State Farm Strong Arms Texans, Again
Criminal Probe/20% Rate Hike
Are they connected?
On the same day the Travis County District Attorney’s office announced a criminal probe into State Farm’s claims handling practices by the Public Integrity Unit, (See: State Farm faces Criminal Probe in Texas http://abcnews.go.com/US/state-farm-faces-criminal-investigation-hurricane-claims/story?id=17167218&page=2) State Farm announced a bombshell of its own, (See: State Farm Rate Hikes totaling 31.5% http://www.chron.com/news/houston-texas/article/State-Farm-seeks-20-rate-hike-faces-criminal-3848925.php ) another rate hike for Texans, this one at 20%, bringing the total of rate hikes in the last 18 months to 31.5%.
Why, you ask? Simple, economics and greed, coupled with free reign.
With the impending criminal probe, the high cost of litigating to mitigate the damages monetarily as well as the fall out for the State Farm Brand, will result in a huge financial hit for the insurance giant. While their current profits would sustain such a hit, they are making a bold choice to pass that cost on to the consumer, preemptively, in the form of a 20% rate increase.
Here is a brief look from a layman’s view of what this rate hike represents.
State Farm insures roughly 1.25 million homes in Texas, or 1 in 6. Texans, on average, pay the highest premiums in the nation at approximately $1460.00
$1460.00×20%=$292.00 the average additional cost each homeowner will pay annually.
$292.00×1,250,000 insured homes = $365,000,000.00 in additional earned premiums, annually.
Three Hundred and Sixty Five Million dollars.
This is a mighty impressive war chest to fight the legal battles to come, whether it is from a task force on a criminal probe, or a consumer(s) in civil court.
State Farm is going to charge Texas consumers an additional 20% of their hard earned income. They are going to do this because the powers that be are finally catching enough heat from the same consumers, that they are launching investigations into their activities. Keep in mind, these investigations and class action law suits are because of State Farm’s practices against these same consumers. Talk about text book Irony. In essence, State Farm is saying, “We will systematically underpay you, often illegally. If we are caught, we will raise your rates in order to pay for our defense, any fines we may incur, and to keep our profits and net worth in line.”
Recession, what Recession?
Here is a brief look at State Farm’s net worth growth from 2001 thru 2011. (See: http://www.pantagraph.com/business/local/article_ebca23c0-4426-11e0-a9b1-001cc4c03286.html )
2001 38.1 Billion
2011 60.8 Billion
That is a net growth of 22.7 Billion in ten years. This after what is claimed to be the most expensive catastrophic losses in history. This is after sponsoring every major sporting event, paying every agent, adjuster, attorney, (Both plaintiff and defense) as well as engineering firms like HAAG (See: http://www.propertyinsurancecoveragelaw.com/tags/haag-engineering/ ), who have been consistently linked with general tendencies to side with insurers like State Farm, at the detriment of an insured. This after unprecedented monetary efforts to make us believe, after all, that we are all just “Good Neighbors”. Simple fact, we are all just dollars and cents.
State Farm has presented its rate hike to the Texas Department of Insurance, as per the state guidelines. If you would like them to intervene, they must hear your voice. You can let them know here. mailto:ConsumerProtection@tdi.state.tx.us Remember, this hike will add an average of $292.00 per year to YOUR budget, for the same or reduced coverage, in the same area that has not seen an increase in risk.
State Farm has had a rough couple of years, or so they would have Texas Consumers believe. They have consistently raised homeowner’s rates, reduced coverage and increased deductibles, while pulling out of coastal areas where loyal consumers have paid them premiums for decades, and trusted, that like a good neighbor, State Farm would be there.
So, the burning question is a simple one. “Should Texas homeowner’s pay for the legal defense and subsequent fallout of State Farm’s own illegal practices against Texans?”
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This article was written by Cal Spoon, this is my opinion only, deduced by the facts before me.
Strong-arm robbery is a term used to describe a situation where the offender used any degree of force to complete the act. Strong-arm robbery is technically a term used to describe the crime of “Robbery by sudden snatching.” This crime’s definition is detailed below:
812.131 – Robbery by sudden snatching
“Robbery by sudden snatching” means the taking of money or other property from the victim’s person, with intent to permanently or temporarily deprive the victim or the owner of the money or other property, when, in the course of the taking, the victim was or became aware of the taking. In order to satisfy this definition, it is not necessary to show that:
The offender used any amount of force beyond that effort necessary to obtain possession of the money or other property; or
There was any resistance offered by the victim to the offender or that there was injury to the victim’s person