Farmers Insurance, one of the largest US general insurers, has moved out of the Texas homeowners’ insurance market, citing a $2.3 billion loss in the state over the past two years and a $435 million half-year loss as the reason. Mould losses alone through the first half were more than $550 million.

But the decision to quit is really a protest against the state’s insurance commission, which has filed suit against Farmers for “deceptive, misleading, and discriminatory homeowners insurance practices” that violate the Texas Insurance Code and the Deceptive Trade Practices Act. The state accuses Farmers of price-gouging by raising homeowners premiums by 400% this year.

The decision to run-off the business will affect about 700,000 policyholders. John Hageman, Farmers’ Texas state executive director, said the terms and conditions imposed on householders policies by the commissioner “would result in our continued financial losses which puts all our customers at risk and is unacceptable from a business standpoint.”

He said Farmers’ primary concerns have become lost amid the election year rhetoric that has taken centre stage. “For every $1 in homeowner premiums Farmers has received this year, it has paid out approximately $2.50 in claims. No company can stay in business under those circumstances."

On August 13 the state banned Farmers from further rate hikes, and Farmers countered with its own lawsuit, claiming the commissioner, Jose Montemayor, has overstepped his authority.

The next step: while some legislators are trying to broker a peace deal between the state and the insurer, others want to pass a law saying that insurers must offer cover for all classes of insurance, or none at all.