“Farmers policyholders will finally see the rate relief they deserve,” Mr. Montemayor said.

However, the deal stirred the ire of some consumer representatives. Birny Birnbaum, director of the Center for Economic Justice, called on Texas Gov. Rick Perry to replace Mr. Montemayor immediately in the wake of the deal.

“We are shocked that Mr. Montemayor let Farmers completely off the hook for the premium overcharges over the last 15 months,” Mr. Birnbaum said. “Not one penny to consumers who paid hundreds of millions of dollars in excessive premiums.”

In September of last year the department upheld its own order of rate reductions of 12 percent for State Farm, the top homeowners writer, and 17.5 percent for Farmers, the states number-two writer.

The commissioner ordered the reductions last year under new authority granted by the legislature aimed at bringing stability to the homeowners market, which had been hit by rising prices stemming in part from mold litigation.

State Farm remains the sole holdout in the appeals process following the Farmers settlement.

“This agreement avoids a very real potential of an extended legal battle and provides rate reduction for a substantial portion of the Texas homeowners market,” Mr. Montemayor said.

Farmers executive director for Texas, John Hageman, said a significant reduction in water and mold-related claims permitted the rate reduction.

Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.