State Farm gets approval for 18.8 percent rate hike for homeowners
Apr 8, 2011
The Tampa Tribune published the following news today, April 8, 2011:
State Farm gets approval for 18.8% rate hike for homeowners
By RAY REYES | The Tampa Tribune
Published: April 8, 2011
Florida residents with homeowners’ policies covered by State Farm can expect to see higher rates this year.
An average hike of 18.8 percent has been approved by the Florida Office of Insurance Regulation. The increase will go into effect by June for new policyholders and July for customers seeking renewals, according to state documents.
Some of State Farms’ 632,000 customers won’t have to pay the full 18.8 percent increase, company spokesman Michael Grimes said. Depending on where they live, the increase “varies by zone and individual policyholders will see varying changes in their bills,” he said.
State Farm, the second-largest insurance company in Florida behind the state-run Citizens Insurance Property Corp., originally requested a 28 percent increase.
A major hurricane has not struck Florida in more than five years, but Grimes said his company requested the rate hike because factors such as sinkhole insurance claims are driving up costs.
Although the 28 percent hike wasn’t approved, State Farm isn’t bailing out on Florida.
“This is an important step to remain viable in this marketplace,” Grimes said. “We’ll continue to work with regulators and legislators to encourage market reform.”
State Insurance Commissioner Kevin McCarty said the insurance carrier provided enough proof to his agency to justify the increase in rates.
“The amended rate filings by State Farm…are reflective of both a rate need by the company as well as cost-drivers in the system,” McCarty said in a statement. “State Farm provided actuarial support for these new rates through data submitted…and through responses to office questions during the public hearings conducted on Feb. 15 in Tallahassee.”
McCarty has also approved a 62 percent rate hike for State Farm customers who own what’s deemed “commercial residential properties” such as apartment complexes, which are rented out to others.
Lawmakers are also trying to pass measures that would allow Citizens to increase rates by up to 25 percent. Currently, Citizens can only increase rates up to 10 percent. Citizens has about 1.3 million policyholders.
The approval of State Farm’s rate increase comes at a time when state legislators are attempting to tweak laws regulating homeowners insurance – specifically how those policies cover sinkhole damage.
Bills proposed in the House of Representatives and the Senate would do away with a requirement that insurance carriers offer sinkhole coverage. The bills would allow insurers an option to keep providing coverage, with additional premiums, but won’t make it mandatory to do so.
Coverage may also be restricted to the principal building and driveways, patios and other areas may not be insured.
Statewide, sinkhole claims shot up from 2,360 in 2006 to 7,245 in 2009. More than 66 percent of those claims occurred in just three counties – Hernando, Pasco and Hillsborough.
Industry advocates say the bills will stop fraudulent claims of sinkhole damage. Several lawmakers, including Sen. Mike Fasano, R-New Port Richey, and Rep. Rick Kriseman, D-St. Petersburg, say the proposals will only hurt consumers, especially in a sputtering economy.
rreyes@tampatrib.com (813) 259-7920
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