State Farm agreed Friday to pay $352.5 million in refunds to more than 1 million of its Texas customers as part of a sweeping settlement that ends nearly 12 years of legal battles over premiums that state officials say were too high.
The company admits no wrongdoing, but says most homeowners who had State Farm policies between Sept. 7, 2003, and the end of July 2008 will be eligible for refunds. Checks will begin going out this fall and continue through August 2016.
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The value of the refunds will be calculated based on a percentage of the premiums paid and also depend on how many years the affected policyholders were State Farm customers, said Public Insurance Counsel Deeia Beck, whose office represents insurance consumers and joined the case in 2008.
Beck called the settlement "a good outcome for Texas consumers."
Legal wrangling first began in 2003, when the Texas Department of Insurance notified State Farm that its rates "were not reasonable for the risks to which they applied and must be modified." Officials argued that the company was far exceeding what it needed to make a reasonable profit when setting premiums. The state insurance commissioner eventually ordered refunds and Texas' 3rd Court of Appeals refused in November to overturn key portions of that order.
State Farm has repeatedly denied wrongdoing and maintained Friday that its rates "are, and always have been, lawful and financially sound."
"We believe this settlement allows us to focus on serving our customers and move forward without additional expense and distraction of continued litigation," spokeswoman Patti Kelly said in a statement, which added that "it will take a few months to determine the refund amount for each affected policyholder."