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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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