for a slightly better amount of coverage and a reasonable premium.
We are the same with car damage...out here, mostly from deer.
When it is just a bumper, we do it ourselves. When it has been a quarter panel, Allstate paid and did so promptly with no fuss. Our premium on the cars is based on one being a year old and another being a luxury van with all the bells and whistles. No reason to jack that premium up by claiming every minor scratch.
It was tempting to file a claim and use the money to remodel, but we understand how risk is evaluated and any adjustment we received would be more than offset by increased rates. The windstorm claim was the first we had ever filed except for a couple of times a C-band sat dish got zapped by lightening. These claims stay on your record and are considered by every subsequent underwriter even if you change companies. Basically, you pay at the time of damage or pay forever in the form of increased rates.
Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insureds.
Profit = earned premium + investment income - incurred loss - underwriting expenses.
As this article points out; the State Board of Insurance dictates the rates charged.
I'm glad you have had mostly good experiences with Allstate.
The majority of insurors are only interested in claims for the past three years.
As all properties will eventually suffer damage from a covered peril, many underwriters are uncomfortable with a property that has never suffered a loss; feeling the inevitable loss is more immanent.
The reverse is also true. Many underwriters are desirous of a property risk which recently suffered a major loss; as, statistically, it is unlikely to occur again anytime soon.