TALLAHASSEE - Arbitrators have overruled the state and will allow Nationwide Insurance to raise homeowners' premiums by an average of 54 percent.
The increase by the Tampa Bay area's second-largest insurer applies to hurricane and nonhurricane coverage, though the amount will vary by location.
Nationwide spokesman Eric Hardgrove said the company will implement the increase "as soon as possible."
Nationwide, which has 240,000 policyholders in Florida and 42,005 in the Tampa Bay area, sought a 71 percent rate increase in July, but regulators rejected it. The company then filed for arbitration and won the case during hearings earlier this month. The ruling was released Friday.
Under the original 71 percent average request, increases for the Tampa Bay area varied widely. Hillsborough County was projected to be 49.8 percent; Pinellas, 134.6 percent; Pasco, 73.7 percent; and Polk, 43.7 percent. However, since a 54 percent average increase was approved under arbitration, those figures will likely be somewhat less.
Gov. Charlie Crist's office did not respond to requests for comment on the Nationwide rate increase. Chief Financial Officer Alex Sink was traveling and could not be reached for comment, her spokeswoman said.
Crist is riding a wave of popularity, according to recent polls, and he has devoted considerable energy to standing up to the insurance industry - by almost any measure doing far more than former Gov. Jeb Bush did over the previous two years.
Recently, Crist said people shouldn't believe newspaper reports about consumers who are seeing little or no rate relief. Rates will decline significantly, he said.
"I guarantee it. They're going to keep going down," he told members of the media.
However, by promising so much, Crist leaves himself open to a fall, some say.
"He needs to be a little more cautious about raising expectations. I think at times he has a tendency to overstate the achievements he expects," said Lance deHaven-Smith, a professor of public policy at Florida State University. "That can come back to haunt you."
He said it doesn't matter that Crist really isn't responsible for the Nationwide arbitration, which began when Bush was in office.
"It didn't originate in his era, but the public doesn't make those fine distinctions," deHaven-Smith said. "In politics perception is everything. You can easily go from being a hero to not being one."
The special legislation backed by Crist and passed by the Legislature in January put a freeze on insurance arbitration until 2009. There are no other pending property insurance arbitration cases, said Jonathan Kees, a spokesman for the Office of Insurance Regulation.
That same legislation set in motion some adjustments to the cost of reinsurance, or backup insurance meant to bring down the cost of insurance premiums. Two weeks ago, Nationwide estimated its rollback at 4.5 percent.
The state is challenging that, and Hardgrove said the company is working with regulators on the issue. That suggests the final rate increase of 54 percent - which will take effect for policies that renew after June 1 - could be cut by 10 percent or more. But in the end, most, if not all, customers seem likely to pay more, not less.
Technically, Nationwide will now submit a new rate filing for final review, but the state must respect the arbitration findings.