Regulators deny State Farm request to appeal rate hike
Sep 8, 2008
The insurer had sought to raise rates 47 percent
By Paul Flemming
THE ASSOCIATED PRESS
Florida Today--September 6, 2008
Regulators Friday smacked down State Farm’s request to challenge rejection of a proposed 47-percent rate increase.
Now Florida’s largest private home-insurance company has until Sept. 15 to come up with a better argument for a hearing. It can also change its rate request and file it anew.
Last month, Insurance Commissioner Kevin McCarty said he intended to reject the proposed increases, saying State Farm failed to show that its reinsurance costs were not excessive. Also questioned were State Farm’s profit factor — 23 reasons in all were cited for rejecting the request.
The insurance company had the right to request a formal hearing to challenge the rejection. It did so, but officials said it didn’t make a sufficient case.
"State’s Farm’s petition for hearing was incomplete," said Stever Parton, general counsel for the Office of Insurance Regulation. "They basically just said that they disagree with the reasons we gave in the notice."
"We’ve said all along that we believe the evidence we’ve provided to support our rate filing is overwhelming," said State Farm spokeswoman Michal Shanley.
She said the company is considering its next move. "I don’t think that can be predicted right now."
State Farm has more than 900,000 homeowners policyholders in Florida. The company is in the midst of dumping 50,000 wind-damage homeowners policies, a process begun in March and previously announced.
In 2006, the state approved a 52.8-percent rate increase for State Farm. Last year, after legislation to change insurance-rate regulation passed and the state’s consumers took on more reinsurance risk, State Farm reduced its rates 9 percent.