State Farm Rate Increase Hearing Report: August 12
Aug 13, 2008
On Tuesday, August 12, 2008, the Florida Office of Insurance Regulation (“OIR”) held a hearing to address State Farm Florida Insurance Company’s (“State Farm”) request for a 47.1 percent overall increase for new and renewal homeowners’ insurance policies. The increase would be effective December 1, 2008 for new policies and effective March 1, 2009 for renewal policies.
During the three-hour hearing held in Tallahassee, State Farm representatives defended the company’s rate filing, explaining that it needed the rate increase to ensure financial stability, as well as catastrophic claims paying ability.
Bob Lee, an OIR actuary, asked the State Farm representatives about the company’s reinsurance contracts and the profit load built into its rate filing. He also asked about the types of computer models and data State Farm used in conjunction with the rate filing.
State Farm representatives testified that the company used the average of the output from three computer models, all of which were approved by the Florida Commission on Hurricane Loss Projection Methodology. A factor to compensate for risk and for additional reinsurance costs then was also added to the total.
Mr. Lee objected to State Farm adding anything to the output of the models, saying that it appeared that State Farm was “adjusting” the models.
State Farm’s representatives responded that the company did not adjust any component of the models, but instead added more information.
Steve Alexander from the Florida Office of the Insurance Consumer Advocate criticized the “amount of profit” State Farm requested, as well as the amount State Farm paid to its agents.
No decision was made at the conclusion of the hearing.
News coverage regarding the rate hearing is below.
If you have any questions or comments, please do not hesitate to contact Colodny Fass.
State Farm under fire for proposed rate hike
Regulators grilled State Farm officials Tuesday, demanding explanations to justify the 47.1 percent rate hike the insurer says it needs to pay future claims.
Crist hopes panel kills rate hike
State regulators on Tuesday aggressively grilled State Farm officials asking them to justify their request for an average 47 percent increase in homeowners’ insurance rates.
State Farm won’t drop 31,000 policies
State Farm Florida Insurance has told the Office of Insurance Regulation that its actuary was incorrect when she said the company planned to drop an additional 31,000 policies Tuesday morning.
EDITORIAL: With neighbors like State Farm, who needs enemies?
I know, “when it rains, it pours.” But in the midst of our economic storm, State Farm brings Noah to mind. Amazingly, State Farm officials kept a straight face Tuesday in trying to defend their requested 47 percent increase for homeowners insurance. With 900,000 Floridian affected, state regulators could’ve grilled the officials for six hours instead of three.
Hurricane insurance hearings create own storm for State Farm
When State Farm officials appeared before Florida regulators Tuesday to seek a 47.1 percent statewide average rate hike, Office of Insurance Regulation general counsel Steve Parton zeroed in on why State Farm averaged the results of three hurricane models.
Analyst: Insurer Turning Back Clock
State Farm Florida wants to raise home insurance rates nearly 50 percent statewide, but its proposal is loaded with excessive costs and profits, Florida’s consumer advocate said Tuesday.
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