2 Auto Insurers Will Raise Rates

By Vic Kolenc, El Paso Times, Texas

Aug. 20--EL PASO -- The state's two largest auto insurance carriers are raising their rates to cover rising costs.

State Farm, the state's largest auto insurer with 3.2 million Texas policyholders, plans to raise auto insurance rates an average of 2.4 to 7.3 percent statewide beginning Oct. 27.

In El Paso County, State Farm rates will increase an average of 4.4 to 5.1 percent, said Kevin Davis, a company spokesman in Austin.

"We've seen an increase in claim costs; that's the reason for the increase," Davis said. Some policyholders could see rate decreases, he said.

Allstate, with more than 1.1 million Texas policyholders, on July 21 increased rates an average 3.6 to 5.5 percent.

It does not have a separate rate amount for El Paso County, said Bill Mellander, an Allstate spokesman in the Dallas area.

Increasing costs also is the reason for Allstate's increase, Mellander said. The company is seeing more claims for collisions and for bodily injuries, he said.

The increase on average will mean "about $5 a month extra" for policyholders, Mellander said.

Last year, Allstate increased rates in Texas 1 to 1.8 percent, but hadn't increased rates before that for several years, he said.

Davis said most of State Farm's policyholders had not seen a rate increase in about five years. However, policyholders under State Farm County Mutual, which number about 200,000 Texans, saw an average rate increase of 5.1 percent last year.

Jerry Hagins, a spokesman for the Texas

Department of Insurance in Austin, said the department was reviewing the rate increases to make sure they were justified.

But "on the face of it, these are very modest increases," and are more probably due to the "upward movement of the normal business cycle following several years of (rate) stability," Hagins said.

"About 200 companies write auto insurance in Texas; it's a very competitive market," which helps keep rates down, Hagins said. "When you look at other states, we're somewhere in the middle in what people are paying for auto coverage."

Alex Winslow of Texas Watch, a consumer group active in state insurance issues, said it's "unfortunate" the companies are raising rates while "Texans are struggling to keep up with rising costs of gasoline, food, and housing."

Last month, the Consumer Federation of America called on states to determine whether auto insurance rates were correct as people drive less due to high gas prices. Hagins at the Texas Department of Insurance and Mellander at Allstate said it's too soon to tell whether driving habits have changed enough to affect rate structures.

But individuals who have changed their driving habits substantially, such as taking a bus to work, should contact their insurance company to see if they qualify for a lower rate category, they said.

The Associated Press contributed to this report.

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