Florida Farm Bureau defends request for rate increases
Jul 31, 2008
Daytona News Journal–July 31, 2008
By JIM SAUNDERS
Tallahassee Bureau Chief
Insurance regulators today grilled Florida Farm Bureau officials about a proposal to raise homeowners’ insurance rates 28.4 percent statewide — and even higher in Volusia and Flagler counties.
Regulators rejected a Farm Bureau rate increase last year, after the Legislature made changes to try to reduce property-insurance costs.
"It seems like deja vu all over again," Steve Parton, general counsel for the state Office of Insurance Regulation, said during today’s hearing.
But Farm Bureau officials say the insurer, which has two affiliated companies that were included in the rate proposal, is losing money in the homeowners’ market. The proposal includes rate increases of 30.1 percent in Volusia County and 35.6 percent in Flagler County.
Actuary Missy Shelley said Farm Bureau might have to consider reducing its number of policies if the rate increases are denied.
"As a business, you just can’t operate at a loss," Shelley said. A large part of the questioning centered on Farm Bureau’s purchase of "reinsurance," a crucial form of backup coverage that insurers use to help pay hurricane claims. Reinsurance costs can play a major role in rates that customers pay.
Regulators did not immediately rule on the Farm Bureau proposal.
Next up will be State Farm Florida, which has proposed an average 47.1 percent rate increase statewide. State Farm, the largest private insurer in the state, faces an Aug. 12 hearing.
Gov. Charlie Crist criticized the State Farm proposal Tuesday, calling it "appalling" and saying he hopes it will be rejected. "I was shocked to see them request that high (of) a rate increase," Crist said.