Florida Insurance Commissioner Kevin McCarty said he will disapprove the July 16 rate filing submitted by State Farm Florida for a 47.1 percent homeowners insurance rate increase.
McCarty’s Office of Insurance Regulation (OIR) said the insurer failed to prove that the net reinsurance costs included in the filing did not result in excessive costs in violation of the rating law. The OIR also questioned the profit and contingency factor and the additional retained hurricane risk load that State Farm used in the filing.
The retained hurricane risk load was previously allowed by law, but that provision was repealed in Senate Bill 2860, which became effective July 1 – before State Farm’s filing was made.
State Farm now has 21 days, if it chooses, to petition the OIR for an administrative hearing. In the meantime, the company cannot implement the proposed rate increases. Senate Bill 2860 also prohibits companies from implementing rate increases through the “use and file” process, through Dec. 31, 2009.
Had the filing been approved, policyholders in certain parts of Florida could have seen increases of as much as 63 percent, or $8,300 more than their current rates, in Dade County; 70 percent, or $4,800 more per year, in Pinellas County, according to OIR. The smallest requested change was an increase of 19 percent, or an additional $1,376 per year, in Pasco County.
Source: Florida Office of Insurance Regulation
www.floir.com
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