For Farmers Insurance agent Jim White, the announcement this weekend of the end of a lawsuit filed by the state, came as a great relief.
"Well, the impact will be, I'll stay in business, and that's huge," he said.
The lawsuit alleged that Farmers Insurance had engaged in unfair pricing practices that made consumers pay too much. The Texas Department of Insurance essentially shut down Farmers until the matter was resolved. To settle the issue, Farmers agreed to give policy holders $100 million in discounts and refunds. All the while maintaining that they did nothing wrong.
"Let me clarify something," said White. "It's called a settlement, but it's an agreement. An agreement whereby the state, the governor, and Farmers have agreed to do business in the state of Texas. And based on that agreement, Farmers is willing to make some concessions prematurely to when they wanted to as a gesture to prove their commitment to Texas, and that's the most important thing that needs to be said here," said White.
Under the agreement, all policy holders will receive a rate reduction of 6.8% from January 1st thru September 1st of 2003. Additional discounts apply to specific policy types. White says that the current level of premiums has been driven in large part by the massive number of claims for black mold, but that at no time was Farmers ever gouging its customers.
"We haven't been doing anything illegal, anything criminal. We don't use unfair practices in setting our rates. Any corporation that is faced with a loss is going to go out of business or their going to raise the cost of what they're selling, and that's what we have to do," he said.