State tells Nationwide to make bigger cuts in property insurance rates


Article Courtesy of The Sun Sentinel

By Kathy Bushouse
Published  March 6, 2007

The state Office of Insurance Regulation has issued its first rejection of a property insurer's rate request that doesn't comply with the state's new guidelines for setting premiums.

Insurance Commissioner Kevin McCarty on Monday rejected Nationwide Insurance Co. of Florida's request to cut rates by an average of 4.6 percent, because the company didn't justify why it didn't adopt the state's higher estimates for rate reductions, said Bob Lotane, a McCarty spokesman. Nationwide submitted its rate proposal Friday.

In South Florida, Nationwide's premium cuts would have been 6.4 percent in Palm Beach County and 4.8 percent in Broward County.

Nationwide's numbers are far lower than the estimated savings of 24 percent that home and condominium owners statewide should expect from their insurers, based on figures McCarty released Thursday. Actual savings will vary, however, depending on factors such as where a property is located and what insurance company covers the property.

McCarty wasn't taking issue with the amount Nationwide asked to cut rates, but the fact that the insurer didn't back up its request with the required documentation, Lotane said. If a company can't match the state's estimates for premium reduction, it must show why, and Nationwide "didn't nearly provide the backup to make that case to us," Lotane said. "Therefore it's not adequate."

Nationwide is the state's fourth-largest insurer. It insures more than 230,000 policies in the state, with more than 27,000 policies in Palm Beach County and more than 12,700 policies in Broward County through the end of December, according to Office of Insurance Regulation statistics.

Nationwide's numbers were so different from the state's estimates because Nationwide's figures are based on the rates it implemented in September 2005, company spokesman Joe Case said. He declined comment on McCarty's rejection of the rate adjustment request, saying that the company had not yet been informed by the state that its request had been turned down.

Last October, McCarty's office rejected Nationwide's bid for an average rate increase of 71.5 percent, in part because the company could not justify its higher cost for reinsurance, which is insurance for insurance companies.

The company is appealing McCarty's ruling to a three-person state arbitration panel, and hearings are scheduled to start March 12.

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