Tuesday, October 1, 1996

Abilenians could pay less for home insurance By ANNA M. TINSLEY
Harte-Hanks Austin Bureau

AUSTIN - Homeowners in Abilene could soon pay less for insurance if the industry follows new guidelines set by the Texas Department of Insurance.

State Insurance Commissioner Elton Bomer lowered benchmark rates - a guideline used by insurance companies to determine consumer charges - statewide. New rates, which decreased by 14.6 percent for Abilene residents, go into effect today.

Abilene's rate decreased from $643 a year on an $80,000 brick veneer house to $549 a year. That figure represents standard coverage of $32,000 coverage of contents, $25,000 personal liability and $500 medical payments.

Now that new benchmarks have gone into effect, insurance companies have 30 days to file their new rates, which are effective upon filing, said Jim Davis, spokesman for the Insurance department.
"Consumers will see the changes when their policies come up for renewal," Davis said. "The cost doesn't automatically change (today). The next time homeowners renew, they'll see a change either up or down."

Overall, Bomer lowered benchmark rates by 1.1 percent for homeowners insurance.
"But only time is going to tell how much insurance rates will actually change," said Susan Slivinske, spokeswoman for the Insurance Information Institute. "Individual companies make their own marketing decisions based on the policies they write and the focus of their region."

New discounts for homeowners willing to accept larger deductibles also go into effect today.
Insurance companies will start giving discounts this fall to policyholders who choose larger deductibles as a way to save money on insurance.

Jerry Johns, director of Southwestern Insurance Information Services, said there haven't been an estimate as to how many Texans will sign up for the larger deductibles.

"It's one way to address the issue of significant property losses because of severe weather," Johns said. "As an industry, we are supportive of this.

"We feel like there will be a large number of people in North Texas who will probably take advantage of the higher deductibles," he said. "That particular part of Texas has been and probably will continue to be plagued by hailstorms."

The Department of Insurance is hoping a number of homeowners will be willing to increase their deductible up to as high as 5 percent of the insured value, in exchange for cheaper rates.
"It's a trade-off for the homeowner - taking more risk in exchange for lower rates," Davis said. "We are hoping people will do this ... so insurance companies will be more willing to write policies in some areas."

Insurance companies look at the total risk in an area when deciding whether to write more policies there. If a number of homeowners choose to take a higher deductible, that would decrease the risk an insurance company has in an area, Davis said.

"Not an awful lot of households that could handle a 3 percent deductible," Slivinske said. "That's a big hunk of change to set aside in case of an emergency and I don't think there's going to be a swell of people rushing for the biggest deductible."

Deductibles are the part of a loss policyholders must pay. Until now, the maximum deductible was 1 percent of a home's insured value.

"If a homeowner lives in an area that doesn't have much hail, or hasn't filed a claim in 20 years, this might be something they are interested in," Davis said.

Texans interested in the higher deductibles should contact their insurance company when their policies come up for renewal.