Texas Attorney General Greg Abbott has taken issue with the plan of State Farm Insurance Co., one of the nation’s largest homeowners insurers, to non-renew thousands of policies for properties along the Texas Gulf Coast. The Attorney General’s office is conducting an investigation into State Farm’s proposal to deny renewed coverage on more than 11,000 policies of Gulf Coast Texans. State Farm filed suit in an attempt to stop the probe. In an announcement released by his office, Attorney General Abbott said:
The largest issuer of homeowners insurance in Texas has filed a lawsuit in an attempt to prevent the Attorney General’s Office from investigating its non-renewal of thousands of residential property insurance policies along the Gulf Coast. Given the number of Texans that are affected, we want to ensure that State Farm complies with the law. If State Farm has not done anything wrong, it’s certainly curious that they would go to court just to avoid the State’s subpoenas.
In mid-April the Attorney General’s Office sent civil investigative demands — a type of civil subpoena — to State Farm Lloyds of Texas seeking information about the company’s decision not to renew the coastal policies. State Farm subsequently filed a lawsuit against the Attorney General in an attempt to modify or set aside his office’s request for information. In the filing, State Farm indicated the Attorney General had demanded 22 “separate categories of information, involving potentially thousands of pages of documents” to be produced in a week’s time.
While the Attorney General’s office asserted that State Farm’s lawsuit was an “effort to avoid its obligation to provide the information requested by the State,” the company countered that its filing was an effort to “preserve its rights.” State Farm indicated that it notified the Attorney General before filing the lawsuit, and that the company intended to cooperate and would not go forward with the lawsuit “unless and until it becomes necessary.” State Farm public affairs representative Patti Kelly confirmed that the non-renewal of around 11,000 Texas coastal policies began on May 1st of this year. The impacted counties are Galveston, Brazoria, Jefferson, Orange and Chambers, according to State Farm.
State Farm stated in its lawsuit that in December 2011, the company provided TDI with “underwriting guidelines for property insurance that modified the eligibility requirements for new business along the Coast.” State regulators were also “provided additional requested information – prior to implementation,” according to State Farm. The lawsuit says that TDI ultimately “determined the guidelines complied with state law.” But, when the company informed regulators in 2012 that it intended to non-renew some 11,300 customers — both residential and commercial — along the Coast “consistent with the eligibility requirements for new business” contained in the previously filed underwriting guidelines, TDI opened an investigation. That investigation is ongoing. It will be interesting to see which side prevails in this battle. I tend to agree with the Attorney General: If State Farm has nothing to hide, why did it file the lawsuit?
Source: Insurance Journal
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