TEST: State Farm Files Rate Increase for Homeowners Policies
Jul 16, 2008
State Farm Florida has filed a request to increase its homeowners insurance premium rates by an average of 41.7 percent. To view a copy of the request, click here.Â
Media coverage of the issue is below.Â
Should you have any questions or comments, please do not hesitate to contact Colodny Fass.Â
State Farm seeks 47% homeowners’ rate hike
Posted on Wed, Jul. 16, 2008
BY BEATRICE E. GARCIA
State Farm Florida, the state’s largest private home insurer, has filed a request to boost its rates on homeowners’ coverage an average of 47.1 percent.
If approved by state regulators, the increase would be effective for policy renewals starting March 1, 2009.
State Farm’s last rate increase was approved in 2006.
The insurer said the rate hike is needed to stabilize its financial condition and make sure it has enough reserves on hand to pay claims after a major storm.
”Unlike Citizens, we can’t assess after the fact. We have to be ready to pay claims immediately after the storm,” said Justin Glover, a State Farm spokesman.
Glover was referring to the state-run insurer, which can add a surcharge to policies of its own customers first and then assess all policyholders in the state if it has a shortfall. The Citizens assessment would be used to pay back borrowed funds it would tap in case of a deficit. Like State Farm, Citizens, too, needs to have cash upfront to pay claims quickly after a catastrophe.
State Farm insures about one million homes throughout the state. Earlier this year the company said it wouldn’t write any new policies to further reduce its catastrophe risk. It is also not renewing about 50,000 in the next 12 months. It has slowed down the appointment of new agents as it stopped writing new policies.
A spokesman for the state Office of Insurance Regulation said the filing is being thoroughly reviewed and that a public hearing on the State Farm filing will be held Aug. 12 in Tallahassee.Â
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