Lawmakers query insurer
over $44 million boost
of 31.6 percent rate jump goes toward dark view of Fla. hurricanes
Article Courtesy of The News-Press
Published August 17, 2007
— Florida regulators grilled The Hartford on its request for a $44
million rate increase, questioning its efforts to collect a 15 percent
profit for itself as well as similar rewards for its re-insurers.
But the bulk of the hike goes for something regulators can't regulate —
an increasingly dark view of the hurricane threat to Florida.
"They're not writing any new business, and didn't have a bad year
last year," noted Deputy Insurance Commissioner Belinda Miller.
"They're increasing costs because of modeling projections and rating
organizations . . . things that are out of our control. That's
The Hartford — which gets two-thirds of its 97,000 home policies from
referrals through the AARP — seeks to raise rates an average 31.6
percent. That almost exactly offsets reductions the company was ordered to
make in June as a result of legislative changes.
The Office of Insurance Regulation is still working to reschedule similar
questioning of State Farm, but is waiting first for delivery of a large
volume of records subpoenaed by the state.
Miller said today it appeared the State Farm hearing will now be held in
early to mid September.
Aside from questioning the company's specific rates and new underwriting
rules, regulators hope to lay ground for the next round of property
insurance fixes by the Florida Legislature. January's reforms were
supposed to lower rates an average 24 percent in trade for consumer
backing of $12 billion in potential hurricane losses.
Those have failed to materialize, Miller said. "That's very
frustrating. People don't understand how that can be true," she said
Tuesday, asking Hartford executives, "What do you say to your
"The savings that were created offset what would have been increases
in costs," replied Hartford actuary Mark Homan. "We know those
are the costs we paid."
Unlike other companies, The Hartford bought roughly the same amount of
reinsurance for 2007 as it did for 2006, but the cost for that coverage
went up, as re-insurers turned on new computer models that predict greater
catastrophic losses for the next five to 10 years.