Florida Insurance Commissioner Kevin McCarty has approved a statewide average 18.8 percent rate increase in State Farm’s homeowners’ policies, which is roughly 10 percent below the 27.9 percent it initially requested.
The new rates will apply to new policies effective July 1 and renewals as of July 15. Currently, State Farm has some 578,000 homeowners’ policies in the state.
In a separate filing, McCarty approved a statewide average increase of 62 percent in the insurer’s commercial multi-peril residential policies. State Farm had asked for an average increase of 95.7 percent increase. The policies are used to cover homes that are owned by an individual or business that are rented to others.
In approving the homeowners insurance rate filing, McCarty said the increases “are reflective of both a rate need by the company as well as cost-drivers in the system.”
State Farm spokesperson Chris Neal said the company is disappointed that McCarty didn’t approve the rate request as filed, but maintained it has no plans to leave the market. “It’s not the rate we asked for,” he said. “However, it’s still an important step for State Farm Florida to remain in the marketplace and remain viable in the marketplace.”
Three years ago, State Farm threatened to leave Florida unless it could make some drastic changes in its exposure. Under the terms of a 2009 deal, State Farm was allowed to drop 129,000 policyholders, the majority of which ended up in the state-back Citizens Property Insurance Corp. The insurer was also allowed to raise its rates by 15 percent on it remaining book-of-business.
State Farm said this year’s rate change includes an average 20 percent increase on homeowners, a 15 percent decrease in renters and a three percent decrease for condominium owners. The changes from policyholder to policyholder, however, will vary with some seeing increases and others decreases based on their geographic location and other factors. In Miami-Dade and Broward counties were State Farm has more than 65,000 policies in-force. Rate changes will range from a decrease of 9.8 percent decrease to a 64.3 percent increase.
State Farm, along with other property insurers in the state, has been spared hurricane and catastrophe losses over the past five years. However, non-catastrophe sinkhole claims have become a big cost driver. Although the majority of sinkhole claims come from “sinkhole alley” — Pasco, Hernando, Hillsborough and Polk counties — claims are also coming from other parts of the state.
State Farm reported that it paid out some $47 million in sinkhole claims in 2007. By 2010, however, that figure reached $141 million.
Under several property bills that are currently being considered by the Florida legislature, private insurers such as State Farm would no longer be mandated to offer the coverage.
Topics Florida Trends Pricing Trends Homeowners
Was this article valuable?
Here are more articles you may enjoy.
Insurers Get Green Light to Pay Less Than Billed Charges in Florida PIP Cases 
Berkshire’s ‘Most Important’ Biz Drives Q1 Results; GEICO Still Behind on Tech 
Rising Prices, Low Satisfaction Drive 49% of Customers to Shop For New Auto Insurance 
Billionaire Ellison Is Moving Oracle to Nashville From Texas 
