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State officials and Farmers Insurance Group reached a settlement Saturday that will keep the state’s second-largest home insurer in the Texas homeowner’s insurance market. The deal is worth $100 million for homeowners in restitution, refunds and rate reductions, according to the Texas Department of Insurance. It also ends a lawsuit and administrative enforcement actions the state had taken against Farmers, which threatened to stop renewing policies after the state accused it of unfair pricing policies, state officials said. The settlement is not an admission of wrongdoing, the company said. “This agreement is good news for consumers and will have a positive impact on the Texas homeowners market,” said Insurance Commissioner Jose Montemayor. The company announced in September that it would stop renewing homeowner policies for its 700,000 Texas customers, saying it could no longer afford to do business in the state, where homeowner’s insurance rates are the highest in the nation. Texas and Farmers had been at an impasse since the state Department of Insurance filed an emergency cease-and-desist order against Farmers in August for what it called unfair pricing policies. Homeowners’ insurance rates have increased as much as 200 percent for some Texans, and the issue became so volatile that many political candidates this year campaigned on insurance reform. Farmers and other insurers deny wrongdoing and contend the increases are due in part to an upsurge in claims for mold and water damage. The settlement takes effect Jan. 1. Farmers will continue to renew policies for existing customers but will not seek new ones, said Mark Toohey, assistant vice president for public affairs. Toohey said he had not seen the settlement and could not discuss it in detail. “The most important thing about the agreement is that it allows Farmers to stay in the homeowners’ market in Texas,” he said. Toohey insisted the company’s pricing practices were legal and would not change, despite the state’s allegations that they were deceptive. Gov. Rick Perry said that although Farmers admits no wrongdoing as part of the settlement, “I believe the state’s complaints were valid.” “This settlement is good for two reasons: It provides reduced rates, refunds and premium credits for Farmers’ policyholders, and it will allow the thousands of good Farmers agents in Texas to continue writing policies,” Perry said. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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