EDITORIAL: Kill the increase

Florida Today--July 18, 2008

State regulators should reject State Farm’s request for yet another big rate hike
Hide your wallets because the rip-off artists are back.

State Farm, the second largest property insurer in Florida with more than 1 million policies, has filed a new request to raise homeowner rates an average 47.1 percent statewide.

The impacted include nearly 42,000 policyholders in Brevard County, representing almost 24 percent of the Space Coast property insurance market.

If State Farm doesn’t get its way, it is threatening to dump more policies on top of the 50,000 coastal policyholders it’s already dropping to reduce its hurricane risk.

The proposal — scheduled to take effect March 1, 2009 — is another greedy attempt by the company to line its pockets and should be rejected by the Office of Insurance Regulation, which has set an Aug. 12 public hearing in Tallahassee.
There’s ample evidence why:

• The state approved a 52.7 percent State Farm rate increase in 2006. But the company gave back a paltry 9 percent rate reduction last year, meaning the cash has continued to roll in without a hurricane hitting Florida the past three years.

• Many State Farm customers have hardened their homes with storm panels, shutters and other improvements, significantly reducing chances of damage and losses the company would have to pay.

• Mass cancellations would send Florida’s homeowner market back into turmoil and likely force more people into state-run Citizens Property Insurance Co. That would increase the risk to taxpayers of having to bailout Citizens if a big storm hit and it couldn’t cover losses.

• Big rate hikes could worsen Florida’s home foreclosure crisis by pushing more already squeezed homeowners over the financial edge.

Political pressure against the increase is building fast, as well it should.
Florida Senate President-designate Jeff Atwater called the request “outrageously high” and said its review will be done “in the sunshine and it must conform with state-approved scientific and actuarial models, not State Farm’s profit goals.”

Sen. Bill Posey, R-Rockledge, who has overseen insurance law changes that have led to more competition and an average 12 percent rate reduction this year, met the Wednesday news with “disbelief” and said the hike should not be approved.

“They’ve taken the lion’s share of $3.8 billion in profits out of the state” to Bloomington, Ill., where the company’s headquartered, he said. “There’s nothing in this equation that makes sense. I think it’s a way to cancel more people.”

So do we.

And it’s why the state should play hardball.

First, by killing the increase.

Second, by telling State Farm it can’t sell lucrative auto insurance if it dumps more home policies.

Floridians have suffered through enough insurance price gouging since the 2004 hurricanes and, confronting higher costs for such basics as food and gas, should not have to pay higher premiums that aren’t warranted.

State regulations need to come down on State Farm with an iron fist.

Now.
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