The higher rates, which go into effect March 16, will increase premiums for Farmers policyholders who have either a Texas Family Home Policy or a Next Generation Home Policy. About half of Farmers customers have one of those policies.
Farmers last raised home insurance rates in Texas in March 2011 — an increase of 3.9 percent.
Company officials said the higher rates are needed to address increased claim costs.
In its initial rate filing last fall, Farmers said that current loss trends in Texas indicate an overall rate increase of 52 percent in premiums would be justified. The estimated impact of the rate hike, according to the company, is $41 million.
Under the state’s file-and-use system, auto and home insurers in Texas can raise rates once they have notified the insurance department, although the agency reviews all rate changes and can challenge any increase it considers excessive or unfairly discriminatory. A department spokesman said Wednesday that the state would not object.
A consumer group immediately criticized the commissioner for the Farmers decision and noted that Kitzman already has approved a rate hike for State Farm, which included a higher minimum deductible for its homeowners policies.
“So far, Eleanor Kitzman hasn’t met a rate hike she didn’t like,” said Alex Winslow of Texas Watch.
Winslow said Texas homeowners continue to get less insurance protection for more money as companies restrict what losses they will cover. He pointed out that Allstate and USAA also have increased their rates this year.
Kitzman has been commissioner for about five months.
When Farmers filed notice of its rate increase, Jim Swope, vice president and executive director for Farmers in North Texas, said the company had an underwriting loss of over $250 million in Texas from 2009 to 2011. He blamed weather damage and increased cost of roofing materials.
Swope said the rate plan does not include any change in the company’s deductibles. State Farm was the first major company in Texas to raise its minimum deductible to 1 percent, requiring policyholders to shoulder a bigger share of any property losses they sustain.