Texas Democratic Party: Moving Texas Forward

State Farm Insurance must repay $310 million in premiums and back interest to Texas customers for overcharging them on homeowner policies through August last year, the state’s insurance commissioner ruled in a long-running case.

The refund is far less than the $1 billion that consumer advocates wanted, prompting one, Texas Watch, to say Insurance Commissioner Mike Geeslin “is guilty of aiding and abetting the state’s largest insurance company in its grand larceny of hundreds of millions of dollars from Texas homeowners.”

“The $310 million amount of refund and interest was based on evidence that was presented at hearings,” said Ben Gonzalez, an Insurance Department spokesman.

Evidence in the case “numbered in the thousands of pages,” the insurance commissioner said. The original rate reduction order came in 2003, and has been hung up since then.

Deela Beck, the state’s public insurance counsel, said larger refunds are needed and she is considering an appeal.

State Farm said Tuesday the ruling “creates an unstable environment for consumers and the insurance industry,” but did not say whether it plans to appeal.

“We are deeply disappointed with this decision as we believe State Farm Lloyds rates are, and always have been, fair,” said Patti Kelly, a company spokeswoman in Austin.

If the company does not appeal, it has 60 days to begin applying credits to existing shareholders’ policies or make refunds to affected customers who are no longer policyholders.

The highlights of Geeslin’s order:

Affects State Farm Lloyds residential policies between September 2003 and July 2008.

Calls for refunds of about $257 million, plus interest of $53 million. Individual amounts depend on policies’ length and premiums paid.

To read more go to the Fort Worth Star-Telegram article.