AUSTIN - Allstate Insurance has notified the Texas Department of Insurance that it will increase homeowners' rates statewide by 5.4 percent to 9.7 percent next month.
In a filing with the agency, the company said it will hike premiums 5.4 percent for customers with Allstate Texas Lloyds and 9.7 percent for those with Allstate Fire and Casualty. Together, the two Allstate subsidiaries provide coverage for about 625,000 homeowners in the state.
Kristen Beaman, a spokeswoman for Allstate, said Tuesday the increase is necessary because of rising construction costs and the frequency of destructive weather in Texas.
"It's a reflection of the weather in Texas. Hail and wind storms have been increasing in severity over the last several years," Beaman said. "The increased cost of roofing materials is also a big factor."
Still, she added, "We feel that our rates are very competitive in Texas."
For the 450,000 homeowners insured by Allstate Texas Lloyds, the average increase will be about $64 a year. For the 175,000 insured by the Allstate Fire and Casualty, the average increase will be $115. Those two subsidiaries have about 98 percent of Allstate's policyholders in Texas.
The new rates are effective Jan. 20. Allstate is the third largest home insurer in the state.
A spokesman for the Texas Department of Insurance said that agency actuaries will review the Allstate rate filings to make sure they are justified. Under state law, an insurer can increase premiums once it has notified the department, but the agency can order a reduction if the rates are deemed excessive.
Allstate Texas Lloyds last increased rates in August 2009, when North Texas homeowners insured by the company saw their rates jump an average 6 percent. Homeowners in the Houston area and along the Texas coast were hit with a 15.6 percent increase at that time.
Consumer groups said the latest rate plan from Allstate is just more of the same from the state's largest insurers.
"Here we go again," said Alex Winslow of Texas Watch, a consumer organization that closely follows insurance issues. "It seems like every time one of the major insurance carriers raises rates, they all raise rates."
Farmers Insurance announced an increase last month.
"This is part of a pattern we have seen for years with big companies raising rates without justification," he said. "They are allowed to do that because we have a system that lets big insurers dictate terms of the market without regard to the impact on policyholders."
Consumer groups have been urging the Legislature to return to a system of prior state approval of all rate hikes for auto and homeowners insurance. Currently, companies can raise premiums once they have notified the insurance department under the state's file-and-use system for implementing new rates.
The industry is poised to fight any changes in the system, arguing that it has stabilized the insurance market in Texas and promoted competition among companies.
Beaman said policyholders with Allstate Fire and Casualty will be offered a 22 percent discount if they have both their auto and homeowners policies with the company.
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