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.


Texans to get $11 million refund from Mid-Century Insurance Co. By Joe Frey

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 percent cut.

"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.


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