Farmers Insurance Exchange, a reciprocal insurance branch of the Farmers Insurance Group, is looking to raise homeowner’s insurance rates in Louisiana. The insurer has approached state regulators seeking approval for rate increases that would affect thousands of residents throughout the country. The Louisiana Department of Insurance is currently investigating the rate proposal. Regulators have not yet issued a preliminary report on whether the rate proposal seems excessive or not. The state is currently determining how the potential rate increase will affect consumers and the overall economy of Louisiana.
The insurer is seeking an average increase of 39% throughout the state. This increase would affect some 25,000 homeowners; just over half of the policyholders Farmers serves in the state. Farmers claims that the rate increase would generate more than $14 million in premium revenue. The insurer did not provide information regarding the reason behind the rate increase, but the hike may be related to the recent spat of natural disasters the U.S. has experienced. These disasters have caused extensive damage throughout the country and have had an effect on the property/casualty insurance industry.
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Information concerning the rate proposal has not been made public by the Louisiana Department of Insurance. Insurance Commissioner Jim Donelon has noted that this information will be made available at a later date, after regulators have had an opportunity to investigate the matter. Regulators may decide to require the insurer to make changes to its proposal, depending on how it will impact consumers and the state at large. The regulatory process differs on a case-by-case basis, but the state expects to provide more details on the matter by the middle of next month.
Farmers has raised homeowners insurance rates in Texas as well, by an average of 10% throughout the state. The new rates affected 350,000 residents. The insurer claimed that this rate increase was due to the disasters that had visited the state in the past and the persistent drought that was creating hazardous conditions in some parts of the state. Texas regulators approved the rate increase after determining that the higher rates would not have a profoundly negative impact on consumers in the state.