Already in hot water with state officials over its pricing practices, Farmers Insurance Group has announced it will halt the sale of new home insurance policies in Texas after Oct. 31, 2002. The insurer says it will continue to renew existing policies.

Farmers' State Executive Director John Hagerman says the company has no other choice but to stop selling new policies in light of an Aug. 13, 2002, Texas Department of Insurance (TDI) emergency order that the insurer freeze its Texas home insurance rates. Farmers is also being sued by the state of Texas, accused of jacking up premiums by claiming it is losing money when it is allegedly turning a profit.

"We will continue to pursue all available avenues in an attempt to put this behind us," says Hagerman.

The TDI says Farmers is unfairly blaming the emergency order for its decision to stop selling new policies. "We ordered them to stop using unfair-pricing practices, not to stop selling policies," says TDI spokesperson Robert Black. "It's our position that Farmers will comply with the cease and desist order and they will treat their customers fairly. With this decision, they don't seem to be doing this."

Farmers, the state's second-largest home insurer, joins State Farm (the state's largest home insurer) in a Texas home insurance moratorium. Together, the two control half the Texas home insurance market. Allstate Insurance Co., the state's third-largest home insurer, limits coverage by selling new home insurance policies only to Texas homeowners in the top two tiers of its five-tier credit-scoring system.

Complaints of exorbitant home insurance rate hikes — some as high as 300 percent in areas with rising mold claims — and the inability of some consumers to obtain or renew their home insurance spurred Texas Gov. Rick Perry to demand that the TDI and Texas State Attorney General John Cornyn investigate all three insurers' marketing and pricing practices. That investigation is ongoing.