Texans to get $11 million refund from Mid-Century Insurance Co. By
Thanks to a miscalculation in April 1998, Mid-Century Insurance Co., one of the largest
auto insurers in Texas, overcharged its policyholders over a 13-month period and will now
refund $11 million to about 800,000 Texans. In addition, the company has agreed to reduce
its current auto insurance rates by 3 percent, saving its policyholders an estimated $8
million, according to the Texas Department of Insurance (DOI).
Mid-Century Insurance is a part of Farmers Insurance Group, the No. 2 personal auto
insurer in Texas.
Don't forget to carry the "1"
Back in 1998, Mid-Century filed with the DOI for a 6.5 percent decrease in its auto
insurance rates. The rates were initially approved by the department, but upon review, the
department found that Mid-Century's proposed 6.5 percent rate cut was in practice a 5
"In 1998, we had a bunch of companies roll back their rates, so we looked at all
the companies' rates pretty hard back then," says Lee Jones, a spokesperson for the
Texas DOI. Two separate departmental reviews of Mid-Century's rates determined that not
only had Mid-Century overcharged its policyholders from April 15, 1998, through May 15,
1999, but also that the company's current rates are too high.
Mid-Century has chalked up the mass overcharge to miscalculation and human error and
has signed a consent order with the DOI that requires it to reimburse its policyholders.
In signing the consent order, Mid-Century denies any wrongdoing.
In a statement issued by Farmers' Texas office, the company lauded its forthcoming rate
reductions as a "reward" for the company's best customers.
The check's in the mail
Mid-Century has 120 days from March 7, 2000, to send the refunds to its current and
former policyholders. Current policyholders are eligible for reimbursement in the form of
either a check or a credit to their current premium bill. According to the consent order,
the form of reimbursement for current policyholders is at the discretion of Mid-Century.
Former policyholders will receive checks in the mail.
In addition, Mid-Century is required to file new rates that are 3 percent lower than
its current rates. Those rates are slated to take effect no later than April 1, 2000.