Austin—one of Texas’s leading auto insurance policy providers, State Farm, which has insured nearly 3 million drivers in the state, would be increasing its average insurance rate by 2 percent in the following month. The company says this is primarily because of the high costs of medical expenditures.
State Farm Mutual, known as State Farm’s largest vehicular coverage subordinate, informed the Texas Department of Insurance that their increased insurance rate would be effective on the 16th in the month of August of this year. The climb of the rate would be implemented on drivers who would renew their insurance policy and for drivers who are just about to get insurance policy coverage from the company. Another subsidiary of State Farm, the State Farm County Mutual who covers for high risk consumers and their cars also has notified the Texas Department of Insurance that they would be raising their insurance policy rate by 6.8 percent on the average. This would affect almost 230,000 consumers and cars and the said rate hike would also be effective this August.
Mike Geeslin, the Insurance Commissioner, was then asked by the Public Insurance Counsel, Deeia Beck, to not accept the said insurance policy rate increase. She reported her objections to the said insurance policy rate hike just last Tuesday and under her report, she claims that the company, State Farm, has not provided an enough basis or reason for the upsurge of their insurance policy rate. She said that their explanation was not rational or even good enough to be a reason for a hike. She also wrote in a letter sent to the insurance department that this insurance policy rate increase, if ever it was approved and would be implemented, the rates would be extremely high, out of proportion, and fraudulently biased. As a response to Beck’s oppositions, the insurance department’s spokesperson said that the said insurance rate hike would be under analysis.
The spokesperson of State Farm, Kevin Davis, reported that the said insurance rate increase is due to the growing cost of vehicular accidents related to claims on liability, especially bodily injury for example the medical expenses of the accident. Davis also reported that even though the company, basically Sate Farm Mutual, would increase by 2 percent, their insurance rates would still be low since they have decreased insurance rates since 2004 by 6.6 percent.
Beck stated, also in a letter, that the said insurance rate increase would be the third time the company would be increasing their insurance rate of stable and weakening vehicular insurance policy loss cost in a span of two years. Beck, along with the public counsel, also said that the increase was not justifiable due to the company’s large loss trend and they have said that the company’s expenses was not yet evaluated or processed since they were all over the state, among different business lines.