tells Nationwide to make bigger cuts in property insurance rates
Article Courtesy of The Sun Sentinel
Published March 6, 2007
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
The company is appealing McCarty's ruling to a three-person state
arbitration panel, and hearings are scheduled to start March 12.