Texas homeowners need to brace themselves -- insurance rates are going up, and not just for the major players.
More than 100 companies filed for increases in 2013, and it is more than just the increase that has some fuming -- some believe the entire system is rigged.
When FOX4 heard insurance rates were going up again, the team started digging and crunching numbers. The Texas Department of Insurance is supposed to regulate the industry, but some claim it isn't, and as a result, you are paying the price.
Janice Bonner laughs about turning what was a South Dallas drug house into her own private paradise.
The 63-year-old widow can now proudly show off her incredible renovation, but the retiree says even though the house is paid off, she can barely afford to continue to live there because her monthly homeowner's insurance payment keeps increasing.
"If we are not a high risk for filing a claim, our insurance should remain where it is," Bonner said. "I can see you increasing it a little, but a $30 increase, that's a lot."
And Bonner is far from alone. The three largest insurance companies are hitting homeowners with hefty increases, impacting nearly 2 million Texas homeowners.
Insurance companies blame Mother Nature in Texas, from the hail storms to the tornadoes, ice storms and fires.
"If it is a good rate it will stand," said Jerry Hagins with the Texas Department of Insurance, or TDI. "If it is not a good rate, we can disapprove it."
But FOX4 has learned TDI rarely ever rejects a rate increase. FOX4 reviewed hundreds of company filings for the past three years, and in 2011, there were only four rejections.
In 2012, there were only two rejections, and in 2013, out of more than 100 rate increases? Zero rejections.
"We are not getting filings with 50 percent increases or 75 percent increases," said Hagins. "We are getting filings that are coming in close to what they should be."
FOX4 found that depends on who you talk to. The Office of Public Insurance Counsel, a state agency that represents consumers, filed formal objections opposing all of the big three's increases.
The agency called the increases "excessive," and questioned the methods the companies used in coming up with those increases.
In Texas, the state has a file and use system. Insurance companies just notify TDI about increasing homeowner rates, and the companies can begin charging those rates.
The commissioner can reject a rate or order a company to a hearing, but that rarely happens, either. The last hearing was in 2009.
"The system is rigged to favor insurance companies against their customers," said Alex Winslow. Winslow is with Texas Watch, an Austin-based consumer advocacy group.
"It is backwards," Winslow said. "Insurance companies should be required to go to the Insurance Department and say we want to charge this rate, here is why we think it is fair and you tell us can we do it? We are paying more and more and getting less and less year after year."
In 2013, State Farm hit homeowners with a 20 percent increase; now it is up another 9.8 percent.
Farmers Insurance had a 15 percent increase a year ago. Now, it is up another 14.9 percent, and Allstate which was up 5.7 percent a year ago, is going up another 6.5 percent this year.
State Farm says the volume of claims and the cost per claim are increasing. Farmers Insurance blames the costs of paying claims, and Allstate says the company's rates are very competitive and its policies provide strong value.
"How can these companies come back year after year and have so few of the increases rejected?" FOX4 reporter Becky Oliver asked.
"Most of those are 0 percent changes or very small," Hagins said.
Using TDI's own data, FOX4 crunched the numbers, and in 2013, out of 211 company filings, 90 filed for a 0 percent increase, eight companies withdrew their filing and nine had decreases, but 104 companies had increases. Some are small, but there are 38 with double-digit increases.
"There is virtually no oversight of insurance carriers in Texas," said Senator Rodney Ellis of Houston.
Ellis fired off a letter to the newly-appointed commissioner, accusing the big three of taking "excessive overall profits."
"When is the last time you heard of an insurance company going belly up?" Ellis asked.
Ellis says the whole system is a mess and needs to be changed.
"It is ridiculous," he said. "It should never have been put in place. The file and use system was put in place for one simple reason. The insurance lobby wanted it, they had the money and they got it."
For retirees like Bonner, living on a fixed income, the increase means giving up something else, like necessities.
"Even if I don't have a dime to feed myself, I've got to pay them," said Bonner. "We don't have anybody helping us poor people."
Senator Ellis says he plans to file legislation to get rid of the file and use system.
What can consumers do? Find out if your insurance is going up and by how much by checking here.
Shop around by comparing your rate and coverage to other companies by checking the following:
Tips for consumers
-Group your homeowner's insurance with your auto coverage
-Increase your deductible
-Demand discounts from your agent -- security systems and hail-resistant roofs can lower your rate
If you have a story idea or a tip that needs investigating, send us an email at firstname.lastname@example.org or call our tip line at (214)-720-3365.
The following is a full response from State Farm:
"We understand our customers may have questions about this rate filing, and our agents are more than happy to serve as a resource for our customers and explain how this rate filing will impact their individual policies.
State Farm's highest priority is to keep our promises to our policyholders and be there when they need us most. To keep this commitment, we must maintain our financial strength. The costs of repairs we pay to help customers recover from the unexpected continue to rise, and have for some time. Additionally, the volume of claims, and cost per claim, are increasing. For every dollar in homeowner premium we take in, we spend $1.11 taking care of our customers' claims and paying business expenses.
Here are details about the filing:
State Farm Lloyds submitted a rate filing to the Texas Department of Insurance on November 1, 2013 that will result in Texas homeowners seeing a statewide average 9.8 percent rate increase.
The impact on our individual customers varies significantly depending on many factors including the type of home construction, the age of the utilities in the home and the optional coverages the customer has purchased. We encourage customers to check with their State Farm agent to see how the filing will impact them.
The changes became effective for new customers on January 1, 2014 and for policies that renew on or after February 1, 2014 for existing customers.
Many factors go into calculating rates in an area. Being "claim-free" can have advantages and result in a customer qualifying for additional discounts. Many of our customers enjoy these discounts. At the same time, rates are also influenced by anticipated claims costs (increased costs of materials, labor, and so on) and trends, in a territory for a future period of time. Those factors are also a part of the established calculation."
The following is a full response from Farmers Insurance:
"Due to the continued increase in the costs of paying claims, including those related to weather events such as tornadoes and severe storms which bring damaging winds and hail, Farmers Insurance has filed for an upward adjustment in rates with the Texas Department of Insurance for residential property insurance customers. On average, rates for Texas customers with a Next Generation Homeowners policy, which represents the company's most popular homeowner's product in the state, will rise 14.9%.
The new rates will affect approximately 570,000 customers across the state. Farmers Insurance is the third-largest provider of Homeowners Insurance in Texas with approximately 11.1% of the market.
The costs associated with paying for losses resulting from fires and water losses have also kept growing, adding to the need to adjust rates accordingly. In order to maintain its ability to pay claims on behalf of its customers, it is necessary for Farmers to have rates that take into account the increasing costs associated with covering the risks faced by customers.
Farmers encourages customers with questions regarding these adjustments to call their agent and request a Farmers Friendly Review to assess their current coverages and seek suggestions for the best protection to meet their needs."
The following is a full response from Allstate:
"Allstate's homeowners insurance rates are very competitive in the Texas marketplace and our policies provide strong value to our customers. Allstate is making responsible decisions that help keep rates affordable for consumers, while maintaining the financial strength to protect our customers from the long-term risks and realities of weather patterns in Texas, like hail, wind storms and tornadoes. We encourage all our customers to regularly consult with their Allstate agent about the most appropriate coverage and available discounts for their particular circumstances."
KDFW FOX 4
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