Florida Office of Insurance Regulation Reviews Hartford Insurance Rate Increase Request

Jun 16, 2011


The Florida Office if Insurance Regulation (“OIR”) held a public rate hearing today, June 16, 2011, to review an overall statewide rate increase request of 25.3 percent from Hartford Insurance Company of the Midwest (“Hartford”) for its homeowners line of business.

Hartford is seeking a rate increase based on three factors:  lower premium trend, increased loss trend and methodology.  According to the insurer, the driving factor of these trends is caused by an increase in sinkhole claims from 2006 through 2010. 

OIR officials present at today’s hearing included Deputy Director for Property and Casualty Product Review Michael Milnes, Actuary Bob Lee and Assistant General Counsel Stephen Thomas.

In attendance from the Office of the Florida Insurance Consumer Advocate was Actuary Steve Alexander. 

Hartford officials in attendance included Assistant Vice President David Case, Director of Hartford’s Florida Actuarial Team; Cifford Wee, Assistant Vice President of Catastrophe Management; Ann Cariglia and Actuarial Assistant Carolyn Pfeffer.

Following the company’s opening statements, the OIR’s actuary asked a series of questions that revealed Hartford’s filing does not include separate trend data for sinkhole and non-sinkhole losses. 

Mr. Lee confirmed that the requested rates include by-county increases ranging from 19.9 to 38.9 percent.  He indicated that Hartford has sustained a large increase in sinkholes losses from $2.7 million in 2006 to $15.1 million in 2010, for a total loss of $34.8 million during that time period.  Mr. Lee also confirmed that 85.6 percent of that loss occurred in “Territory 16,” which comprises non-coastal parts of Citrus, Hernando and Pasco Counties. 

The Hartford representatives indicated that no provisions from SB 408 were included in this filling.  Mr. Lee expressed concern about why Hartford also did not include its 2011 reinsurance contract in the filling.

Mr. Alexander summarized his review of the filling on behalf of the Florida Insurance Consumer Advocate, concluding that the sole non-catastrophe-related loss was due to sinkhole claims in Territory 16.  Notwithstanding, Hartford’s average policy cost per year is 28.3 percent more than the nationwide average.  He indicated that in Territory 16 alone, where Hartford collects 6.2 percent of its premium, the company has sustained a 31.3 percent loss. 

In Mr. Alexander’s opinion, the rate increase should not be granted to Hartford.  Further, he felt that Hartford’s methodology of applying sinkhole losses and the indicated rate change for Citrus, Hernando and Pasco Counties would result in cost-shifting in other areas of the State. 

He recommended that Hartford should collect separate trend data for sinkhole and non-sinkhole losses, as well as evaluate the effect of SB 408 on the trend data.

Following Mr. Alexander’s presentation, Mr. Milnes concluded the hearing. 

To view the hearing agenda, click here.



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