Despite a court order forcing it to cancel all of its homeowner policies in Texas, Farmer's Insurance says it's fighting to continue service in Texas, and it wants its customers to stay calm and stay put.
Governor Rick Perry's office claims Farmers Insurance was overcharging customers and was involved in illegal and unethical practices. But Farmers Insurance is standing up to the state, claiming it's being unfairly targeted and falsely accused. Lubbock Farmers Insurance agent Jim White has fielded dozens of phone calls already this week. "This is an issue we hope to resolve in short order," says White.
Last week, Farmers sent out 700,000 cancellation notices to every one of its insured Texas homeowners. 15,000 of those customers are right here in the Lubbock area. "We felt that was the most effective way to get the information out to our customers and let them be prepared about what they're facing," says White.
What customers are facing is the possibility of having to find a new insurance company. What Farmers Insurance is facing is a court order from the Texas Department of Insurance. It alleges Farmers was overcharging customers and demands that Farmers roll back rates by 40% and refund $150 million dollars to its policy holders. But Farmers says those allegations are politically motivated and out of control. Farmers says there's no proof that they were overcharging. In fact, Farmers says it can prove just the opposite. That its rates are right in line with its competitors. "If we're not competitive we lose business. That's the nature of the beast. You get to go to Albertson's or United to buy your groceries based on pricing and service. The insurance business needs to be the same way," says White.
Jim White has been in business for 32 years and says he's built a solid reputation on Farmers good name. He says it's that good name that's worth fighting for. "I personally have sat in the Governor's office and discussed these issues with them. Farmers has done nothing illegal, nothing criminal, and these are the charges levied against us for political reasons." White says Governor Perry has taken a lot of criticism this election year from his opponent Tony Sanchez. White says Perry made an example of Farmers to show he wasn't soft on big insurance companies. "It breaks my heart to be labeled immoral, criminal and deceitful and that's what I told the governor," says White.
The allegations of overcharging are indirectly related to skyrocketing black mold related claims in Texas. According to Farmers Insurance, 9 of the top 10 homeowner insurance companies in Texas lost money last year because of black mold related claims. Rates have been increased to deal with those staggering losses, but that hasn't even been enough. White says many insurance companies still come out in the red and are subsidized by policy holders in states with profits.