Texas Department of Insurance has said in its financial reports, that the home insurance market had an average loss ratio of 67.3% in 2009. This is a much better year compared with the previous five years which had lots of hurricanes. After hurricane Ike in 2008 devastated the home insurance market in Texas, 2009 looked promising and solid.

This is good news at a time when many home insurers wanting to exit the market or raise the rate hikes in order to sustain in the market. As of now the home insurers in Texas follow a “file and use” system by which they can go for rate hikes after notifying the Texas Department of Insurance though the Texas Department can object any rate hike which it feel is going to hurt the consumers. Consumer groups which
are already pushing for a change in law by which the home insurance companies should get prior state approval for rate hikes will be buoyed by the news.

In a surprising move State Farm has sued the Texas Department Of Insurance for making some of its proposals for insurance rate hikes public on the state agency’s website.

State Farm says some of its proposal information is confidential and since Texas Department of Insurance has made them public, it would benefit the companies competitors. State Farm is particular about some documents related to reinsurance that would be of value to its competitors.

On the other side the state department fees all such proposals are entitled for public scrutiny and that would ultimately benefit the public in choosing the best home insurance policy. Also the State Farm’s proposals for rate hikes would make the Home Insurance market unstable feels the state agency and hence the decision to make them public. Texas department has also expressed its disappointment for the State Farm’s decision to sue the state agency.

State Farm is the major player in the Texas Home Insurance market and has a goodwill among the Texas residents. Hope this move doesn’t change that goodwill and trust. A better move would have been to contact the Texas Department and request them to remove such material which the State Farm believes is confidential. But then we do not know if they have pursued that route in vain and have sued the Texas Department as the last resort.

It would be interesting to wait and watch how the case proceeds. Next court hearing is scheduled for 14th April and till then some documents related to the suit are expected to be withheld on the Insurance Department’s website.

Legislature’s Property Insurance Deregulation bill is being debated though the Florida state governor Charlie Crist is not in favor of such a bill. Last year the governor vetoed the bill as it was proposing for complete deregulation of the major property insurance companies in Florida.

This year the revised bill seems to ask for 5% increase in the first year, 10% increase in the second year and 15% increase thereafter with no regulation whatsoever. This is deregulation in disguise.

The argument put forth by the bill’s opponents is that while a senior citizen saw no hike in his social security check, how could they afford the property insurance rake hikes? The supporters suggest that pending a harsh hurricane season, if the rates are not increased many property insurance companies would bite the dust and that already the insurance companies are wary of doing business in Florida.

End of the day its no good news for Florida’s home insurance holders as have to face a rate hike in their insurance premiums. It should be noted that insurance companies make millions by moving the premiums to other ventures instead of holding the premiums to take on the losses during hurricane seasons.

It comes under the backdrop of forecasts for around 5 hurricanes to strike Florida during this year’s hurricane season from June 1 to November 30. Citizens has benefited from the past 4 years of hurricane free season though some private insurers withdrew from the Florida’s residential market after huge losses in 2004 and 2005.

Citizens was created in 2002 for providing Home Insurance to those who couldn’t get it anywhere else. As many insurers have pulled out of the Florida market due to its uncertain hurricanes, Citizens has become the major player there.

It would be interesting to watch how the insurance companies fare this year with the prediction of quite a few hurricanes. One can expect quite a few companies to withdraw from the Florida market if the hurricane forecasts turn out to be true.

It should be noted that State Farm has 30% of the Texas Home Insurance cover. Other Home Insurance companies will follow suite if State Farm doesn’t reconsider the rate increase.

State Farm has said that it had increased only 4.5% on average while it wanted a 26.5% rate increase. Also State Farm intends to give 20% discount for those with multiple policies when compared with the current 15% discount. 84% of the State Farm’s customers might be eligible for the discount.

The increased rate is to come into effect from 1st May 2010 for new policies and 1st June 2010 for policy renewals.

There should be some sort of decision power with Texas Department of Insurance in order to regulate such rate hikes. As of now the Insurance companies are raising rates without any approval from the TDI.