State Farm and Allstate customers in Texas will be paying increased rates, despite urging from the Consumer Federation of America (CFA) to governors nationwide to look into lowering insurance rates to match decreased driving due to high fuel costs.
State Farm Mutual, with 3 million policyholders, will increase rates an average 2.4 percent Oct. 27; State Farm County Mutual, with 200,000 policyholders, will increase rates 7.3 percent in December; Allstate Indemnity, with 694,000 policyholders, increased rates 3.6 percent in July; and Allstate County Mutual, with 435,000 policyholders, increased rates 5.5 percent, the Houston Chronicle reported.
"These are increases after a long period of stability in the auto market," Jerry Hagins, a spokesman for the Texas Department of Insurance, said. "We’re seeing an uptick now, but we don’t consider this to be more than upward pressure from low prices in the past."
Allstate told the Chronicle it needed to increase rates to make up for a higher frequency of collisions and increased costs for bodily injury claims.
The company added it has yet to factor recent reductions in driving into its rates because it’s waiting to see if it’s a lasting trend. According to the Federal Highway Administration, from November 2007 through June, Americans have driven 53.2 billion miles less than they did over the same period in 2007.
The CFA recently sent a letter calling on the nation’s Governors to “act immediately” to require insurance companies to lower their rates as Americans drive less.
“As Americans drive less because of the price of gas, fewer claims will be filed with insurance companies,” said J. Robert Hunter, director of insurance for CFA and former Texas insurance commissioner and federal insurance administrator. “Whether this will mean windfall profits for insurers or rate cuts for the consumers is up to Governors and state regulators to determine. We ask that each state immediately call hearings to determine the right auto insurance prices under the changed driving situation.”
To read our story on the drop in miles driven in the United States, click HERE. To read our story on the CFA’s take on insurance rates, click HERE.
