State Farm customers report triple digit rate hikes
Jun 2, 2011
The following article was posted to the WPTV Channel 5 website on June 2, 2011:
State Farm Customers report triple digit rate hikes
By Julie Patel
Some State Farm Florida policyholders were hit with triple digit increases in recent weeks when their policies came up for renewal.
Insurance Commissioner Kevin McCarty approved a 19 percent average statewide rate increase for the company in April, but average increases in certain parts of South Florida were as high as 64 percent. Individual policyholders’ premiums can change by a higher or lower percentage than the average approved for the state and their region.
“Premium changes depend upon a number of factors such as location, risk, claims experience, coverages selected, deductibles selected, and qualifying discounts, to name a few. We encourage our policyholders to speak with their agents about the specifics of their policies,” said State Farm Spokesman Michael Grimes.
Some homeowners said their agents told them State Farm is losing money because of state laws that are tough on insurers and encouraged policyholders to complain to legislators. Some agents provided cheaper quotes for state-backed Citizens Property Insurance.
Here is a sampling of premium increases for State Farm policyholders in South Florida:
A 280 percent increase to $8,524 from $2,246 for Gerald Meit, a retired pharmacist in Weston. Meit said he has purchased insurance from State Farm for more than 50 years, with no claims. When he heard regulators approved a rate hike, he braced for an increase. But he said he was shocked when he received his renewal notice.
“We were expecting some kind of increase, but even if it doubled, that’s less than what they’re asking,” he said. “It looks like they don’t want us. It looks like they’re blowing us off with this kind of increase.”
A 181 percent increase, to $5,537 from $1,972 the year before, for John Hutelin, a pilot who lives in Plantation.
He said he has never filed a claim in the 25 years that he has been insured by State Farm and he now plans to drop his automobile policy with the company as well.
Hutelin said the insurer said the increase is partly due to an inspection the company did of his home that found the concrete walls include some wood. He said since the walls are all concrete, the company is referring to three wood gables at the ends of his home.
A 166 percent increase to $6,575 from $2,474 for Steven, a retiree in Coral Springs resident. He said he spoke with his agent, who said the company is “playing catch up” after being denied rate increases in years past.
“How can State Farm justify” it? he asked McCarty in an email. “That’s outrageous.”
Christina Huff, from McCarty’s office, replied to him in an email, saying regulators only approve rates that insurers can justify: “The Office is required to make sure that rates are not excessive, inadequate or unfairly discriminatory prior to approving the rate. Florida Statutes dictates the method by which our actuaries and analysts review rate filings.”
State Farm Florida made a list released this week of the top four weakest large insurers in the state, with a “D” or “weak” rating from Weiss Ratings, which assesses the financial health of insurers. The Florida company’s premiums didn’t keep pace with claims and other expenses to the tune of $187 million in 2010, said Gavin Magor, a senior financial analyst with Weiss, which does not accept payments from the companies it rates – unlike most rating agencies. The company sent $445 million of the $980 million it collected in premiums to reinsurers, including $215 million to its parent company, Magor said.
The insurer’s parent company, State Farm Mutual, made Weiss Rating’s list of the top four strongest large insurers. The ratings are based on how much money the insurers have in reserves and their profit margins, risk factors, stability and other issues.
Find this article here: http://www.wptv.com/dpp/news/state/state-farm-customers-report-triple-digit-rate-hikes