Allstate Texas Must Refund $56 Million To Homeowners

Allstate Texas Lloyds must refund more than $56 million in rate overcharges to homeowners they insure, the Texas Department of Insurance said yesterday.

The announcement followed a judge's ruling last week affirming a 2004 order by Texas Insurance Commissioner Mike Geeslin requiring the insurer to reduce its homeowners insurance rates by 5 percent.

Allstate spokesman Joe McCormick said the company made the 5 percent reduction in May and is considering whether to appeal the order to make refunds.

Jerry Hagins, a spokesman for the state insurance department, said the Allstate subsidiary in 2004 had filed for "a 1 percent rate decrease, but we didn't feel that was adequate." He said the department felt the amount the company wanted to charge would be excessive and ordered the reduction, which the company challenged.

Last spring, the commissioner's finding was backed up by the state's Office of Administrative Hearings, which ordered a rate reduction and refund for policyholders going back to 2004.

The company appealed the case to Travis County District Court in Austin, where Judge Darlene Byrne ruled in favor of the department.

Mr. Hagins said Allstate is the number-two writer of homeowners insurance in Texas, with a 16.5 percent share of the market last year.

The insurance department said it disapproved the lower decrease the company sought, "based on an actuarial analysis by the department, which found Allstate's homeowners rates to be excessive, unreasonable and unfairly discriminatory."

The judge's order also requires Allstate to refund to policyholders the amount overcharged since December 2004, including interest on the overcharged amount at the annual rate of 11.25 percent.

Her ruling follows a mandate by the insurance department that rates must by justified to regulators.

Mr. McCormick said the insurer has "a fundamental disagreement with the way the TDI actuaries analyzed our rates. We contend they have to look at our rates as a whole.

In examining different perils, Mr. McCormick said the TDI had judged Allstate's evaluation of the risk as too high for some and too low for others, but "didn't take into account those rates that were lower."

He said the company believes TDI actuaries "need to look at the rate as a whole. As far as the refund is concerned, we believe the department. took a snapshot approach looking at the rate in certain point in time rather than looking at longer term trends.

"We certainly feel our rates our reasonable and competitive," he said, adding that the company in Texas has 750,000 homeowner policyholders and "We're committed to taking care of them with competitive rates that are adequate and committed to protecting our customers long term and having the strength to do that."