OK rate boost
Article Courtesy of The Sun Sentinel
Published March 31, 2007
arbitration panel on Friday allowed Nationwide Insurance Co. of Florida to
raise its home and condominium premiums by a statewide average of 54
percent, but state insurance officials say the overall effect on property
owners will be tempered by decreases the company will have to pass along
to its more than 232,000 customers.
Nationwide, the state's fourth-largest insurance company, appealed to the
arbitration panel after state Insurance Commissioner Kevin McCarty in
October rejected the company's request to increase prices by 71.5 percent.
The panel's decision is final, and the state can't appeal it.
It wasn't clear Friday when Nationwide would start implementing its higher
rates. Company spokesman Eric Hardgrove said the insurer is working with
state insurance officials to determine a date. Nationwide has 27,027
customers in Palm Beach County and 12,711 customers in Broward.
"We're going to obviously work to get it in place as soon as we
can," Hardgrove said.
The price increases still could come down. Nationwide, like other
insurance companies statewide, must comply with the new property insurance
law Gov. Charlie Crist signed in January that requires insurers to pass
along savings to customers based on cheaper reinsurance coverage they'll
get from the Florida Hurricane Catastrophe Fund.
Earlier this month, Nationwide had requested a 4.6 percent average
statewide price decrease but that's still under state review; that
proposal was based on 2005 rates.
With the arbitration ruling, Nationwide will have to change its rate-cut
proposal, said Bob Lotane, a spokesman with the state Office of Insurance
Regulation. "That is going to temper this 54 percent
[increase]," Lotane said.
Also unclear Friday was how much of an increase customers will see in Palm
Beach and Broward counties. The panel recommended that Nationwide and the
Office of Insurance Regulation discuss a possible cap of how much rates
can be raised in certain areas.
When it first requested higher rates in July 2006, Nationwide sought a
55.2 percent increase in Palm Beach County and a 38.7 percent increase in
Friday's ruling is the second time this month an arbitration panel
overturned McCarty's decision on a proposed rate increase. In early March,
another panel allowed Tampa-based Homewise Insurance Co. to collect a 75.8
percent price increase.
"Just another reason why we are not fans of arbitration," Lotane
The arbitration panel is made up of three arbitrators from the American
Arbitration Association, with one member chosen by the insurance company,
the other by the state insurance department, and the third agreed to by
The state has never won a case that's gone to arbitration since the
process was created in 1996.
Legislators, during the emergency session on property insurance in
January, voted to suspend arbitration until Jan. 1, 2009. Nationwide's
arbitration case already had been pending.
"Hopefully they will kill it for good," Lotane said. "... I
think the fact that they went as far as to suspend it for almost two years
shows that they're beginning to see the wisdom of our arguments on