Insurer wants a rate increase

Dec 3, 2008

Herald Tribune--December 3, 2008

By John Hielscher

The 2008 hurricane season is finally over, but the quest for higher homeowners insurance rates marches on.

Nationwide Insurance Co. of Florida filed last week to raise homeowners rates by a statewide average of 10.1 percent, though any local increases may be smaller.

Nationwide, the state’s sixth-largest property insurer, with 145,000 policies, says it needs a rate increase to cover increasing costs from non-hurricane damage, including sinkhole claims.

“The rate change is just a reflection of the real cost of serving a very challenging market,” spokeswoman Nancy Smeltzer said Tuesday.

The proposed increase is an average 7.6 percent for 6,694 policyholders in Sarasota County and 0.2 percent for 1,717 policyholders in Manatee County.

The 442 customers in Charlotte County would see a 10 percent average reduction in rates, Smeltzer said, though the price of some policies could increase. If approved by the Florida Office of Insurance Regulation, the higher rates would take effect July 30. Home, condo, apartment and renter policies would be included.

The OIR is already reviewing the rate filing, said spokesman Ed Domansky.

Other Florida property insurers with pending rate increases include Southern Oak, Merastar and Cotton States.

State Farm, Florida’s largest private property insurer, with 1 million policies, has appealed the OIR’s denial of a 47.1 percent rate increase that would top 70 percent in Sarasota, Manatee and Charlotte counties. An administrative law judge is expected to rule soon on that appeal.

The 2008 hurricane season ranked as the fourth costliest on record, with 16 named storms causing an estimated $11 billion in insured losses, according to the Property Casualty Insurance Association of America.

Florida was spared any hurricane strikes, but Tropical Storm Fay in August made four separate landfalls and produced 41,000 claims and $246 million in damage, says the Florida Insurance Council.

Nationwide’s proposed increase would help offset growing construction costs such as labor and building materials, Smeltzer said. The company’s rate request would cap hurricane and non-hurricane premium increases at 15 percent and sinkhole premiums at 25 percent. Sinkhole coverage is optional.

“We recognize the financial pressures out there that are facing every household,” she said.

Nationwide stopped writing new property coverage in Florida in 2005. Once the state’s fourth-largest carrier, it has dropped upwards of 100,000 policyholders in the past three years, including more than 15,000 in this area.

The company lowered rates by 20.4 percent under the 2007 insurance reform legislation. But that followed a 54 percent rate increase, resulting in a net 21 percent increase for customers.