After the decision by Farmers Insurance to put the brakes on writing new homeowners policies in Texas beginning Aug. 15, the market in Texas experienced an upheaval, according to the Independent Insurance Agents of Texas (IIAT).
The association said other carriers are reluctant to fill the gap left by Farmers, the second largest homeowners writer in the state, until the Texas Department of Insurance (TDI) decides whether to allow restrictions on mold coverage.
Progressive stopped writing new homeowners policies Aug. 1, and OneBeacon Insurance Group, formerly CGU, announced it would write no new Texas homeowners that weren’t already in process beginning Aug. 13. Although OneBeacon was the 19th largest homeowners writer in 1999, its agency plant and writings were reduced after White Mountains Insurance Group purchased the group earlier this year. Currently, OneBeacon has 170 agents.
IIAT said a number of individual agency companies are placing restrictions on new business through a variety of strategies. Those include: rejection of any new applicant with prior water-related claims in the last several years; capping at last year’s total the new homeowner policy count in 2001; maintaining a 1-to-1 ratio of homeowner to personal new auto business; and assigning higher rates to houses built before 1981.
On Aug. 12, Myron Steves, a Houston-based managing general agent, launched a surplus lines HO-B with a water exclusion and a buy-back option. IIAT indicated that many modifications and rate increases implemented to dilute the impact of mold-related losses will not be reported to TDI, since most homeowners premium is written on Texas Lloyd’s companies, which are exempt from state rate regulation.
TDI is not expected to take action on the mold issue until it completes its fact-finding efforts. Those include a series of public hearings on mold issues held in Austin, Corpus Christi and Houston, and a TDI staff analysis of mold claims data to be provided by the state’s five largest homeowners writers no later than
Aug. 31.
Progressive Insurance Co. notified its Texas agents in early August that the company planned to temporarily cease writing new homeowners policies in the state, effective immediately. Stressing its commitment to its homeowners product, Progressive said the measure simply creates a “time out” period in which to assess issues related to black mold.
Progressive told agents that outstanding quotes uploaded on or before Aug. 7 will be honored and there is no change for existing policyholders. Also, homeowners policies in other states are not affected nor are Progressive’s Texas auto, special lines or commercial vehicle products.
A leading provider of auto insurance in Texas, Progressive began offering homeowners insurance in the state in March. Progressive indicated that because of uncertainty as to the extent of the potential liability related to black mold, the time out period would be used to assess the situation and develop a strategy to deal with mold issues before accepting any new business. The company plans to meet with TDI in August to discuss issues presented by mold related claims.
Topics Texas Agencies Homeowners
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