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The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

Texas Insurance Commissioner Files Unprecedented Deceptive Trade Practices
Suit Against Farmers


AUSTIN, Texas -- Texas Gov. Rick Perry has joined an unprecedented lawsuit
filed Aug. 5 by the Texas insurance commissioner against Farmers Insurance
for deceptive trade and discriminatory practices in Texas. The suit alleges
that among other deceptive acts, the homeowners carrier failed to account for
the fact that different geographic locations have different mold- and
water-related loss histories (The State of Texas, et al. v. Farmers Group
Inc., et al., No. not yet assigned, Texas Dist., Travis Co.).

(Complaint available. Document #03-020813-101C.)

The complaint was filed in the Travis County District Court against Farmers
Group Inc., Farmers Underwriters Association, Farmers Insurance Exchange and
Fire Insurance Exchange. Farmers and its subsidiaries represent nearly 20
percent of the homeowners insurance market in Texas, according to the state's
press release.

The Texas insurance commissioner and Attorney General John Cornyn say the
carriers have deceptive, misleading and discriminatory homeowners insurance
practices that violate Texas Insurance Code Articles 21.21 Section 4(2),
21.21-6 and 21.21-8 and the Texas Deceptive Trade Practices Consumer
Protection Act.

According to the complaint, the alleged illegal practices were discovered
through an investigation initiated by the Attorney General's Consumer
Protection Division and during an examination by the Texas Department of
Insurance (TDI).

"Recently, Farmers has dramatically changed its homeowners-insurance practice
in Texas. Farmers is using credit history as a significant factor in setting
premiums, without disclosing the adverse impact of doing so, and is switching
Texas policyholders from all-risk 'HO-B' policies to stated-peril 'HO-A'
policies that provide much less coverage. Despite this loss of coverage,
Texas policyholders have seen increased premiums allegedly due to losses
suffered by the Exchanges last year. Thus, Farmers is now charging
significantly higher premiums, but offering substantially less coverage," the
commissioner asserts. "Although Farmers claims its losses require it to raise
premiums and reduce coverage for Texas policyholders, Farmers Group is making
-- not losing -- money!"

 

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