State Farm won’t drop 31,000 policies
Aug 13, 2008
Miami Herald--August 12, 2008
BY BEATRICE E. GARCIA
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.
During a public hearing in Tallahassee to defend its 47.1 percent hike request, Kathy Popejoy, State Farm Florida’s pricing director and actuary, said the company planned to drop the additional policies at renewal time.
However, State Farm told regulators after the hearing that its actuary was mistaken and it planned to drop at renewal only the 50,000 it has agreed to do last October.
Ed Domansky, an OIR spokesman, said the agency “has asked State Farm to clarify in writing what was said today and what the correct answer [of non-renewals] actually is.”
During the hearing, representatives from OIR questioned State Farm’s high reinsurance costs and the profit factors it used in its filing. Bob Lee, an OIR actuary, noted that State Farm averaged out the results of the models in figuring its rate increase.
Lee noted that while the three models were approved by the state, insurers aren’t supposed to modify the results.
Steve Parton, OIR’s general counsel, questioned State Farm’s increasing acquisition costs that include advertising and branding, especially at a time when it’s not writing new homeowners policies in the state.