One of Florida’s largest home insurers, State Farm, plans to change an earlier request for a rate increase because of higher costs than its initial calculations showed, raising the possibility of higher premiums than it initially proposed.
The company asked state regulators in May to allow it to boost premiums by an average of about 70 percent, citing higher costs for reinsurance. Reinsurance is essentially insurance for insurance companies, backing them up in the case of heavy claims.
But last month, the company notified the state Office of Insurance Regulation that it was withdrawing its filing “because the net costs of reinsurance estimated in our original filing have changed (increased significantly.)”
“In a nutshell, it’s simply that the original numbers we found to be wrong,” State Farm spokesman Chris Neal said Friday.
Because the company hasn’t submitted an updated filing, Neal said he couldn’t comment on what the company may seek.
But the letter makes it clear that its initial idea of what it would take to make up higher reinsurance costs wasn’t enough.
State Office of Insurance Regulation spokesman Bob Lotane said that State Farm officials notified the agency Friday that the company plans to amend its filing, rather than file a new one entirely, avoiding slowing down the process. Lotane said the agency will act on the request by August. The increase, if approved, would go into effect Aug. 15.
The company covers about one in five Florida homeowners.
Home insurers have been requesting large rate increases and in some cases not renewing policies in Florida following two years of heavy claims from hurricanes and fears of a more active period that have led to much higher costs of reinsurance.